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“The average rounding is zero, so there is no net bias,” he said.

Prof. Gore pointed out that prices are already rounded, to the nearest penny, and the shift to the nearest nickel is unlikely to make much of a financial difference to anyone, given the randomness problem.

When Israel eliminated the one agora piece, one pharmacy chain turned “salami slicing” on its head by building an advertising campaign around their policy to always round down. Cash registers can be programmed in various ways — to round off to the nearest nickel, round up to the next nickel, or simply cut off the price after two decimals, all of which can lead to a different final price.

If businesses were always going to round their prices up, they would likely need legislative authority to do so, but that is not proposed in Canada and seems unlikely. Instead the federal government has said the rounding must be fair and transparent, to the nearest nickel, whether up or down.

An analysis by Jung Ah Kwon and Simon Thang for KPMG said the question of rounding’s effect on final prices is largely academic, but it did find some fuzziness in the numbers.

“In Ontario, for example, if an item is offered for sale at $1.08 and the business rounds to the nearest nickel, the total including HST will be $1.22 before rounding and $1.20 after rounding. After accounting for $0.14 in HST remitted to the government, the vendor will actually keep $1.06 from the sale,” they wrote.

Prof. Gore praised Canada’s decision to scrap the penny and said the American version costs the country something like a billion dollars a year in lost time making change. He said the mental arithmetic of rounding could also add time to transactions, but that it is unlikely to be as much.

“I also think that some practice rounding is good brain exercise, other than fishing in your pocket for a penny,” Prof. Gore said.

National Post

jbrean@nationalpost.com

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