Designed for the Business, Non-Business, Economics, Non-Economics Major(s) to Explore and Understand a Variety of Real-World Issues.
Monday, September 13, 2010
A Penny's Worth
I really like this rant via Freakonomics. It is about the use of pennies in our economy. We should get rid of them, yet they remain. Why is this? The video rants about it.
I am suprised that it costs more to make a penny than what a penny was worth. I never knew ethat it costs so much more money to make a penny, and even a nickel. I think that we cant stop the production of pennys because it is a large part in the American economy. Pennies are nessecary because the cost of goods and services do not come out evenly, for example something might cost 5.46. By not having exact change, our ecomony would be very different. Even though pennies are expensive, we need them. Jessica Catanese
I, too, was really surprised to learn that both a penny and a nickel cost more to be produced than they are worth. While thinking about the use of a penny in my own everyday life I realized that I avoid the use of pennies when buying items. Instead I keep them in a jar at home or a cup in my car until I have 100 (or 200, or 500, etc.) of them and can roll them to be exchanged for a bill. Pennies are inconvenient to keep in my wallet because I use them so rarely that they build up and make my wallet too bulky. As John Green points out, they cannot be used in parking meters or vending machines, so really they do seem like a less important unit to a whole. Statistically, John Green says that (in 2008) it cost over $70 million dollars per year to make pennies and that making pennies also greatly deficits the productivity cost. In my opinion, these are valid reasons to do away with the production of pennies. However, the reality of the situation is that it would probably become more of a hassle for the government to balance out the monetary system than it would be for them to just allow tax payers’ to lose money to production. Also, in terms of opportunity cost, what about the people that would have to be hired to spend time making this new monetary system functional and balanced? Another concern of mine is in regards to fixed amounts that would have to be altered if the use of the penny or the nickel were eliminated—like the sales tax in PA. Clearly, the only way to achieve the 6 cents for every dollar is to either use 6 pennies or one penny with one nickel—which would no longer be possible if these coins were eliminated. So would these sales taxes, along with other fixed rates, need to be changed? Because I don’t think it’s possible for each state to eliminate sales tax on the dollar.
The penny and nickel could absolutely be done away with. However, prices may need to be adjusted for things to work out so that most costs come out to be on the dime, as in $19.90 as opposed to $19.95. Who knows, it may help our country to figure out costs faster, as many of us are terrible at math. I doubt it will ever happen, but it could be possible because who would really be that upset about the end of pennies and nickels anyway?
I also think it is very interesting that a penny costs more than it is worth to make it. Like the guy said we could avoid this by making the penny out of a different material. It is the only coin that is not silver, but is the lowest in value. I do not quite understand that. However, I also agree that we cannot just do away with the pennies, because prices are not even and people would not know what to do. If we adjusted the prices of goods then I really do not think anyone would have a problem never having to use a penny again. I hate all change in general and am constantly trying to get rid of it, so I would love to get rid of something that is costing tax payers so much to make and really worthless to our civilization.
I also was not aware of the fact that the penny is so expensive to make. I don't think that many people, including myself, spend too much time thinking about how much money it costs to make money. It sounds funny but its true. After viewing this rant, I would have to agree with the speaker when he says that it makes no sense for the penny to exist. What are the benefits, other than being able to have the exact amount in change such as 1.56. It may change our system but I think it may be something that we can get used to as time pasts. The benefits will outweigh the setbacks..the biggest benefit is the amount of money that will be saved that can be allocated elsewhere. I'm pretty sure many people will agree with me on that.
