Sunday, March 03, 2013

Post Penny Inflation Spike?

Economists say no,  but as I drink my McD's coffee this morning at the community centre, I must say I've been noticing a lot of "rounding up", and not too much in the way of "rounding down".


Matthew Day said...

Lol, simple mathematics at work? 60% of all transactions will be rounded up, not down. (3 ruunds up to 5, 8 rounds up to 10). A tiny tweak in pricing stock... Doesn't matter when buying a car, but you can bet that every dollar store is reaping a bonanza.

Paul Raposo said...

That's what this was all about--burning the consumer, and putting more money in the pockets of business. Will voters punish the CPC for this during the next election? Doubtful. said...

Simple monetary policy shows eliminating the penny will increase inflation, even I it is minutely. Since we were minting money that cost more than its face value, we were actually causing slight deflation (at least in regards to the penny), in stopping the practice we have ended any deflationary impact and thus increased inflation proportionately.

crf said...

I Don't quite understand your math Matthew Day.

1,2 rounds down 3,4 rounds up 6,7 rounds down 8,9 rounds up.

If there is equal probability of your bill containing any digit, you're no more likely to have it rounded up rather than down.

I don't know the probability of your bill containing any digit. It might matter what the tax rate is applied, if any.

I checked google quickly about this precise question, but I couldn't find anything about it. "What's the most likely digit in the hundredths of dollar place on a receipt?"

It isn't the famous Benford's law, but I guess it is a similar question. However, because tax rates may result in fractions of cent then being rounded to nearest cent, it might be expected, by Benford's law, that the digit 1 would be the most frequent terminal digit on a bill. And then this would be rounded down to 0 at the till. But that's not the whole story, since other factors than rounding are at work.

So my best guess would be that we are already ahead of the game. We're likely saving money. Tiny fractions of a cent per arbitrary transaction. Hooray.

Maybe Bob MacDonald can ask a mathematician about this?

Holly Stick said...

I cashed a cheque for $70.31 at my credit union and they would not give me the penny, but if I had deposited it in my account they would have included it.