Sep 29, 2009

Goodbye to 1 grosz...

The Polish National Bank (NBP) wants to withdraw from the market in 2 years one and 2 grosz coins (lowest nominal value, equivalent to 1 cent/penny/etc...). According to the Bank, the consumer will not be harmed since, while some prices will be rounded down, others will be rounded up. Marketing specialists, however, for whom a price of PLN 3.99 is a better selling line than PLN 4 due to consumers' framing schema of interpretation, have already started to show concern. Such "price illusion promotions" are so common that the NBP could easily introduce a 0.99 coin.

Undoubtedly, some people will benefit from the change... history has seen many swindlers who made their fortunes on price rounding. For example, consider the famous example from Sweden. When pensions were readjusted to account for inflation, a post office accountant would round up all numbers after the second decimal place, and accumulate them on his private bank account. Moreover, the books didn't show anything, and there were no dissatisfied consumers, since the pensioners received precisely what they expected.

NBP states that last year it produced 172 million 2-grosz coins and 316 million 1-grosz coins, which translates into PLN 24,4 million taken out of the taxpayers' pockets. Not a small sum! However, for me even more puzzling is whether the substential demand for 1 and 2 grosz coins is in fact so largly due to marketing specialists. In March of last year, in an online forum I read about a group of amateur charlatans who wondered whether it pays to collect 1 and 2 grosz coins and sell them as scrap metal. Under the market prices, for 1 kilogram of 1-grosz coins (604 coins) they could earn PLN 4. Not too much, but maybe just enough to make a deal on the price difference...

3 comments:

Pierre-Louis said...

a good reason to abolish cash alltogether...

Lala said...

"The Moneyless World is not an ultimate millennium. We need it now." Steele, 1968

re: abolition of cash, I came across this rather peculiar article from the late 60's ...

http://www.worldsocialism.org/spgb/jun04/smashcash.html

TomasHozik said...

0.99 coin, that's a really cool idea, but I don't think it's theoretically feasible. Money flows in circles. I'm afraid there would be no opportunities to return .99 coins to the consumer...