Just a Pretty Face: Why America Should Get Rid of the Penny

Elli Korn – Honorbound

Richard doesn’t need a gold toilet; it certainly doesn’t save him any money. Quite simply, he prefers a gold toilet to a normal one because he admires its appearance (and perhaps the overall shininess). As Charles Wheelan, economist and author of Naked Economics, explains, “As we grow wealthier, we are often more willing to put aesthetics above the pocketbook.” [1] But while we expect this behavior from our rich neighbor Richard, we certainly don’t expect it from our government. And yet, by keeping the penny, America is wasting money.

In expounding on this issue, pocketbook vs. aesthetics, Charles Wheelan addresses Tuscany and Umbria. He states that while these regions’ traditional farms are not the most economical in this world of corporate agriculture, there is nothing wrong in preserving them. While many think economics might reject this notion, the opposite is in fact true: economics believes in maximizing utility, not income, whatever that utility may be. So, if preserving this culture of small family-owned farms and vineyards brings Italy more utility, than by all means, they should. But while Italy finds value in placing aesthetics over the pocketbook, are Americans willing to make the conscientious sacrifice to preserve the penny if it means a strain financially?

So, the logical question is now: but is it a strain financially? Well, the answer to that is yes. According to the 2014 Annual Report from the U.S. Mint, it costs 1.7 cents – more than a penny – to manufacture a penny [2]. Whenever the mint makes pennies, it actually loses money. Furthermore, despite avid research, the Mint cannot find a way to bring the cost below face value.

In response to this, some argue that the psychological factor of being able to market prices at 99 cents greatly makes up for the loss of money, as it encourages consumers to make purchases. However, the population would easily readjust to cheapest coin’s difference from a dollar. In other words, the nickel could easily replace the penny’s value psychologically, as .95 cents became the new 99 cents.

Essentially, removing the penny would not greatly drain money, in fact, it would keep the US Mint from losing money. So, yes the penny is inefficient, but is that reason enough to abandon it?

The answer is yes. While it is true Americans have no qualms sacrificing income for beauty, their treatment of the penny makes it clear that they do not value its aesthetic enough to outweigh the economic drain.

Some argue that part of the penny’s aesthetic is in its homage to Abraham Lincoln, but America already has currency – the 5 dollar bill – and monuments which pay homage to him. Furthermore, Americans actually take care of the 5 dollar bill, while they simply just leave pennies on the ground.

Moreover, almost every American can appreciate a five dollar bill. No one will be annoyed if you pay with five dollar bills, but once had a friend pay me back $3 in pennies, and I cannot tell you how frustrated I was with the weight of the bag. Not even vending machines take pennies, there was absolutely nothing I could do with them.

If we were to value the penny aesthetically, we would not be aggravated by it, which means that preserving the penny is simply wasteful, both financially and aesthetically.

Photograph: Bill that Mandates Medicaid Pay Reimbursements in Pennies Passes House, June 22, 2016, https://firstworldem.com/2015/02/28/medicaid/

[1] Charles Wheelan, Naked Economics: Undressing the Dismal Science. (New York: W.W. Norton & Company, 2008).

[2] Livingston, Amy. “Should We Get Rid of the Penny? – 8 Reasons to Keep It vs Eliminate It.” Money Crashers. March 25, 2016. Accessed June 22, 2016. http://www.moneycrashers.com/get-rid-penny-reasons/.

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