Price Rounding Experiment

Two years ago, I got caught up in the debate to abolish the penny. One of the suggestions proposed by the anti-penny camp is to adopt Swedish Rounding, a method by which cash purchase totals are automatically rounded to the nearest five cents. Sweden, Finland, the Netherlands, Hungary, Australia, and New Zealand already use this method.

But Americans don’t trust price rounding, claiming that it will end up costing them cumulatively over several purchases. Statisticians say nay, but I wanted to find out for myself just what the net effect of Swedish rounding would be to me.

For the next two years, I attempted to save every receipt of my transactions, cash or credit. I wasn’t able to save every single one, but hopefully 345 receipts I have provide a large enough sample size to accurately reflect my purchasing trends. I tossed every receipt whose bottom line ended with five or zero, the two values that are not rounded. For the rest I tabulated the Swedish rounding adjustment (+/- 1 or 2 cents), and then added the pluses and minuses together to get the net result.

If prices in the US were subject to Swedish rounding, it would have cost me 26 cents over the last two years. That’s an average of -$0.000754 per transaction.

Let’s extrapolate!… 13 cents a year times 300 million US citizens = $39,000,000 for all US citizens per year. Where would that money go?

You can play along at home. Go through your credit card statements, and track your individual charges as they appear. Round and tally, and see for yourself what Swedish rounding would have done to you.

Of course, this all assumes that merchants would not change their prices if Swedish rounding were instated. Do you trust your merchants not to arrange prices in your favor? Would we still see such psychological pricing tactics like "$5.95" instead of "$5.99"? I’d much prefer to see merchants price their wares in such a way that the final price including tax came to an even dime every time. Merchants, if you hate pennies, the power of change is in your hands.

But if we’re going to eliminate the penny, we should simply abolish the cent as a subunit of the dollar, with the dime becoming the new smallest unit. Less and less is the hundredths of a dollar still relevant. On a day to day basis, I think we’d all be content with tenths of a dollar alone. No more pennies or nickels would be needed, but we’d need a new 20 cent coin in place of the current quarter. (The mill, one tenth of a cent, has been the smallest unit all this time, but is only seen on gas price signs. Why does it persist there when it has vanished everywhere else?)

There is one hurdle to doing this. The current law says that sales tax will be collected to the nearest $0.01. This may explain why retailers don’t round prices already. Are sales tax laws forcing the hand of merchant to use cents in change?

I’ve already discussed the possible ongoing demise of the cent here. As a coin collector, I’d hate to see the penny, or any other coin, disappear, but such is the forward inertia of progress. It still sucks that the devaluation of the US dollar has rendered our smaller coins into a nuisance.

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Nifty Wikipedia Thing: the humble utilitarian test pattern

Movies I’ve Seen:

Wall*E ~ The most thought-provoking G-rated movie I’ve seen in years. I walked out of the theater talking about transhumanism, automation, the politics of WalMart, behavioral adaptation, and recycling, just to name a few topics. Strongly recommended!

What I’m Reading:

"Atlas Shrugged" by Ayn Rand (30.3%)

"Dave Barry is From Mars and Venus" by Dave Barry

Four Travels

I have four excursions to report for the previous month.

First, there’s my week-long trip to Indiana. This was a social call, to visit my parents and attend my father’s second marriage, but I was able to show Evelyn many neat sites in the area that I’d grown up around. We "did the tourist thing" in Shipshewana, a small town with many country arts & crafts stores inspired by the local Amish community. Evelyn appreciates the Amish, especially their pragmatic work ethic and focus on productivity. "If only the rest of the country were as useful," she sighed. I’ve always wanted to be a time traveller, and Evelyn says that’s because I grew up in a time warp, a part of the country where you can still find hitching posts and soda fountains.

We also biked to the Indiana Historical Radio Museum, which was a short but neat visit, and to see the town’s once-prosperous synagogue. (Ligonier once had one of the state’s most active Jewish communities.)

