Market News: 4/08/2019Submitted by Executive Wealth Management on April 10th, 2019
Recently, the international market research firm YouGov surveyed Americans about their daily financial habits. One interesting data tidbit was that over 55% of the respondents said that they stop to pick up pennies that they find lying on the ground. Is this a wise activity to undertake when all factors are considered? Well, let’s try an analysis.
One approach is to look at the monetary value of the time invested in picking-up the coin and compare that to the value of the newly pocketed penny. For example, a person who makes an hourly wage of $36 earns exactly one cent per second. So any workplace diversion that lasts more than a second but results in only a penny gain would be an overall loss. The chart below shows the break-even line between profit and loss for procuring a penny at various hourly wages.
However, this type of analysis certainly has flaws. No one spends all of their waking hours working, and what if we pick up pennies during our free time? Well, then we could look at the problem from a scientific perspective. It takes energy to bend over and grab the penny, roughly 0.5 calories for a person who is 6-feet tall and 170 lbs. That energy needs to be replenished by food, the cost of which has to be factored into a calculation of profit. Information on the calories per dollar cost of food can be found online, so we can easily discover that if a person eats exclusively donuts their overall profit per pickup is 0.90 cents, while if they nibble on organic raspberries they would be losing over –0.95 cents per pickup. (Refined sugar is one of the cheapest sources of energy available in a supermarket.) So anyone following this line of thinking would necessarily spend their free time searching for pennies while they devour donuts. Of course, there could be some long-term health ramifications for this strategy that are unaccounted for.
Finally, one could claim that regardless of the granular economic or thermodynamic pros or cons of penny pick-ups, the habit itself helps instill in a person an appreciation for money that maybe difficult to quantify but that would be expressed in larger, more important transactions. So we have seemingly arrived at a paralysis by analysis. However, there is an important point to remember: all our actions, financial or otherwise, involve trade-offs. There are no free lunches, or free pennies. And while a comprehensive calculation of the opportunity costs may be migraine-inducing, they should always be given at least some consideration. Heck, we didn’t even factor in the good luck that comes with picking up a penny.