A UBC student tackled the topic of penny-rounding in Canada by asking the question, “Will rounding on groceries benefit retailers or consumers?”

Study: penny rounding profitable

Typical grocery store receives an additional $157 per year

According to a new study by a UBC student, a typical grocery store in Canada receives an additional $157 in revenue per year from penny-rounding.

The author of the study is Christina Cheung, a third-year dual degree student in economics and combined mathematics and statistics.

Cheung tackled the topic of penny-rounding in Canada by asking the question, “Will rounding on groceries benefit retailers or consumers?”

“When you go to a grocery store, most of the prices end in nine, which means when we round things the prices might actually round up,” she explained.

Her findings show that penny-rounding imposes a tax of $3.27 million Canadian dollars from consumers to grocery stores on a yearly basis in aggregate. Her research applies only when buying one or two items at a time; she found that three to 10 items have no rounding effect.

Cheung worked on the paper during her second year as a passion project outside of class, spending hours gathering data over winter break with the help of friends.

She chose to study grocery items since they are consumed universally, and therefore capture the entire population’s spending habits and preferences. Her research used over 18,000 price data, collected manually from three Canada-wide grocery store chains.

Cheung took first place in the International Atlantic Economic Society’s Best Undergraduate Paper Competition at their Montreal conference this October. Her winning paper, ‘Eliminating the penny in Canada: an economic analysis of penny-rounding on grocery items,’ will be published in a future issue of the Atlantic Economic Journal.

In 2012, the Canadian government announced it would phase out the penny from Canada’s coinage system. The decision to phase out the penny was due to its excessive and rising cost of production relative to face value, the increased accumulation of pennies by Canadians in their households, environmental considerations, and the significant handling costs the penny imposes on retailers, financial institutions and the economy in general.


 

@flavio_nienow
newsroom@ldnews.net

Like us on Facebook and follow us on Twitter.

Just Posted

RedRover talks animal care

Nicole Forsyth, Executive Director of RedRover, spoke in the Burns Lake Public… Continue reading

Alternative arts fest at LDSS

Lakes District Secondary School held its Alternative Arts Festival on May 28.… Continue reading

Smithers man receives two-year sentence for fatal car crash

Over a year after a fatal crash, a Smithers man has been sentenced to two years plus a day in jail.

RDBN opts to join entrepreneur immigration pilot scheme

The Regional District of Bulkley-Nechako (RDBN) will back a candidate under the… Continue reading

Ultrasound for Burns Lake hospital possible, Northern Health says

Northern Health is considering the possibility of bringing ultrasound services to the… Continue reading

10 facts about Father’s Day

Did you know that the special day for dads was first celebrated in 1910?

B.C. VIEWS: When farmland protection doesn’t protect farmers

Secondary residences aren’t mansions, families tell Lana Popham

Bombers down B.C. Lions 33-23 in season opener

Former Lion Andrew Harris leads Winnipeg with 148 rushing yards

Northern B.C. family remembers murdered Indigenous woman with memorial walk

Still no closure for Ramona Wilson’s family 25 years later

B.C. university to offer mentorship program for former youth in care

Students using the provincial tuition waiver program will soon be able to form a community at KPU

Cyclists competing in one of the toughest bike races on the planet pass through Fernie

Divide riders looking strong as they finish first leg of 4160 km race

You might not know these B.C. records are public

Hired a lawyer to file a civil claim? Those are published online

B.C. bus driver loses case to get job back after texting while driving full bus

An arbitator ruled that Tim Wesman’s phone usage was a “a reckless disregard for public safety”

B.C. Interior First Nation family ‘heartbroken’ over loss of young mom

RCMP have released no new information since the June 8, 2019 homicide

Most Read