We visited the Elkhart County Historical Society museum, one of the sites that fell under my father’s domain during his 24-year position as chief ranger of the county parks. Rarely do I get to say that somthing from my childhood was bigger than I remember it, but "Rush" fits the bill. Every nook and cranny of this building had some century-and-a-half-old thing in it, like grandma’s attic writ large. There are far more artifacts on display here than I remember there being 15 years ago. I guess the curators have been hitting lots of estate sales and flea market auctions. I have an interesting mental connection to this building, a former high school. The backstory would make an interesting future post, but I suspect this ones’s running lengthy enough, so I’ll save it for later. Ask me about "Rush", "keyhole", and "The Prisoner" and you’ll hear all about it.

I thought Evelyn would enjoy Goshen’s rehabilitated Old Bag Factory, which used to make shopping bags, sacks for fruit, and even those little flags inside Hershey’s Kisses (it was news to me!). Since then, the OBF has been settled by artists, woodworkers, potters, and restaurants, making it the Greenwich Village-esque artisan community of Goshen. Evelyn and I were very engrossed by an 1890s wall-mounted hand-cranked drill press.

We went on a 20-mile bike ride, getting ambushed by rain during the second half, making it the best ride ever. And of course, Dad’s wedding was wonderful, calm, and casual.

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The next weekend found us on a trip to Baltimore Inner Harbor, to visit the museum ships that I’ve wanted to see since I moved to northern Virginia. The USCGC Bertholf, the Coast Guard’s new cutter, was in town, and is related to some of my projects at work, so I made it a "professional development" excursion, focusing in on aspects of the ship that I frequently work with. Also in the harbor are the Pearl Harbor survivor USS Taney, the WWII avenging submarine USS Torsk, the lightship Chesapeake, and the landed Seven Foot Knoll lighthouse. We saved the USS Constellation, an 1850s sail warship, for a future visit, and we’ll have to come back sometime for the Baltimore Aquarium.

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In recent years past, our attempts to do patriotic things on the Fourth of July, Evelyn’s favorite holiday, have ranged from picnics to bike rides, but we’ve often felt that enthusiasm and patriotism have been lacking. Despite being near the nation’s capital, it seems the entire area just uses July 4 for grilling and fireworks (unless of course you want to brave the Cordoned Off Security Zone of Doom to get through the thick crowds at The Big Events in downtown DC, which we’re not keen on). We’re both small-town raised, and prefer community things like parades, ice cream socials, and brass bands in the park.

After years of trying to find a satisfying Independance Day activity, we’ve settled on a new tradition… visiting the homes of Declaration of Independance singers on the Fourth! To kick the new tradition off, we started with the author himself, Thomas Jefferson’s home, Monticello (see today’s photo). Tom, you’re place is packed with books… nice! And I liked Jefferson’s innovative additions: the interior/exterior clock that was wound only once a week, the wind direction indicator in the ceiling, the wine dumbwaiters built in the fireplace mantle above the wine cellar, the beds mounted between rooms. It made me appreciate Jefferson the Engineer, a man who loved using science to make life more comfortable. If here were alive today, I’m sure Tom would be thrilled by indoor plumbing, air conditioning, electric lighting, and Wi-Fi. We picked several handfuls of cherries from his orchard.

For scheduling reasons, our Monticello sojourn was on July 3rd. President Bush was going to give a speech there the next day, and Tom’s backyard was filled with folding chairs. On the Fourth itself, we were on the road to Long Island. We picked Larry up from the airport, visited more family, then went in search of colorful explosions. We found a workable spot in the parking lot of a P.C. Richards, from where we could see several nearby fireworks shows at once in a big panorama and inhaling the surrounding cloud of black powder smoke, the smell that tells you it’s Independance Day. I used the car’s CD player to entertain us with Boogie Woogie Bugle Boy and Johnny Horton classics.

For family, I direct your attention to the new photo gallery, containing pictures I took at Florence’s 90th birthday party (her first!). This is a temporary gallery, so pass the word along to other family while it lasts.

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Nifty Wikipedia Thing: Demographics of Antarctica

Webcomic of Note: Lackadaisy

Movies I’ve Seen:

Iron Man ~ "Leave it to the engineers to want to see Iron Man," said Marty

What I’m Reading:

"Atlas Shrugged" by Ayn Rand (27.9%)

"Boogers are My Beat" by Dave Barry