These adjustments are not costless, so there is resistance from some parties who do not want to pay transition costs. Whatever the rationale, 58 percent of men and 73 percent of women wanted to keep the penny in 2006, according to a Coinstar poll.
The decision to discontinue it would incur political backlash. Her areas of writing expertise include economic theory and applications, Russian culture and scuba diving.
To get the price just right the cash must be divisible into pieces so that you don’t overpay.
But it isn’t divided forever, because at some point the value it represents is too small to buy anything or bother with. In the olden days, pennies could actually buy stuff, no more.
So you have to get rid of them by using exact change.
But, because the United States doesn’t include sales tax in prices – unlike more civilized countries – and you can’t multiply by 8.875% in your head, you can’t get your change ready before you reach the register like a good Samaritan would.Charities benefit from spare change because, since people do not care about it, they are more likely to give it away.Charities worry that if the nickel becomes the smallest denomination, then people will value change more.One of the functions of prices is to provide participants in the economy with information about the scarcity, supply and demand for a particular good.Removing the penny removes grades of information that could be available to investors, consumers and manufacturers.The value of copper went up and, because of inflation, the buying power of the penny went down.This caused The Mint to reduce the amount of copper in pennies, first from 100% to 95%, and then to only 5% copper and 95% zinc.In fact there is only one machine that takes pennies: Coinstar – a leach on the economy that eats 10% of your money while providing nothing in return except the ability to spend cash that was already yours.The difficulty of spending pennies is why they end up in jars, dead to the economy after a short, useless life where they failed at their only job, to facilitate exchange and instead did the exact opposite by being a literal dead weight on every cash transaction. But, you might think, won’t prices rise and charities lose money without the penny? New Zealand got rid of their 1 cent coin, as did Oz.The impact of the loss of the penny on price flexibility depends on its implementation.If only cash transactions are affected, then electronic transactions will continue to deliver more sensitive data.