Eliminating The Penny Could Hurt The Poor

January 2, 2018 in Daily Bulletin

Inflation has eroded the value of the penny (a single cent) to the point where many propose eliminating it in America altogether. Roshini Nair reported on a study that looked at the implications:

  • In 2013 Canada decided to phase out the penny for cash transactions – retailers would round to the nearest five cents.
  • Debit and credit card transactions were unaffected by this move.
  • Retailers tend to price things at 99 cent intervals (e.g., $9.99) – rounding to the nearest five cents has the potential to boost their revenues.
  • One study estimated that the average grocery store earned an extra $157 a year as a reslt of the change.
  • Scale that across Canada and you get $3.3 million a year.
  • Since the poor are more likely to pay with cash than the rich, the change hurts them proportionately more.

Read the article here.

Via: Marginal Revolution