Listening too John Grant rant about the uselessness of the penny was quite persuasive. Hearing Grant provide information about how it cost more to produce a penny then what it is actually worth swayed me to his side about losing the penny. Although I also feel like the penny is pointless being that I do not use them, only to save, they are still a measurement of currency. Just like me, im sure their are others around the U.S that save there pennies up to cash them out. If it was a law today that pronounced that all pennies no longer had any value, then that would be like throwing away millions of dollars, the money we are supposed to be saving by losing the penny. I also believe it would be difficult to lose the penny with some local taxes being 7 or 8 cents. If the penny was pronounced dead, then most likely some local taxes would be raised to ten cents, which is not beneficial because people would have to pay more for things. In conclusion I believe the penny is not really worth being U.S currency, but it is will probably more difficult to just get ride of the penny with it countless history in America. Desirae Holland Tuesdays-Thursday 8:00-9:20
This video about the penny and the nickel was very interesting to watch. I had never really thought about how much it costs to actually produce a coin, and was astonished when I found out that it actually costs more than the coint itself. Although I too look at the penny as useless for the most part, I think it would be difficult to do away with. Because of the penny, we are able to make exact change, such as $1.07, and althought we do not need the penny to pay this amount, it makes it much easier for us. After watching this video I could understand both sides of the argument, and really have no stron opinion for the side.
John Grant points out that pennies could potentially be produced with a less expensive metal. I cant see how eliminating the penny and nickel all together would be beneficial because the entire system of exchanging money would have to be altered. In which case, someone would always lose money. So returning to the matter of making pennies with an alternate material, why can't we?
It is an eye opening fact that the cost of making pennies and nickels are higher than their actual worth. It shows a lack of efficiency from those who are producing these coins and more confusion arises when John Green points out that more cost effective material can be used to make these pennies. It seems that the only reason that pennies and nickels are still around is because they are used to compensate for prices of goods and services that do not come out evenly and to collect as much from exchange rates. But those who buy gas know that they usually add another 9/10 of a cent per gallon, so why does a 1/10 of a cent exist? If the government were to get rid of nickels and pennies there would be an immediate effect on income, prices, and the whole process of exchanging money but in the long term it would be more efficient and reasonable to implement a coin system suggested by John Green.
I think it is ridiculous that we pay more for pennies and nickels to be produced than they are actually worth. The man ranting about this notion brings up good points about the use of pennies. I have hundreds of pennies around and never use them on vending machines, or anything else for that matter, since no machine accepts them. I only use pennies when it is convenient for me, which is when I suddenly discover the 2 cents in the bottom of my purse needed for a purchase. I agree that we should do something with our system when it comes to the production of pennies and nickels. The man makes a good point about switching from different metals. When you look at the economy, that $70 million can be used to fund much more needed programs. Some of these would be education costs, helping reduce poverty, putting more money into social programs...the list goes on. It just seems so absurd that we spend so much of our money that really doesn't seem to benefit us. What is more absurd is that this is the first I have ever heard about this problem...it should be more of an issue.
I was really surprised to find out that pennies and nickels are that expensive to make. Of course they're worth something in the economy today, but in the long run it doesn't seem logical to keep producing them. He made a good point by saying we could use more inexpensive materials to make the coins, but even then it doesn't seem to be worth it. I personally just leave pennies lying around until its so excessive that I'm forced to go cash them in somewhere (which also normally costs you..). The money being wasted on the creation of these two coins could be put to such better use in society today, and I think it's strange that no one has made a bigger deal out of it.
This poor man is just a tad bit too stressed out about a simple penny. lol But to be honest after viewing his outrageous video I totally get where he is coming from. The penny holds little value within society today. No longer can we say ... "Every penny counts" because the truth is ... it doesn't. I agree. . . let's just get rid of the ugly brown pieces.
When first reading the description, I thought to myself "How could we possibly argue that we should get rid of pennies and nickels?" but after watching John Grant's rant, I find myself very convinced. I think it would be difficult to adjust to life without pennies. For example, even if every item cost whole dollars or change in multiples of 10 or 25, sales tax (although varied by state) would complicate prices. For example, here in PA sales tax is 6% so if something cost a $1.00, it costs $1.06 after tax, and would not work without pennies. Therefore, I do believe it would be easier to just keep pennies and nickels around, but make them much cheaper to produce so that we taxpayers do not lose money in their production.
I think that the fact that a penny cost more to make then it is actually worth is unreasonable, there must be a way to produce the 1 cent item cheaper. The penny has to stick around and so do nickels it would be weird not have them in our money unit and it would be a difficult change to adjust to. I think the only solution and reasonable thing to do is to use a less expensive material and make the penny for a cheaper price, much less then what it is worth.
