Comment by jacobgkau
4 hours ago
> Basically, if something is $1.01 or $1.02, you round down. If it's $1.03 or $1.04, you round up.
So everything's going to be $1.03 or $1.04. Not sure why you think retailers (or any sellers) would ever, ever, ever let this play into customers' advantage.
But apparently pointing out that obvious truth makes me a "moron," because you can think of some clever ways to get around it that retailers surely won't work around.
If you buy two things at $1.03 or $1.04, it's $2.06 or $2.07 and rounds down to $2.05 more often than it's $2.08 and rounds up to $2.10. That's not "some clever ways." That's so basic it's absurd. They don't know how many things you're going to buy. They don't know how many things anyone is going to buy. There's no way to game the entire system for every combination of things people might buy.
Never mind this: When was the last time you bought something in person, in cash, and bought only one thing? Just think it through for a second.
> They don't know how many things anyone is going to buy.
They have historical data, so they know on average people buy 5 things, and they will have data on what impact on purchasing behavior the changes have. Most likely they will tune for increased volume as people spend more to avoid losing a couple of cents.
> Most likely they will tune for increased volume as people spend more to avoid losing a couple of cents.
Why would they ever tune for that? “Uh oh, turns out customers are intentionally spending more money!”
I don’t understand how this same train of thought comes up every time eliminating pennies is raised. This whole train of thought collapses if you consider the scope we’re talking about (literally a couple of cents max per transaction) and how stores actually behave today. Stores are happy to drop a couple of pennies to make prices look better. But in this hypothetical world stores are going to calculate the optimal prices to round in a way that rips off customers for a couple of cents. This makes no sense. They give up a penny on nearly every item today for the sake of “pretty” prices.
Edit: Oh, I see you’re arguing that they would tune to encourage spending up to “save” the couple of cents, rather than retuning in response to the hypothetical increased spending. No doubt they would like to do this. I doubt they actually would because this is not trivial and it would require ruining the pretty prices.
If there is no rounding down, it could amount to more.
Hypothetically if you incur 10,000 transactions per year with the max rounding up of $0.04 per transaction, you're out $400.
This doesn't make a huge impact to individuals, but it absolutely will to large volume businesses.
For large volume businesses, $400 / year is what we usually call.. a rounding error.
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You’re arguing about nonsense scenarios. Hypothetically every business could also tack a “convenience fee” of $20 on every purchase like TicketMaster and make 200k off this imaginary customer.
Also even if a business rounded up every transaction, the expected benefit is 2 cents per transaction vs fair rounding, not 4 cents.
But there would be rounding down, so how is this relevant?
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> Never mind this: When was the last time you bought something in person, in cash, and bought only one thing? Just think it through for a second.
"In cash" is entirely separate from the rounding debate and is just the "people use cards, anyway" argument. It's not relevant to this discussion. This discussion is about cash. I do buy single items at stores sometimes.
> If you buy two things at $1.03 or $1.04, it's $2.06 or $2.07 and rounds down to $2.05 more often than it's $2.08 and rounds up to $2.10.
Where's the law preventing stores from imposing an accounting fee for multi-item purchases, conveniently totaling a few cents?
> Where's the law preventing stores from imposing an accounting fee for multi-item purchases, conveniently totaling a few cents?
Where’s the law preventing someone from doing this right now? I don’t think this cynicism is justified.
Similarly, if places are willing to price stuff at $1.03 for the few extra cents they’ll collect some of the time, then they can just raise prices on 99c items right now to $1 to collect the extra cent, which they don’t do because such prices have a psychological effect on the consumer that outweighs the small gain.
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Are we pretending that nobody has ever tried phasing out smaller denomination currency, and that we don’t have a vast body of actual case studies to draw from? Why are we running thought experiments at all?
Americans like to pretend that history and the experience of the rest of the world doesn't exist and that things that large numbers of other countries have done successfully (and which even the US has done in the past, in this case, as the half-penny, after all, was phase out a long time ago) are impossible to do successfully.
