Money illusion refers to the tendency of people to think of currency in nominal, rather than real, terms. In other words, people mistake nominal variables for real variables. The term was coined by John Maynard Keynes in the early twentieth century, and Irving Fisher wrote an important book on the subject, Money Illusion, in 1928. The existence of money illusion is disputed by monetary economists who contend that people act rationally (i.e. think in real prices) with regard to their wealth. Shafir, Diamond and Tversky (1997) have provided compelling empirical evidence for the existence of the effect and it has been shown to affect behaviour in a variety of experimental and real world situations.