Like most people, surveillance pricing feels gross to me. But I think we need to separate two things: Surveillance pricing is a combination of (a) price discrimination and (b) surveillance.
If it were up to me, I'd probably give people much stronger legal rights to control their personal information, which would in turn decrease "surveillance".
But I haven't seen a convincing argument to ban price discrimination. There seems to be some kind of implicit assumption that price discrimination reduces consumer surplus on average. But I've never seen a convincing argument to that effect.
For example: Pharmaceuticals are often priced much low in poor countries. That's price discrimination. (You could think of it as a primitive form of surveillance pricing.) But if that were banned, pharmaceutical companies wouldn't lower prices for everyone. That would destroy almost all their revenue which comes from high prices in rich countries. Instead, they'd charge rich-country prices to everyone, and most people in poor countries would simply have to go without. That seems like it would be pure harm.
It's entirely possible that some kind of "coarse" price discrimination is OK/good but "fine-grained" price discrimination is bad. But where's the argument?
I think very few people are thinking about the harder economic arguments here. We know that if companies are drawing prices, they'll do it in the way that most hurts the consumer and most benefits the company. Or more realistically, in the way that the company _perceives_ it benefits them the most.
I'm not necessarily opposed to the ideas you're talking about, I just have zero faith that anything positive will be stood up if companies have their say.
> It's entirely possible that some kind of "coarse" price discrimination is OK/good but "fine-grained" price discrimination is bad. But where's the argument?
This seems entirely reasonable - they're obviously a point where tax rates are too low and revenue isn't being brought in, but also a point where tax rates are too high, incentivizing tax shelters or outright crime, and revenue starts decreasing again. The price discrimination side is the same thing just on "optional" purchases instead of taxes so it makes sense there is some Laffer curve corollary.
Well for one it undermines the currency by making my dollar worth something different from your dollar, makes it impossible for individuals to make informed choices, and makes it so that there's no reason to try to be more productive/chase some higher paying endeavor since it will be extracted for your basic necessities anyway and you'll end up in the same position. So now labor price signals fail.
We already see the results of this in the US in the medical and educational systems, where planning is nearly impossible because the price is hidden until purchase (or even afterward) and the other side is trying to price it at "whatever you have". Unsurprisingly, both of those have absurd debt loads and are causing society-wide discontent/destabilization.
Now imagine that grocers can individually price to you, and you find out what you owe (and whether you need to put some items back) at the register, and this information about you is available to be purchased by anyone so all available grocers have that same knowledge. What are you going to do?
>For example: Pharmaceuticals are often priced much low in poor countries. That's price discrimination. (You could think of it as a primitive form of surveillance pricing.) But if that were banned, pharmaceutical companies wouldn't lower prices for everyone. That would destroy almost all their revenue which comes from high prices in rich countries. Instead, they'd charge rich-country prices to everyone, and most people in poor countries would simply have to go without. That seems like it would be pure harm.
Well you simply make it illegal to charge more than the poor country prices and, bare with me here, you also make it illegal to go bankrupt.
> But I haven't seen a convincing argument to ban price discrimination.
The very definition of "price discrimination" is the convincing argument.
"How much does this candy bar cost?"
"Well, you social credit profile says you payed $700 for pair of shoes last week so... twelve grand."
"But the guy in front of me just paid 35 cents for the same candy bar."
"Well, I mean, *he* is white."
Meanwhile, dynm:
> But where's the argument?
Looking to big pharma for guidance is depressingly hilarious.
Price discrimination isn't about wealth. A poor person who books a flight the day before because of an emergency pays more than a rich person who books it 3 months out.
Pharmaceuticals lobbying hard to get the UK to stop buying drugs on the national level (where they have enormous pricing power) and make hospitals responsible for buying drugs. This would be terrible for the UK.
Poor countries aren't in danger from this... we can't ban price discrimination in other countries because they have sovereignty, and the pharmaceutical company isn't monolithic. The one operating in another country is another corporation that must follow that countries rules, and will be granted a license from the American parent company to decide for itself what pricing to impose there (which will be controlled by that country's laws on drug pricing).
It's how it works now, and we don't much have the ability to change that. If we tried, the pharmaceutical companies would be in danger... those countries can spin up factories to make the same drugs and just ignore the patents. A behavior/strategy they want to avoid encouraging.
There are two ways to legally "earn" money. The first is to provide a product or service that is sufficiently valuable the buyer willingly parts with the money for the price.
The other is extractive — to find a way to exploit the customer with limited choices and extract the maximum value from them. Monopoly pricing is the primary example — people need electricity, housing, food, etc. and if someone corners those markets, or colludes, they can extract a far higher amount of money from people than they would willingly spend in an actually free market of multiple competitors and fully available information (wherein another competitor would offer prices closer to the cost of production and take the business from the overpriced competitor).