I was extremely surprised when I watched this video mainly because I was ignorant to the matters economist John Green spoke of. The fact that amazed me most was when he stated that billions of dollars could be saved annually by stopping the manufacturing of pennies. The worth of a penny has gone down a great amount. It starts from when a penny was worth the amount of a nickel, when Abraham Lincoln was president. He says money exists for manufactures to facilitate the production of goods and services, yet the pennies which are worth 1/100th of a dollar do nothing for them. It costs 1.7 cents to make a penny, meaning $70 million is spent subsidizing them. The point I agree with most is when Green states that pennies cannot be used in local places such as parking meters. When I go to the shore, one quarter equals 15 minutes; would a penny be 30 seconds if it was accepted? I agree with Green after watching this video that pennies are pretty much worthless. If they put a stop to them being produced, billions of dollars would be saved. The only thing that would be missed about a penny is spotting one out that is heads up to turn your bad day around.
I think it's amazing how much money we spend on making...money. I was completely unaware of the controversy behind these two coins. I agree that we should try to change the material that is used to make a penny. It would be a too massive of an adjustment to just cut the penny out of everyday life or even get the overwhelming support to do so. Maybe there is a way that things like vending machines and parking meters can be modified to accept pennies. If we make pennies we might as well put them to work.
I personally feel that the penny is completely obsolete and big waste of time and money for the United States. My one issue is the effect of rounding to the nearest 5 cent. Many people in favor of abolishing the penny say that the probability of rounding up will be the same as rounding down. So in theory no one will be losing or gaining money. However, I believe that businesses are smarter than that. I could foresee many retail stores pricing items so that the final price would round up (increasing profit). Although this might not necessarily be bad for the economy as a whole, it will certainly have an impact on consumers and families. Overall I am in favor of getting rid of the penny, however the consequences may not all be thought out just yet.
I am suprised that it costs more to make a penny than what a penny was worth. I never knew ethat it costs so much more money to make a penny, and even a nickel. I think that we cant stop the production of pennys because it is a large part in the American economy. Pennies are nessecary because the cost of goods and services do not come out evenly, for example something might cost 5.46. By not having exact change, our ecomony would be very different. Even though pennies are expensive, we need them.
ReplyDeleteJessica Catanese
I, too, was really surprised to learn that both a penny and a nickel cost more to be produced than they are worth. While thinking about the use of a penny in my own everyday life I realized that I avoid the use of pennies when buying items. Instead I keep them in a jar at home or a cup in my car until I have 100 (or 200, or 500, etc.) of them and can roll them to be exchanged for a bill. Pennies are inconvenient to keep in my wallet because I use them so rarely that they build up and make my wallet too bulky. As John Green points out, they cannot be used in parking meters or vending machines, so really they do seem like a less important unit to a whole. Statistically, John Green says that (in 2008) it cost over $70 million dollars per year to make pennies and that making pennies also greatly deficits the productivity cost. In my opinion, these are valid reasons to do away with the production of pennies. However, the reality of the situation is that it would probably become more of a hassle for the government to balance out the monetary system than it would be for them to just allow tax payers’ to lose money to production. Also, in terms of opportunity cost, what about the people that would have to be hired to spend time making this new monetary system functional and balanced? Another concern of mine is in regards to fixed amounts that would have to be altered if the use of the penny or the nickel were eliminated—like the sales tax in PA. Clearly, the only way to achieve the 6 cents for every dollar is to either use 6 pennies or one penny with one nickel—which would no longer be possible if these coins were eliminated. So would these sales taxes, along with other fixed rates, need to be changed? Because I don’t think it’s possible for each state to eliminate sales tax on the dollar.
ReplyDeleteThe penny and nickel could absolutely be done away with. However, prices may need to be adjusted for things to work out so that most costs come out to be on the dime, as in $19.90 as opposed to $19.95. Who knows, it may help our country to figure out costs faster, as many of us are terrible at math. I doubt it will ever happen, but it could be possible because who would really be that upset about the end of pennies and nickels anyway?
