What’s to be done about the penny?

It costs 1.7 cents to produce one US penny. But we can’t seem to get rid of them. Why? David Owen writes,

One is that many people are quite attached to one-cent coins. Another is that some people fear that merchants in a penny-free economy, when making change on cash purchases, might be more inclined to round up than to round down, thus penalizing consumers. A third is that eliminating pennies would increase our reliance on nickels, which now cost almost ten cents to manufacture and so generate even more negative seigniorage, per coin, than pennies do. What is to be done?

Somehow, this doesn’t seem like such a difficult question. Later in the piece, Owen tells us that an economist figured that the “rounding tax” would amount to $2 per American per year. My favorite passage is this:

The 2006 nickel, which features a likeness of Jefferson and was sculpted by Menna’s former colleague Donna Weaver, is the first circulating U.S. coin to have a forward-facing portrait; it is considered by coin aficionados to be an engraving tour de force.

There’s much more in the story (h/t Ezra Klein).

 

 

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