Production of value is the essence of the value of capitalism. Extracting value by coercion is fundamentally corrupt, and at the extreme end is nothing more than mob rule ("nice store windows you got there, it'd be a shame if something happened to them; pay us for protection").
Surveillance pricing is simply a fundamentally dishonest form of the latter, exploiting massive amounts of information on customers to extract more money from a person than they would be freely willing to pay for a product, because you found a temporary or permanent vulnerability and 'have them over a barrel'.
A society that permits surveillance pricing will inevitably become more impoverished because the few players doing surveillance pricing will extract more money from the society WITHOUT creating any more value. This impairs everyone else's ability to provide value.
Allowing it is fundamentally stupid and self-destructive.
i expect rather than being a couple stores doing it, it will be a separate company acting as a cartel across stores forcing some people to always pay more no matter where they go
I agree that surveillance pricing sounds terrible and discriminatory. But people are also happy with coupons, codes, introductory pricing, employee discounts and many of the other schemes that do more or less the same thing. One guy who worked for an athletic shoe company told me that they had a special code that their sponsored athletes could give to their friends.
Surveillance pricing defenders claim that surveillance pricing is better because it works both ways--it might offer a higher price to someone who is desperate, but someone who is likely not that motivated might get a sweet deal. I highly doubt that. A highly-advertised, transparent discount or sale is how you sell to someone who is not that motivated. Surveillance pricing is how you (secretly) extract as much money as possible from the desperate.
And they're subsidized by the revenue made by everyone else. A thousands of coupons start rolling in and meaningfully affecting revenue either the coupons go away or the MSRP increases. It's the exact same pig just slightly different lipstick.
It doesn't really seem the same. In coupon hunting, I might not want to spend time finding a coupon and decide to pay full price. That's my choice.
In surveillance pricing, I wouldn't get that choice, I'd just get a custom-to-me price. I'd have no idea how the company decided to charge me more or less than they charged my friend. And no idea how to change the price I'm offered, so it would be terrible if the algorithm decided to charge me +15% for everything.
For me, it's the surveillance infrastructure per se. My main curiosity around these bills is to what extent surveillance pricing–versus ad targeting–drives the economics of those systems. (My prior is not much.)
The difference is in degree, and with the point that coupons/discounts/dynamic pricing have gotten to I think we would be better off if those things started getting banned as well. The main point of all of these things is to confuse the market and make it less efficient (so that companies can extract value instead of creating more value). We've gotten to a breaking point, and we should reject all of it rather than justifying new ones based on the less-harsh dynamics being tolerable before companies became completely shameless.
Actually many people thoroughly detest forced "memberships" to pay the actual price of the item, digital coupons, forced use of apps, and all of the other utter nonsense. I hope surveillance pricing bills destroy all of them forever.
Is the "actual price" what you're willing to pay for it, or the lowest possible price you could pay based on whatever combination of membership(s) and coupon(s) is available?
to me the actual price is in the realms of a couple dollars higher than what the reseller paid for it, to account for paying employees and taxes and so on
the price i end up paying is always some multiple of the real price
My take on this isn't directly related to the surveillance side of it, but from what I can tell we used to have this model:
Most stores and restaurant chains had normal prices, and sale/special prices. You could coupon like mad and save some serious money by going around to a bunch of different places, with them probably losing money on many of those transactions as long as you were disciplined and didn't buy non-couponed items, but it was a ton of work.
(Another model was to have had fake, way-too-high [like, double what they should be] full prices, but 2/3 of those kinds of stores were always "on sale" at what should be the normal price anyway. A disgusting psychological trick and tacit lie that we probably should have found some way to effectively crack down on, but pretty easy to spot and it was no big deal to avoid the places that did this, especially since most of them sold crappy goods anyway. This model's still around, I'm just not really concerned with it here and mentioning it as an aside to acknowledge that it existed, and exists)
Now we have this model:
A very-few stores and restaurant chains still follow the old model, but most now have batshit crazy "normal" prices, require an app (so, spying) and shopping specials to get what should be the normal prices, and then sometimes you do still get an actual bargain.
The net result is that if you just want reasonable fucking baseline prices and not to be gouged, you now have to spend more time and attention than before.
I'm convinced this is a big part of why there's a perception that inflation is even worse than official measurements say it is. I can say it's a major contributing factor to it feeling like our financial situation is worse than it was six years ago, despite making quite a bit more money now. We were finally at a point where we didn't really need to pay attention to sales and such at most normal stores, just didn't matter enough to us to save an extra couple bucks and we could finally relax a little when shopping, like pay attention to which interchangeable thing was cheaper and maybe grab things if we saw a sale but we didn't need to structure our grocery lists around deals. Now? They've price-discriminated via attention and allowing-tracking (those damn apps) so much that we have to pay lots of attention and have their damn advertising prodding us all the time (the apps) again just to not get entirely screwed every time we go to a store. We feel poorer again.
