Overview
Digital payments are convenient but depend on power, communications, devices, and authorization. The series combines U.S. payment data, hurricane event studies, household liquidity proxies, cross-country surveys, and a randomized information treatment whose linked purchase estimates remain unfinished. It finds that cash can preserve some available purchases when electronic routes fail, but only when stores, goods, merchant acceptance, and cash access remain; resilience requires usable redundancy, not cash replacing digital payments.
Learning outcomes
- Cash can preserve an available purchase when live electronic authorization fails, but cannot restore stores, roads, or supplies.
- Hurricane data show sharper spending declines and stronger digital-to-cash shifts where outages occur, though weather effects remain bundled.
- Greater cash availability is associated with fallback use and smaller expenditure declines; the causal effect size remains unresolved.
- Resilience is a shared design problem: households, merchants, and institutions must keep alternatives accessible and usable.
Keywords
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PlansFAQ
Why does cash still matter if people use cards more often?
Cash still matters because it can preserve an available purchase when a live electronic route fails, even if cards dominate routine use. Its value depends on cash access, an open store, available goods, and merchant acceptance.
Does a hurricane make people switch from digital payments to cash?
A hurricane can coincide with a shift toward cash, but outages may force substitution while no-outage households may draw down precautionary cash. Spending also reflects store closures, mobility, and supply disruption.
Does having more cash protect household spending during an outage?
Having more cash is associated with more fallback use and smaller expenditure declines during outages, but the evidence does not yet prove that extra cash causes the improvement or establish one universal reserve amount.
What makes a payment system resilient when networks fail?
A payment system is more resilient when a usable alternative survives the relevant failure, with accessible funds, merchant acceptance, operating stores, and available goods. Redundancy complements digital payments rather than replacing them.