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Pennyless Pricing

August 9, 2006

Would consumers suffer if politicians eliminate the penny?

Transcript

BOB HIRSHON (host):
Is dropping the penny wise? I’m Bob Hirshon and this is Science Update.

Recent legislation has proposed retiring the penny, and rounding all cash purchases up or down to the nearest nickel. But with so many prices ending in 99 cents, would shoppers get shortchanged? To find out, Wake Forest University economist Robert Whaples studied over two hundred thousand transactions at a convenience store chain.

ROBERT WHAPLES (Wake Forest University):
I found, in fact, that rounding would slightly benefit consumers. They wouldn’t get ripped off at all.

HIRSHON:
He explains that the proposed law would round only the final bill, not individual prices. And even when many of those prices end in 99, the total purchase including sales tax usually doesn’t. What’s more, he says the time saved by eliminating pennies could add up to 300 million dollars a year. I’m Bob Hirshon, for AAAS, the science society.