Image: Pennies © Corbis

Next time you feel like giving someone your 2 cents, you won't need more than a penny. That's because when you factor in materials, manufacturing costs and overhead, it took 2.4 cents to produce a single Lincoln cent last year, the U.S. Mint says.

Those nickels hiding in your sofas and purses are pricey, too. It cost roughly 11.2 cents to make one U.S. nickel -- like the penny, more than double the coin's face value.

Critics suggest it's time for the Mint to start pinching its pennies. A bill before Congress would mandate a switch to a cheaper metal -- steel -- for pennies and nickels.

And that bill doesn't go far enough for some critics. They'd like to see the U.S. scrap pennies altogether, as Canada decided to do last week. Canadian pennies had been costing the government 1.6 cents each to produce. (Read "Canada kills its penny.")

Other U.S. coins are cheaper in comparison to their face values. For fiscal 2011, production costs per coin were:

  • Dime, 5.7 cents.
  • Quarter, 11.1 cents.
  • Dollar, 18.0 cents.

Despite the overall cost of production, the metal in today's U.S. penny -- 97.5% zinc and 2.5% copper -- is worth barely half a cent. The metal value of a nickel, which consists of 75% copper and 25% nickel, is about 5.5 cents.

Do you have pre-1983 copper pennies in your change jar at home? The metal in those coins is worth about twice their face value, which is why today's pennies are only copper-plated.

But don't get any ideas about melting down your loose change. The Mint says that's illegal, and the penalty can be as high as five years in prison and a fine of $10,000 (that's 1 million pennies).

Ironically, these symbols of America are made from non-American materials. The imported metals are one reason the coins are expensive to produce, says U.S. Rep. Steve Stivers, R-Ohio, who introduced the bill to switch to steel coins. The Obama administration, meanwhile, has asked Congress to give the Mint the flexibility to use cheaper materials.

If Congress does act, it could save U.S. taxpayers plenty.

"We could save taxpayers an estimated $433 million over 10 years in production if we moved to using steel instead of nickel and copper in nickels and pennies," Stivers says. "Plus, the U.S. could see a $4 billion profit from recovering the nickel, zinc and copper from old coins currently in circulation."

Canada's Royal Canadian Mint already has made the switch to steel. Most Canadian coins have been more than 90% steel since 2000.

William Butler Yeats' fans need not worry: His beloved brown penny would still look the same.

"We could dip pennies made of steel in copper to mimic the current look," Stivers says. And there "wouldn't be a noticeable difference in the look of the nickel."

But not everyone is sold on steel. Stivers and Robert Whaples, a Wake Forest University economics professor who has published papers about the nation's costly coins, say the vending-machine industry isn't buying the change.

"Some vending machines still take nickels. And because the machines' technology measures coins based on weight, vending machines would have to upgrade their technology to adjust to the change in weight of a steel nickel," Whaples says. "But those costs would be minimal compared to the savings of switching to steel."

Getting rid of the penny would be an even better move, Whaples says.

Should the penny be pitched?

Some consumers worry that eliminating the penny would encourage stores to round up, increasing prices across the board. But Jeff Born, a professor of finance at Northeastern University in Boston, says doing away with pennies wouldn't have such a negative ripple effect.

Born was living in Fiji when that country stopped producing pennies. Merchants, however, maintained a "penny mentality" to price individual items, but then consumers' final bills were rounded. "Bills and purchases ending in 1 or 2 were rounded down to zero, which meant the store lost a few cents. Prices ending in 3 or 4 were rounded up, and the store gained a few cents," Born says.

Click here to become a fan of MSN Money on Facebook

Whaples' research, published in the Eastern Economic Journal, says merchants would round down more than they would round up. "Contrary to consumer concerns, consumers would not be gouged . . . if we did away with pennies," he says.

"We would see a move toward prices ending in zero, which would be good, because there are lots of folks in marketing who believe that $3.68 and 9/10 cents for a gallon of gas seems cheaper than $3.69," Born says. "Stores could always keep the penny in pricing without having the actual coin, because the penny is not a problem when you make payments by credit card or check."

The bottom line: Born says there's no reason to think doing away with the penny would cause inflation. "Life went on in Fiji. It goes on in lots of countries where the value of coins has become too small to bother with. It's hard to find coins less than 100 yen in Japan, and it was hard to find small lira coins in Italy before the euro."

If the penny and/or nickel were eliminated from production, it wouldn't be the first time the U.S. abolished a coin. The Mint has eliminated a number of denominations over the years:

CoinYears producedCoinYears produced
Half cent 1793-1857 $3 1854-89
2 cents 1864-73 $4 1879-80
3 cents 1851-89 $5 1795-1929
20 cents 1875-78 $10 1795-1933
$2.50 1796-1929 $20 1850-1933

The U.S. also used to have paper money printed for circulation in denominations of $500, $1,000, $5,000 and even $10,000 notes, but those were eliminated, too.

The preference for paper

In contrast to coins, paper currency is pretty cheap. The new-currency production budget for 2012 is $747 million, and the costs per bill are:

  • $1 and $2 bills, 5.2 cents.
  • $5 and $10 bills, 8.5 cents.
  • $20 and $50 bills, 9.2 cents.
  • $100 bill, 7.7 cents.

Though the production cost of dollar bills is less than a third of the cost of dollar coins, paper bills don't last nearly as long. "Coins can last an average of 20 years or more in circulation," Stivers says. "Bills last less than a year."

And, Whaples says, a switch to $1 coins could save $500 million a year.

Nevertheless, dollar coins haven't caught on with the American public. "People prefer paper dollars because they're easier and lighter," Whaples says.