Stop Making Cents: What We Lose with the End of the Penny

Will things ever add up again? Some people are asking that question after the last penny was recently struck at the U.S. Mint in Philadelphia. The United States government started producing pennies in Philadelphia in 1793, when the city was the nation’s capital.

U.S. Treasurer Brandon Beach said the change would save taxpayers $56 million as he stepped up to the coin-press machine that would strike the final one-cent coins. And, with a flourish, Beach pushed the button on the penny-making press for the last time.

President Donald Trump ordered the cancellation of penny production after the coins started to cost about four times more to make than the one cent it is actually worth in U.S. currency.

The penny’s detractors had long argued it was an obsolete denomination with little use in modern markets. Other advocates for the end of the penny note that it can still be used as legal currency, billions of pennies remain in circulation, and these existing coins will tide Americans over for the foreseeable future.

Wendy Woloson, professor of history at Rutgers University–Camden, said the story of the penny is a part of American culture. “Many of us grew up with a penny jar in our households as a way to help make ends meet,” Woloson said.

“It was once linked with the fun of penny candy, and today it’s the penny tray on some shop counters that represents a small but important social contract,” Woloson continued. “That ‘take a penny or leave a penny’ gesture is humanizing.”

Woloson wonders what is gained by ending the production of pennies. “The penny could buy a treat, or they could be saved to buy a gift for a special occasion,” she said. “As a culture, we are losing something, and that loss is likely to be significant.”

She asked how the most vulnerable are being impacted, especially as consumers are increasingly encouraged to use digital payment options. “Sure, a pocketful of change can be a nuisance,” Woloson said, “but if we no longer have that change to give to those who are unhoused and may benefit from those coins, how are we affecting them? If we can’t, with goodwill, spontaneously give away our spare change, who do we become as a society?”

Robert Schindler, professor of marketing at the Rutgers School of Business–Camden, whose research focuses on price endings and numeric information processing, said the importance of the penny in marketing arose from the very common practice of setting a price one penny below a round number, such as $4.99 rather than $5. 

“This practice has been widespread across many product categories in various countries and has been going on at least since the late 19th century,” Schindler said. “The use of the penny in pricing, particularly when it lowers the leftmost digit in a price, creates the impression of a lower price. Seeing $29.99 rather than $30 matters to people. You even see, for example, the finishing times of marathon runners peak just below round-hour amounts, suggesting that they put in an extra effort to experience the satisfaction of a lower left digit in their measure of performance.”

Schindler believes that if “penny-below pricing” does tend to give prices a lower feel, then he would expect the practice to continue, even without the penny. 

“In those relatively rare instances when pennies in change would be needed, the charged amount could be rounded off to the nearest 5-cent point,” Schindler said.

Australia and New Zealand stopped producing pennies in the 1990s, as did Canada in 2012; yet, penny-based pricing is still used in these countries, Schindler said.

He added that consumers should be able to rely on fair and honest pricing—and it is critical that both the buyer and the seller come out of a commercial exchange better off.

“Let the buyer beware” is always sound advice, because, after all, no one wants to end up penniless.