In short, I think a somewhat-obscure online rant-song about Taco Bell contains more insight about how normal people are experiencing the US economy since Covid, than most serious economic reporting does.
It's pretty much what I've done when selling at flea markets all of my life. I ask what I think the market will bear, per person and situation. I don't feel at all guilty for it. It doesn't surprise me at all that mass customization in the information age has brought us to it at scale, or that the force of law would be necessary to repress it.
Some people seem to feel they have a right to the best price without negotiating or shopping. I don't feel that I'm owed or owe that privilege.
How do I negotiate with a minimum wage cashier, self-checkout, or a checkout page? Have you ever been in a Kroger property, or Walmart, or any other multi-billion dollar retailer and negotiated on something? Maybe they'll price match and I guess that counts, but it's not as if we have access to data to do that in a meaningful way to compete with the data that they have to act on.
In lieu of suppressing surveillance pricing, I could live with retailers being forced to open source, in real time, all product and sales related data, including historical as far back as they have.
How much did you know about the person you were selling to? Did you know what websites they visited or what past purchases they made or what time they went to sleep every night?
Like a rideshare app offering worse pay to drivers who they know are heavily in debt and near their payment deadline? Offering less pay to people who are desperate and have no other options?
E.g. If a seller knows I've been searching for flu remedies, I've made a social media post related to the illness. Then I go to the pharmacy and everything related to alleviating those symptoms is more expensive for me.
Put simply, if they know you absolutely need something, they will leverage that information.
If it were up to me, I'd probably give people much stronger legal rights to control their personal information, which would in turn decrease "surveillance".
But I haven't seen a convincing argument to ban price discrimination. There seems to be some kind of implicit assumption that price discrimination reduces consumer surplus on average. But I've never seen a convincing argument to that effect.
For example: Pharmaceuticals are often priced much low in poor countries. That's price discrimination. (You could think of it as a primitive form of surveillance pricing.) But if that were banned, pharmaceutical companies wouldn't lower prices for everyone. That would destroy almost all their revenue which comes from high prices in rich countries. Instead, they'd charge rich-country prices to everyone, and most people in poor countries would simply have to go without. That seems like it would be pure harm.
It's entirely possible that some kind of "coarse" price discrimination is OK/good but "fine-grained" price discrimination is bad. But where's the argument?
I'm not necessarily opposed to the ideas you're talking about, I just have zero faith that anything positive will be stood up if companies have their say.
This seems entirely reasonable - they're obviously a point where tax rates are too low and revenue isn't being brought in, but also a point where tax rates are too high, incentivizing tax shelters or outright crime, and revenue starts decreasing again. The price discrimination side is the same thing just on "optional" purchases instead of taxes so it makes sense there is some Laffer curve corollary.
We already see the results of this in the US in the medical and educational systems, where planning is nearly impossible because the price is hidden until purchase (or even afterward) and the other side is trying to price it at "whatever you have". Unsurprisingly, both of those have absurd debt loads and are causing society-wide discontent/destabilization.
Now imagine that grocers can individually price to you, and you find out what you owe (and whether you need to put some items back) at the register, and this information about you is available to be purchased by anyone so all available grocers have that same knowledge. What are you going to do?
Well you simply make it illegal to charge more than the poor country prices and, bare with me here, you also make it illegal to go bankrupt.
The very definition of "price discrimination" is the convincing argument.
Meanwhile, dynm:> But where's the argument?
Looking to big pharma for guidance is depressingly hilarious.
Pharmaceuticals lobbying hard to get the UK to stop buying drugs on the national level (where they have enormous pricing power) and make hospitals responsible for buying drugs. This would be terrible for the UK.
It's how it works now, and we don't much have the ability to change that. If we tried, the pharmaceutical companies would be in danger... those countries can spin up factories to make the same drugs and just ignore the patents. A behavior/strategy they want to avoid encouraging.
There are two ways to legally "earn" money. The first is to provide a product or service that is sufficiently valuable the buyer willingly parts with the money for the price.
The other is extractive — to find a way to exploit the customer with limited choices and extract the maximum value from them. Monopoly pricing is the primary example — people need electricity, housing, food, etc. and if someone corners those markets, or colludes, they can extract a far higher amount of money from people than they would willingly spend in an actually free market of multiple competitors and fully available information (wherein another competitor would offer prices closer to the cost of production and take the business from the overpriced competitor).
Production of value is the essence of the value of capitalism. Extracting value by coercion is fundamentally corrupt, and at the extreme end is nothing more than mob rule ("nice store windows you got there, it'd be a shame if something happened to them; pay us for protection").
