The U.S. Mint makes billions of new one-cent coins every year—more than any other denomination. But the penny costs more than its face value to produce.

Like my graduate school advisor Greg Mankiw, I am for the abolition of the penny. This Wall Street Journal article gives good reasons why. If you hit the paywall, googling the title like this jumps over it. 

The problem with pennies isn’t just the cost of producing them, it is the extra time it takes to handle them. My former student Ed Knotek provides some evidence that there are costs to non-round transaction amounts in this paper. (There is no problem with individual items having non-round prices, if the total transaction amount rounded off. Ed’s evidence is that items that are often purchased individually, rather than as part of a basket, often are given round prices. Establishing that it is legally OK to round off transactions amounts to the nearest or next nickel is what getting rid of the penny is all about.)