Abolish the penny?

There is the danger that prices will be rounded up more than down.  A 19-year-old Canadian, Christina Cheung, has done a study of penny abolition in Canada and here are her findings:

She found 60.8 per cent of grocery store prices ended in 8 or 9.

Cheung put those numbers through a computer simulation program that generated hypothetical purchases.

“I simulated [grocery purchases] depending on what province you’re in, what tax rate you have, and how many items you buy,” she said.

She excluded the volume of credit and debit card transactions, which aren’t affected by penny rounding.

She then made a discovery: a typical grocery store would earn an additional $157 of revenue from rounding each year.

All together, she found grocery stores in Canada yield an additional $3.27 million dollars over a year.

The paper will be published in Atlantic Economic Journal.  Here is the full story by Roshini Nair, via Michelle Dawson.

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