Comment by jsrozner
4 days ago
It can never be better for consumers. The only way a business would adopt this practice is if it leads to greater revenues. On average, that necessarily means worse prices for the average consumer.
> But if you tell them they can't do this profiling, then they'll presumably resort to some mix of (1) no discounts with slightly lower overall pricing or (2) some loss leaders but otherwise regular pricing.
That's not true. Competition with other market participants should in theory (assuming competition) be sufficient. The firms are in general already charging the profit-maximizing price. They could, however, increase profits with more information.
But there is the additional problem that they will also monetize this information by selling it into advertising markets. The whole point of this business model is to capture previously uncaptured value that would otherwise have been shared in the commons.
> It can never be better for consumers. The only way a business would adopt this practice is if it leads to greater revenues. On average, that necessarily means worse prices for the average consumer.
That depends on the distribution of consumer incomes. Price discrimination (charging people more who can afford more) can be good for low-income customers.
> Price discrimination (charging people more who can afford more) can be good for low-income customers.
Unfortunately it doesn't work out that way. Consider banks, for example. As a relatively wealthy person, I don't pay fees for practically anything. On the contrary, banks pay me in the form of new-account signup bonuses, interest-bearing checking accounts, ATM fee reimbursements, etc.
Poorer bank customers, on the other hand, are continuously getting nickeled-and-dimed by banks in the form of monthly account fees, foreign ATM fees, NSF charges, etc.
Likewise, poorer customers are less able to avoid this kind of price discrimination at the grocery store.
If you walk or take the bus to the grocery store, you have fewer grocery stores to shop around for a deal at. If you're living paycheck to paycheck, you're less able to stock up on, say, cold medicine, when you see a good deal (and more likely to pay the "we know you're sick" price). And if you're time-poor (because you're working two jobs, and neither are the kind you can browse the Internet at while your code is compiling), you're less able to do comparison shopping, or notice that the price of what you need is always more expensive than when you don't.
Yeah, but you're probably 'paying' them in the form of cash deposits that earn nothing, but which they lend out for a few percent.
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If you somehow arrange for a redistributive effect. But in practice, the firms are likely to charge each consumer the maximum that consumer can afford. These firms are not engaging in some philanthropic process here.
If you want redistribution, implement a wealth tax.
Are there any examples of markets where price discrimination is good for the average consumer? Airline travel is the one that pops to mind - first class customers pay well above marginal cost and effectively subsidize the cattle class, right?
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> the maximum that consumer can afford.
but isn't that less for consumers who can afford less?
>It can never be better for consumers. The only way a business would adopt this practice is if it leads to greater revenues. On average, that necessarily means worse prices for the average consumer.
Not necessarily. Look at airlines for example, which make heavy use of price discrimination. This allows them to offer a lower economy price to people who have less money, while subsidizing the flight by charging a higher price to business or luxury travelers.
If they were only allowed to offer one type of ticket at one price, it would mostly benefit richer passengers while pricing the poorest passengers out of air travel.
Stores already have that in the form of having cheaper and more expensive products in the same category (for example, 5 different brands of tomato sauce).
The practice that needs to be outlawed is invisible and per customer pricing. It would be the airline for the same class of seat charging different amounts because, for example, their profile of the flier shows they recently searched for "casket" and so they are likely heading to a family funeral.
It would be as if the airline for their economy class offered the flight for $1000 if you don't play, $600 to attract customers into buying, and $800 if they find their customer is desperate. All for the same seat.
They already do charge different prices for the same seat, based on their assessment of the type of passenger you are.
You've picked an "evil" example, but what price discrimination really tends to look like is charging richer people more.
Prices are generally lowered for poor people because they'd rather have your $300 than have an empty seat. If you don't have $800, no amount of desperation will make you pay it - you'll just miss the funeral.
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Nobody is saying you can’t have different classes of service or product offerings. But if I’m buying a banana or you’re buying it, it’s the still a banana.
Different air travelers can pay very different prices for the same seat.
Airlines can't directly tell how much money a customer has, so they find indirect proxies.
Business travelers (reimbursed by their employer and thus not very price-sensitive) have identifiable patterns. They prefer particular flights on particular days of the week, tend to buy tickets close to date of travel, etc. Airlines exploit this to charge them higher prices.
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There's no subsidizing in your described arrangement unless people who have less money get it below cost.
> If they were only allowed to offer one type of ticket at one price, it would mostly benefit richer passengers while pricing the poorest passengers out of air travel.
I'm sold, how do we put this in the Constitution?
In the end this made news about how the surveillance economy works and should further freak people out about it. This helps long term I think.
I have a club card account with a fake name on it. While they may track the purchase I make and know that a single person made them all, it's not attached to anything that is linked to me. My understanding is that they can't link credit card numbers to purchases, they can only use the number to run the transaction.
It's not great they track purchasing, but if it's not linked to me I don't really care that much.
Unfortunately AI will get better and better at circumventing your security by obfuscation. The best use of AI is surveillance.