Dollar Coin vs. Dollar Bill
Posted on 2013-06-20 16:55 in Blog
Every few weeks I run across someone stating we should eliminate the dollar bill and transition over to the dollar coin. The stated claim is it will save the government (and tax payer) money. The counter argument always being the American public has consistently rejected the dollar coin in past attempts.
I must admit I sit on the side of the fence in favor of making the switch.
What is the life-time cost difference between the paper dollar and the coin dollar?
| Coin | Value | Production | Life Expectancy | Life-time Cost (per year) |
|---|---|---|---|---|
| Penny | 1¢ | 2.00¢ | 25 | 0.08¢ |
| Nickel | 5¢ | 10.09¢ | 25 | 0.40¢ |
| Dime | 10¢ | 4.99¢ | 25 | 0.20¢ |
| Quarter | 25¢ | 11.30¢ | 25 | 0.45¢ |
| Half-Dollar | 50¢ | No Data | 25 | Unknown |
| Dollar | $1 | 21.11¢ | 25 | 0.84¢ |
| Bill | Value | Production | Life Expectancy | Life-time Cost (per year) |
|---|---|---|---|---|
| One | $1 | 5.40¢ | 5.9 | 0.92¢ |
| Two | $2 | 5.40¢ | No Data | Unknown |
| Five | $5 | 9.80¢ | 4.9 | 2.00¢ |
| Ten | $10 | 9.00¢ | 4.2 | 2.14¢ |
| Twenty | $20 | 9.80¢ | 7.7 | 1.27¢ |
| Fifty | $50 | 9.80¢ | 3.7 | 2.65¢ |
| Hundred | $100 | 7.80¢ | 15 | 0.52¢ |
On the surface, dollar coins are cheaper, 0.84¢, over their lifetime when compared against dollar bills, 0.92¢. However, the apparent different is very minor. This difference grows if the life expectancy of the coin is increased. Some non-government estimates place the life expectancy between 30 years (0.70¢) all the way up to 50 years (0.42¢). I lean more towards the fifty year number as I routinely see (and spend) coins from the 60’s and 70’s which are still in usable shape (denomination and mint year are both clear).
In order to facilitate the shift from paper to coins, the government would need to stop printing paper dollars. As the old bills wear out and are removed from circulation, the use of the coins would begin to grown and would become common place. Otherwise, the “sock drawer effect” would prevent the high level of circulation desired resulting in yet another failure to move to the dollar coin (Susan B Anthony, Sacajawea, Presidential Dollars.
To support the end goal of moving towards dollar coins, I do my part by actively spending dollar coins when buying cheap items (coffee, lunch at work, ice-cream).