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Daily Archive September 30th, 2011

Dollars and cents: How are you at estimating the total bill?

Filed in Ideas ,R
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When estimating the cost of a bunch of purchases, a useful heuristic is rounding to the nearest dollar. (In fact, on US income tax returns, one is allowed to omit the cents). If prices were uniformly distributed, the following two heuristics would be equally accurate:

* Rounding each item up or down to the nearest dollar and summing
* Rounding each item down, summing, and adding a dollar for every two line items.