ReplyDeleteI also think it is very interesting that a penny costs more than it is worth to make it. Like the guy said we could avoid this by making the penny out of a different material. It is the only coin that is not silver, but is the lowest in value. I do not quite understand that. However, I also agree that we cannot just do away with the pennies, because prices are not even and people would not know what to do. If we adjusted the prices of goods then I really do not think anyone would have a problem never having to use a penny again. I hate all change in general and am constantly trying to get rid of it, so I would love to get rid of something that is costing tax payers so much to make and really worthless to our civilization.
ReplyDeleteWhitney Segel
N'keya Peters (Tue, Thur 8am-9:20am)
ReplyDeleteI also was not aware of the fact that the penny is so expensive to make. I don't think that many people, including myself, spend too much time thinking about how much money it costs to make money. It sounds funny but its true. After viewing this rant, I would have to agree with the speaker when he says that it makes no sense for the penny to exist. What are the benefits, other than being able to have the exact amount in change such as 1.56. It may change our system but I think it may be something that we can get used to as time pasts. The benefits will outweigh the setbacks..the biggest benefit is the amount of money that will be saved that can be allocated elsewhere. I'm pretty sure many people will agree with me on that.
Listening too John Grant rant about the uselessness of the penny was quite persuasive. Hearing Grant provide information about how it cost more to produce a penny then what it is actually worth swayed me to his side about losing the penny. Although I also feel like the penny is pointless being that I do not use them, only to save, they are still a measurement of currency. Just like me, im sure their are others around the U.S that save there pennies up to cash them out. If it was a law today that pronounced that all pennies no longer had any value, then that would be like throwing away millions of dollars, the money we are supposed to be saving by losing the penny. I also believe it would be difficult to lose the penny with some local taxes being 7 or 8 cents. If the penny was pronounced dead, then most likely some local taxes would be raised to ten cents, which is not beneficial because people would have to pay more for things. In conclusion I believe the penny is not really worth being U.S currency, but it is will probably more difficult to just get ride of the penny with it countless history in America.
ReplyDeleteDesirae Holland
Tuesdays-Thursday 8:00-9:20
This video about the penny and the nickel was very interesting to watch. I had never really thought about how much it costs to actually produce a coin, and was astonished when I found out that it actually costs more than the coint itself. Although I too look at the penny as useless for the most part, I think it would be difficult to do away with. Because of the penny, we are able to make exact change, such as $1.07, and althought we do not need the penny to pay this amount, it makes it much easier for us. After watching this video I could understand both sides of the argument, and really have no stron opinion for the side.
ReplyDelete-Richelle Lencicki
John Grant points out that pennies could potentially be produced with a less expensive metal. I cant see how eliminating the penny and nickel all together would be beneficial because the entire system of exchanging money would have to be altered. In which case, someone would always lose money. So returning to the matter of making pennies with an alternate material, why can't we?
ReplyDeleteMichael Lam MWF 2- 2:50
ReplyDeleteIt is an eye opening fact that the cost of making pennies and nickels are higher than their actual worth. It shows a lack of efficiency from those who are producing these coins and more confusion arises when John Green points out that more cost effective material can be used to make these pennies. It seems that the only reason that pennies and nickels are still around is because they are used to compensate for prices of goods and services that do not come out evenly and to collect as much from exchange rates. But those who buy gas know that they usually add another 9/10 of a cent per gallon, so why does a 1/10 of a cent exist? If the government were to get rid of nickels and pennies there would be an immediate effect on income, prices, and the whole process of exchanging money but in the long term it would be more efficient and reasonable to implement a coin system suggested by John Green.
Kimberly Flok MWF 2:00-2:50
ReplyDeleteI think it is ridiculous that we pay more for pennies and nickels to be produced than they are actually worth. The man ranting about this notion brings up good points about the use of pennies. I have hundreds of pennies around and never use them on vending machines, or anything else for that matter, since no machine accepts them. I only use pennies when it is convenient for me, which is when I suddenly discover the 2 cents in the bottom of my purse needed for a purchase. I agree that we should do something with our system when it comes to the production of pennies and nickels. The man makes a good point about switching from different metals. When you look at the economy, that $70 million can be used to fund much more needed programs. Some of these would be education costs, helping reduce poverty, putting more money into social programs...the list goes on. It just seems so absurd that we spend so much of our money that really doesn't seem to benefit us. What is more absurd is that this is the first I have ever heard about this problem...it should be more of an issue.
