People do not, of course, have to pay to use Facebook, it’s free.
The company’s revenues come mostly from advertising. But in light of recent controversies, there have been discussions, at least outside Facebook, about changing the business model. What if people had to pay to use it? How much would they be willing to spend? Any answers would tell us something important about the value of social media in general.
I recently conducted a pilot experiment to obtain some preliminary answers. Using Amazon’s Mechanical Turk, I tried to find out, from 400 Facebook users, exactly how much the platform is worth.
More specifically, I asked 200 Facebook users a simple question: “Suppose that you had to pay for the use of Facebook. How much would you be willing to pay, at most, per month?”
I asked 200 other Facebook users a different question: “Suppose that you are being offered money to stop using Facebook. How much would you have to be paid per month, at a minimum, to make it worth your while to stop using Facebook?”
According to standard economic theory, the two questions should produce the same answers. But they didn’t – not close.
For the first question, the median answer was just $1 per month. The average was $7.38. Nearly half of participants (46 per cent) said that they would pay $0 if Facebook tried to charge them a fee.
For the second question, the median answer was a whopping $59 per month. The average amount people would demand to leave Facebook was $74.99.
What’s going on here?
Behavioural economists, led by Nobel Prize winner Richard Thaler, have drawn attention to the “endowment effect”, which means that most people would demand a lot more to give up a good than they would be willing to pay to get it in the first instance. For example, people might be willing to pay $5 for a coffee mug with their college’s insignia on it – but if they are given such a mug, and are asked how much they would demand to sell it, they might say $10.
My pilot study finds an endowment effect, but it’s unusually high. That tells us something important not just about Facebook but also other goods provided by modern technology. The critical point is that we are now used to getting those goods for free.
_______________
Read more:
Cambridge Analytica shuts down after Facebook data scandal
Private data? You can’t put toothpaste back in the tube
_______________
With that point in mind, return to my first question. Having had to pay nothing for Facebook, people dislike the idea of a monthly fee. When almost half said that they are willing to pay $0, they are giving a protest answer, announcing: “If you are going to start charging me, well, then, forget about it!”
Those who said that they would pay only a small monthly amount (say, $10) might well have been thinking that Facebook is worth more than that, but registering their displeasure at the idea of suddenly having to buy something that has long been provided gratis.
What about the high numbers for the second question? Many of the subjects undoubtedly enjoy Facebook, and they resent the very idea that “someone” is trying to pay them to stop using the platform. They demand a lot of money to give up what they have.
As it happens, Professor Eric Brynjolfsson and doctoral student Avinash Gannamaneni of the Massachusetts Institute of Technology, along with Felix Eggers of the University of Groningen, recently tried to value use of Facebook by asking consumers if they would prefer: (a) to maintain access to the platform or (b) to give it up for one month in response to a specified payment.
This is called a “discrete choice experiment”. It does not ask people (as I did) how much they would pay for some good or how much they would demand to give up some good, but instead to choose between two identified options and to specify the one they value more.
In controlling for various confounding factors, Prof Brynjolfsson and his collaborators used highly sophisticated methods. They also used a large, nationally representative sample. Interestingly, the median answer was in the vicinity of $40 to $50 to give up Facebook for a month (slightly below the median answer to my second question).
Prof Brynjolfsson and his collaborators conclude that digital goods, including social media, are producing large, monetisable benefits that are not included in conventional measures of well-being, such as gross domestic product.
That conclusion seems right, but we need to add two qualifications. The first is that whatever numbers we generate will be an artifact of the particular method we use – and they might be a poor approximation of the actual value of digital goods.
The second is that we need better measures of the effects of such goods on people’s well-being. People might be willing to pay $10 each month for the right to use Facebook, or demand $60 to give up that right. But what are the effects on their actual experience? Are they enjoying life more, or less, or the same?
We are just beginning to get answers to these questions, and the results are mixed.
We need to learn much more.
LA LIGA FIXTURES
Saturday (UAE kick-off times)
Leganes v Getafe (12am)
Levante v Alaves (4pm)
Real Madrid v Sevilla (7pm)
Osasuna v Valladolid (9.30pm)
Sunday
Eibar v Atletico Madrid (12am)
Mallorca v Valencia (3pm)
Real Betis v Real Sociedad (5pm)
Villarreal v Espanyol (7pm)
Athletic Bilbao v Celta Vigo (9.30pm)
Monday
Barcelona v Granada (12am)
How to protect yourself when air quality drops
Install an air filter in your home.
Close your windows and turn on the AC.
Shower or bath after being outside.
Wear a face mask.
