Evaluating the Cash-in-Hand Consumer Culture in the European Union

Abstract:

To evaluate critically the assumption that consumers participating in cash-in-hand transactions are rational economic actors simply seeking a lower price, evidence from 26,659 interviews conducted in 27 European Union member states in 2007 is reported. This reveals that a lower price is the sole reason for just 44% of all informal economy purchases, one of several reasons for 28% of such purchases and not a reason in 28% of cases. A multinomial logit regression analysis reveals how the reasons for cash-in-hand purchases vary across populations. The implications for explaining the cash-in-hand consumer culture and policy are then explored.