I was really surprised to find out that pennies and nickels are that expensive to make. Of course they're worth something in the economy today, but in the long run it doesn't seem logical to keep producing them. He made a good point by saying we could use more inexpensive materials to make the coins, but even then it doesn't seem to be worth it. I personally just leave pennies lying around until its so excessive that I'm forced to go cash them in somewhere (which also normally costs you..). The money being wasted on the creation of these two coins could be put to such better use in society today, and I think it's strange that no one has made a bigger deal out of it.
ReplyDeleteAlexis Haas TR 8:00-9:20
This poor man is just a tad bit too stressed out about a simple penny. lol But to be honest after viewing his outrageous video I totally get where he is coming from. The penny holds little value within society today. No longer can we say ... "Every penny counts" because the truth is ... it doesn't.
ReplyDeleteI agree. . . let's just get rid of the ugly brown pieces.
Taisje Claiborne
When first reading the description, I thought to myself "How could we possibly argue that we should get rid of pennies and nickels?" but after watching John Grant's rant, I find myself very convinced. I think it would be difficult to adjust to life without pennies. For example, even if every item cost whole dollars or change in multiples of 10 or 25, sales tax (although varied by state) would complicate prices. For example, here in PA sales tax is 6% so if something cost a $1.00, it costs $1.06 after tax, and would not work without pennies. Therefore, I do believe it would be easier to just keep pennies and nickels around, but make them much cheaper to produce so that we taxpayers do not lose money in their production.
ReplyDeleteShannon Lutz MWF 2-2:50
I think that the fact that a penny cost more to make then it is actually worth is unreasonable, there must be a way to produce the 1 cent item cheaper. The penny has to stick around and so do nickels it would be weird not have them in our money unit and it would be a difficult change to adjust to. I think the only solution and reasonable thing to do is to use a less expensive material and make the penny for a cheaper price, much less then what it is worth.
ReplyDeleteJasmin Eales MTW
Jasmin Eales
ReplyDeletei meant MWF...my bad
ASHLEY PESIN TUES/THURS 8-9:20
ReplyDeleteI was extremely surprised when I watched this video mainly because I was ignorant to the matters economist John Green spoke of. The fact that amazed me most was when he stated that billions of dollars could be saved annually by stopping the manufacturing of pennies. The worth of a penny has gone down a great amount. It starts from when a penny was worth the amount of a nickel, when Abraham Lincoln was president. He says money exists for manufactures to facilitate the production of goods and services, yet the pennies which are worth 1/100th of a dollar do nothing for them. It costs 1.7 cents to make a penny, meaning $70 million is spent subsidizing them. The point I agree with most is when Green states that pennies cannot be used in local places such as parking meters. When I go to the shore, one quarter equals 15 minutes; would a penny be 30 seconds if it was accepted? I agree with Green after watching this video that pennies are pretty much worthless. If they put a stop to them being produced, billions of dollars would be saved. The only thing that would be missed about a penny is spotting one out that is heads up to turn your bad day around.
I think it's amazing how much money we spend on making...money. I was completely unaware of the controversy behind these two coins. I agree that we should try to change the material that is used to make a penny. It would be a too massive of an adjustment to just cut the penny out of everyday life or even get the overwhelming support to do so. Maybe there is a way that things like vending machines and parking meters can be modified to accept pennies. If we make pennies we might as well put them to work.
ReplyDeleteCatherine McClendon
TR 8am
Daniel Moore MWF 2:00pm-2:50pm
ReplyDeleteI personally feel that the penny is completely obsolete and big waste of time and money for the United States. My one issue is the effect of rounding to the nearest 5 cent. Many people in favor of abolishing the penny say that the probability of rounding up will be the same as rounding down. So in theory no one will be losing or gaining money. However, I believe that businesses are smarter than that. I could foresee many retail stores pricing items so that the final price would round up (increasing profit). Although this might not necessarily be bad for the economy as a whole, it will certainly have an impact on consumers and families. Overall I am in favor of getting rid of the penny, however the consequences may not all be thought out just yet.