Stay indoors when conditions are particularly poor.
If driving, turn your engine off when stationary.
Company%20profile
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FIXTURES
Fixtures for Round 15 (all times UAE)
Friday
Inter Milan v AS Roma (11.45pm)
Saturday
Atalanta v Verona (6pm)
Udinese v Napoli (9pm)
Lazio v Juventus (11.45pm)
Sunday
Lecce v Genoa (3.30pm)
Sassuolo v Cagliari (6pm)
SPAL v Brescia (6pm)
Torino v Fiorentina (6pm)
Sampdoria v Parma (9pm)
Bologna v AC Milan (11.45pm)
Dubai Bling season three
Cast: Loujain Adada, Zeina Khoury, Farhana Bodi, Ebraheem Al Samadi, Mona Kattan, and couples Safa & Fahad Siddiqui and DJ Bliss & Danya Mohammed
Rating: 1/5
match info
Chelsea 2
Willian (13'), Ross Barkley (64')
Liverpool 0
RACE CARD
6.30pm Maiden Dh165,000 (Dirt) 1,200
7.05pm Handicap Dh165,000 (D) 1,600m
7.40pm Maiden Dh165,000 (D) 1,600m
8.15pm Handicap Dh190,000 (D) 1,600m
8.50pm Handicap Dh175,000 (D) 1,400m
9.25pm Handicap Dh175,000 (D) 2,000m
The National selections:
6.30pm Underwriter
7.05pm Rayig
7.40pm Torno Subito
8.15pm Talento Puma
8.50pm Etisalat
9.25pm Gundogdu
Founder: Ayman Badawi
Date started: Test product September 2016, paid launch January 2017
Based: Dubai, UAE
Sector: Software
Size: Seven employees
Funding: $170,000 in angel investment
Funders: friends
FIXTURES
Thursday
Dibba v Al Dhafra, Fujairah Stadium (5pm)
Al Wahda v Hatta, Al Nahyan Stadium (8pm)
Friday
Al Nasr v Ajman, Zabeel Stadium (5pm)
Al Jazria v Al Wasl, Mohammed Bin Zayed Stadium (8pm)
Saturday
Emirates v Al Ain, Emirates Club Stadium (5pm)
Sharjah v Shabab Al Ahli Dubai, Sharjah Stadium (8pm)
Paatal Lok season two
Directors: Avinash Arun, Prosit Roy
Stars: Jaideep Ahlawat, Ishwak Singh, Lc Sekhose, Merenla Imsong
Rating: 4.5/5
Read more from Aya Iskandarani
match info
Union Berlin 0
Bayern Munich 1 (Lewandowski 40' pen, Pavard 80')
Man of the Match: Benjamin Pavard (Bayern Munich)
The bio
Studied up to grade 12 in Vatanappally, a village in India’s southern Thrissur district
Was a middle distance state athletics champion in school
Enjoys driving to Fujairah and Ras Al Khaimah with family
His dream is to continue working as a social worker and help people
Has seven diaries in which he has jotted down notes about his work and money he earned
Keeps the diaries in his car to remember his journey in the Emirates
Company Profile:
Name: The Protein Bakeshop
Date of start: 2013
Founders: Rashi Chowdhary and Saad Umerani
Based: Dubai
Size, number of employees: 12
Funding/investors: $400,000 (2018)
Points to remember
- Debate the issue, don't attack the person
- Build the relationship and dialogue by seeking to find common ground
- Express passion for the issue but be aware of when you're losing control or when there's anger. If there is, pause and take some time out.
- Listen actively without interrupting
- Avoid assumptions, seek understanding, ask questions
The specs
Engine: 5.2-litre twin-turbo V12
Transmission: eight-speed automatic
Power: 715bhp
Torque: 900Nm
Price: Dh1,289,376
On sale: now
bundesliga results
Mainz 0 Augsburg 1 (Niederlechner 1')
Schalke 1 (Caligiuri pen 51') Bayer Leverkusen 1 (Miranda og 81')
COMPANY PROFILE
Founders: Alhaan Ahmed, Alyina Ahmed and Maximo Tettamanzi
Total funding: Self funded
'Peninsula'
Stars: Gang Dong-won, Lee Jung-hyun, Lee Ra
Director: Yeon Sang-ho
Rating: 2/5
About Housecall
Date started: July 2020
Founders: Omar and Humaid Alzaabi
Based: Abu Dhabi
Sector: HealthTech
# of staff: 10
Funding to date: Self-funded
'Project Power'
Stars: Jamie Foxx, Joseph Gordon-Levitt, