3 ms·

"We use participants’ pre-experiment and post-experiment Facebook valuations to quantify the extent to which factors such as projection bias might cause people

"We use participants’ pre-experiment and post-experiment Facebook valuations to quantify the extent to which factors such as projection bias might cause people to overvalue Facebook, finding that the magnitude of any such biases is likely minor relative to the large consumer surplus that Facebook generates." What is "consumer surplus"? By this do the authors mean the total benefit to FB users?

HillaryBriss 8y ago
It's an economist's term. I do wonder about the benefit to FB users. I just got this from Wikipedia: Consumer surplus is the difference between the maximum price a consumer is willing to pay and the actual price they do pay. If a consumer would be willing to pay more than the current asking price, then they are getting more benefit from the purchased product than they initially paid. https://en.wikipedia.org/wiki/Economic_surplus#Consumer_surplus https://en.wikipedia.org/wiki/Economic_surplus#Consumer_surp... What would consumers actually pay out of pocket for an ad-free FB? Alternatively: imagine there was a job that required you to type in your sensitive personal information and then a business took that information, sold (or accidentally gave) it to other businesses, used it to target ads at you, and leaked it to hackers. Imagine also that this business exposed your sensitive personal information to other people who might use it to your economic and social benefit and/or to your detriment (though you cannot predict how or to what extent). How much should you be paid to do that job? Can it be argued that FB actually offers consumers a deficit instead of a surplus?
nickles 8y ago
> What is "consumer surplus"? By this do the authors mean the total benefit to FB users? It's a concept from welfare economics (economic benefit at an aggregate level). Consumer surplus is the excess benefit a consumer receives from purchasing a good (willingness to pay - price paid). For example, if you're willing to pay $100 annually to use Facebook, and you actually pay $0, then the consumer surplus would be $100.
savanaly 8y ago
Economists assume that there exists some value V that if you offered $V to someone to quit facebook, they would be indifferent to the offer. That is, if we offered V + $0.01 they would certainly take the offer and consider themselves a penny better off, and if we offered V - $0.01 they would refuse the offer. There's also some cost to facebook. In the first world it's probably just whatever you perceive to be the impact on you from reduced privacy. In the third world, well, I seem to remember Facebook actually provides internet to people solely for the purpose of using Facebook so in such a case the cost might be tangible. In any case, call it C. Then consumer surplus is V - C, summed over all consumers. https://www.youtube.com/watch?v=_6kwhF6hoqQ https://www.youtube.com/watch?v=_6kwhF6hoqQ

HillaryBriss 8y ago

It's an economist's term. I do wonder about the benefit to FB users. I just got this from Wikipedia: Consumer surplus is the difference between the maximum price a consumer is willing to pay and the actual price they do pay. If a consumer would be willing to pay more than the current asking price, then they are getting more benefit from the purchased product than they initially paid. https://en.wikipedia.org/wiki/Economic_surplus#Consumer_surplus https://en.wikipedia.org/wiki/Economic_surplus#Consumer_surp... What would consumers actually pay out of pocket for an ad-free FB? Alternatively: imagine there was a job that required you to type in your sensitive personal information and then a business took that information, sold (or accidentally gave) it to other businesses, used it to target ads at you, and leaked it to hackers. Imagine also that this business exposed your sensitive personal information to other people who might use it to your economic and social benefit and/or to your detriment (though you cannot predict how or to what extent). How much should you be paid to do that job? Can it be argued that FB actually offers consumers a deficit instead of a surplus?

nickles 8y ago

> What is "consumer surplus"? By this do the authors mean the total benefit to FB users? It's a concept from welfare economics (economic benefit at an aggregate level). Consumer surplus is the excess benefit a consumer receives from purchasing a good (willingness to pay - price paid). For example, if you're willing to pay $100 annually to use Facebook, and you actually pay $0, then the consumer surplus would be $100.

savanaly 8y ago

Economists assume that there exists some value V that if you offered $V to someone to quit facebook, they would be indifferent to the offer. That is, if we offered V + $0.01 they would certainly take the offer and consider themselves a penny better off, and if we offered V - $0.01 they would refuse the offer. There's also some cost to facebook. In the first world it's probably just whatever you perceive to be the impact on you from reduced privacy. In the third world, well, I seem to remember Facebook actually provides internet to people solely for the purpose of using Facebook so in such a case the cost might be tangible. In any case, call it C. Then consumer surplus is V - C, summed over all consumers. https://www.youtube.com/watch?v=_6kwhF6hoqQ https://www.youtube.com/watch?v=_6kwhF6hoqQ