You’ve probably heard rumors about this here and there, but the Wall Street Journal convincingly reported yesterday that websites charge certain people more for the exact thing.
Specifically, poor people were more likely to pay more for, say, a stapler from Staples.com than richer people. Home Depot and Lowes does the same for their online customers, and Discover and Capitol One make different credit card offers to people depending on where they live (“hey, do you live in a PayDay lender neighborhood? We got the card for you!”).
They got pretty quantitative for Staples.com, and did tests to determine the cost. From the article:
It is possible that Staples’ online-pricing formula uses other factors that the Journal didn’t identify. The Journal tested to see whether price was tied to different characteristics including population, local income, proximity to a Staples store, race and other demographic factors. Statistically speaking, by far the strongest correlation involved the distance to a rival’s store from the center of a ZIP Code. That single factor appeared to explain upward of 90% of the pricing pattern.
If anyone’s ever seen a census map, race is highly segregated by ZIP code, and my guess is we’d see pretty high correlations along racial lines as well, although they didn’t mention it in the article except to say that explicit race-related pricing is illegal. The article does mentions that things get more expensive in rural areas, which are also poorer, so there’s that acknowledged correlation.
But wait, how much of a price difference are we talking about? From the article:
Prices varied for about a third of the more than 1,000 randomly selected Staples.com products tested. The discounted and higher prices differed by about 8% on average.
In other words, a really non-trivial amount.
The messed up thing about this, or at least one of them, is that we could actually have way more control over our online personas than we think. It’s invisible to us, typically, so we don’t think about our cookies and our displayed IP addresses. But we could totally manipulate these signatures to our advantage if we set our minds to it.
Hackers, get thyselves to work making this technology easily available.
For that matter, given the 8% difference, there’s money on the line so some straight-up capitalist somewhere should be meeting that need. I for one would be willing to give someone a sliver of the amount saved every time they manipulated my online persona to save me money. You save me $1.00, I’ll give you a dime.
Here’s my favorite part of this plan: it would be easy for Staples to keep track of how much people are manipulating their ZIP codes. So if Staples.com infers a certain ZIP code for me to display a certain price, but then in check-out I ask them to send the package to a different ZIP code, Staples will know after-the-fact that I fooled them. But whatever, last time I looked it didn’t cost more or less to send mail to California or wherever than to Manhattan [Update: they do charge differently for packages, though. That’s the only differential in cost I think is reasonable to pay].
I’d love to see them make a case for how this isn’t fair to them.