Surveillance pricing is simply a fundamentally dishonest form of the latter, exploiting massive amounts of information on customers to extract more money from a person than they would be freely willing to pay for a product, because you found a temporary or permanent vulnerability and 'have them over a barrel'.
A society that permits surveillance pricing will inevitably become more impoverished because the few players doing surveillance pricing will extract more money from the society WITHOUT creating any more value. This impairs everyone else's ability to provide value.
Allowing it is fundamentally stupid and self-destructive.
In the end, what's the difference?
Surveillance pricing defenders claim that surveillance pricing is better because it works both ways--it might offer a higher price to someone who is desperate, but someone who is likely not that motivated might get a sweet deal. I highly doubt that. A highly-advertised, transparent discount or sale is how you sell to someone who is not that motivated. Surveillance pricing is how you (secretly) extract as much money as possible from the desperate.
And they're subsidized by the revenue made by everyone else. A thousands of coupons start rolling in and meaningfully affecting revenue either the coupons go away or the MSRP increases. It's the exact same pig just slightly different lipstick.
In surveillance pricing, I wouldn't get that choice, I'd just get a custom-to-me price. I'd have no idea how the company decided to charge me more or less than they charged my friend. And no idea how to change the price I'm offered, so it would be terrible if the algorithm decided to charge me +15% for everything.
For me, it's the surveillance infrastructure per se. My main curiosity around these bills is to what extent surveillance pricing–versus ad targeting–drives the economics of those systems. (My prior is not much.)
the price i end up paying is always some multiple of the real price
Most stores and restaurant chains had normal prices, and sale/special prices. You could coupon like mad and save some serious money by going around to a bunch of different places, with them probably losing money on many of those transactions as long as you were disciplined and didn't buy non-couponed items, but it was a ton of work.
(Another model was to have had fake, way-too-high [like, double what they should be] full prices, but 2/3 of those kinds of stores were always "on sale" at what should be the normal price anyway. A disgusting psychological trick and tacit lie that we probably should have found some way to effectively crack down on, but pretty easy to spot and it was no big deal to avoid the places that did this, especially since most of them sold crappy goods anyway. This model's still around, I'm just not really concerned with it here and mentioning it as an aside to acknowledge that it existed, and exists)
Now we have this model:
A very-few stores and restaurant chains still follow the old model, but most now have batshit crazy "normal" prices, require an app (so, spying) and shopping specials to get what should be the normal prices, and then sometimes you do still get an actual bargain.
The net result is that if you just want reasonable fucking baseline prices and not to be gouged, you now have to spend more time and attention than before.
I'm convinced this is a big part of why there's a perception that inflation is even worse than official measurements say it is. I can say it's a major contributing factor to it feeling like our financial situation is worse than it was six years ago, despite making quite a bit more money now. We were finally at a point where we didn't really need to pay attention to sales and such at most normal stores, just didn't matter enough to us to save an extra couple bucks and we could finally relax a little when shopping, like pay attention to which interchangeable thing was cheaper and maybe grab things if we saw a sale but we didn't need to structure our grocery lists around deals. Now? They've price-discriminated via attention and allowing-tracking (those damn apps) so much that we have to pay lots of attention and have their damn advertising prodding us all the time (the apps) again just to not get entirely screwed every time we go to a store. We feel poorer again.
In short, I think a somewhat-obscure online rant-song about Taco Bell contains more insight about how normal people are experiencing the US economy since Covid, than most serious economic reporting does.
Lyrics:
https://genius.com/Jeff-heiny-deserving-taco-bell-rant-lyric...
Song, such as it is (warning: lo-fi screamo, more or less):
https://www.youtube.com/watch?v=2g0coPaZWi4
https://www.youtube.com/watch?v=rVlT3uHlNAg&t=111s
It's pretty much what I've done when selling at flea markets all of my life. I ask what I think the market will bear, per person and situation. I don't feel at all guilty for it. It doesn't surprise me at all that mass customization in the information age has brought us to it at scale, or that the force of law would be necessary to repress it.
Some people seem to feel they have a right to the best price without negotiating or shopping. I don't feel that I'm owed or owe that privilege.
In lieu of suppressing surveillance pricing, I could live with retailers being forced to open source, in real time, all product and sales related data, including historical as far back as they have.
It should absolutely benefit the blue-collar consumer. Whom it hurts is the moderately rich. (If it works as intended.)
E.g. If a seller knows I've been searching for flu remedies, I've made a social media post related to the illness. Then I go to the pharmacy and everything related to alleviating those symptoms is more expensive for me.
Put simply, if they know you absolutely need something, they will leverage that information.
its the same exploitation in both cases