Sales taxes as they are known in the US were largely introduced in the 20th century. The half-penny was phased out in the mid-19th century.
The legal structure of sales taxes in the US present some unique challenges that simply don't exist as problems that needed to be solved in other countries. These problems can't be legislated away because the authority to do so is highly decentralized. Pretending that these problems don't exist because they don't exist elsewhere is not helpful.
This is very much a case of the Mencken quote that for every complex problem there is a solution that is simple, obvious, and wrong.
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As others have pointed out, governments sometimes issue actual guidance on how it's supposed to work when they phase out currency. It's not always "just stop making them and see how the market deals with it."
> It's not always "just stop making them and see how the market deals with it."
On the other hand, we’ve been delaying this inevitable and necessary action for decades over hand-wringing about the implications of rounding up or down by a maximum of two damn cents per transactions _for decades_. If we did it “the right way” I’m sure it would take years and years and cost millions of dollars to “study the effects” of eliminating the penny. Just do it already. Even with the best plan in the world people are going to whine about rounding.
It makes no sense to spend more money to mint the actual money, then the money is worth OK. You might not like it, but something has to be done because to continue in a slow and methodical process 1) forgets that the government is the same entity that runs the DMV 2) people love to throw out criticisms of solutions that aren’t perfect not realizing that it’s still better than the status quo. To do nothing is costing money or in the case of Ukraine it’s costing lives. 3) I bet you $100 You don’t like Trump.
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but then you buy 2 things, and it's $2.06. round down! or you buy 4 and it's $4.12. round down!
it'll come out in the wash. there are much bigger things to worry about.
You attempt that at my store. To help ensure my business is sustainable in these hard times (/s), I'm imposing a "multi-item order" fee at my store. Now what?
Now your customers go and shop at a store that isn't cartoonishly customer-hostile. Now what?
If you seriously think that's realistic I guess I don't know what to tell you.
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This is nonsense. No store is going to charge a multi item fee so that they can try to scrape an extra penny off their customers. As someone else’s already pointed out, they could just do this today if they believe their customers will accept it. Did you forget that stores can just raise prices?
Your premise that stores will find a way to force rounding up is nonsense. It’s nonsense because stores aren’t actually going to do it, but also because we’re talking about *pennies*. Oh, no. The store ripped me off for 2 cents. How will I survive?
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The experience of other countries that have actually implemented this (see: Canada) demonstrates that this is not actually a problem.
What's stopping you from doing it now ?
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Now people stop shopping at your store.
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> So everything's going to be $1.03 or $1.04.
Rounding would apply on the total transaction, not individual items (because otherwise the individual posted item prices would just be false.) So, if there is an abuse route with round-half-down, it is that optimizing buyers would structure purchase to always total $x.01 or $x.02, possibly splitting planned purchases into multiple purchases to achieve that.
But even that isn't realistically a significant issue.
What percentage of people live in a jurisdiction without a sales tax? In my local area, sales tax is 8.8%. And if you take the bridge across the river, tax is 8.9%. So there is already rounding involved, $1.03 becomes $1.12167. Unless of course you bill also includes a mix of taxable and non-taxable items like food, etc..
In practice most items are x.99 anyway.
Sales taxes already result in rounding, which the store could try to take advantage of. They never do. They set prices to end in 99 because it's psychologically more attractive. That will most likely continue. If they're required to price in multiples of 5, we'll see prices ending in 95.
Unlikely that stores would be required to price in 5 cent increments. That would presumably require legislative action and would fly in the face of gas stations today pricing with fractional cents.
But yeah, this isn’t a real issue regardless.
Sales tax gets applied first.
Sales tax rates aren't secret. Stores can set their prices with it in mind. Consumers are far less likely to have sales tax rates memorized and to go through the trouble of checking how things'll work out from the sticker price before they get to the register.