Digital Payment, Household Consumption Behavior, and Financial Literacy

This study examines the impact of innovations in the payment system on household finance, focusing on consumption behaviors and financial literacy among low-income households. The investigation utilizes Thailand’s introduction of the cashless State Welfare Card to low-income households in 2017 as a quasi-experiment setting. The primary data sources for this study include the large-scale countrywide household socioeconomic survey (SES) conducted by Thailand’s National Statistical Office (NSO) and survey data from individuals in four provinces of Thailand. The empirical strategy in this study is primarily fuzzy regression discontinuity design.

The results of the study reveal that individuals who receive the cashless State Welfare Card experience effective increases in consumption of the food and beverage items that are the target of the policy. Contrary to concerns about adverse impacts, such as overconsumption or using the card for unintended items like cigarettes, there is no evidence supporting these claims. Instead, people using the state welfare card exhibit better financial literacy and reduced risk-taking consumption behavior. The result underscores the importance of financial literacy training provided alongside the card. However, the study does not find sufficient evidence to suggest a significant impact on trust in the financial system.