End the Penny

People have a goofy emotional attachment to coinage...particularly the pretty much useless penny. Therefore it is good to read this article from the New Yorker. I just wanted to clarify something. The statement made:

...eliminating pennies would increase our reliance on nickels, which now cost almost ten cents to manufacture and so generate even more negative seigniorage, per coin, than pennies do.

is just flat out wrong. There would be almost zero increase in nickel usage, and what increase there would be would be necessarily less than the increase in dime and less still than any increase in quarter use. Its actually pretty simple statistics.

Completely random coin gathering would yield a ratio of pennies:nickles:dimes:quarters of 5:1:2:3.75 if you remove pennies from the list the ratio would be 1:2:3.75 (n:d:q). In a given handful of change eliminating the 4 pennies may mean you get an extra nickel, but it could mean you get an extra dime, which would mean you lose a nickel, or you could get an extra quarter and lose two dimes...it could also mean that you end up at an even dollar and lose ALL coins from change. The real kicker is that if all merchants were to round up you wouldn't even see the occasional shifts mentioned above: 96c back would become 95c and 39c back would become 35c...the exact same non-penny change.

It seemed an odd thing to get so very, very wrong.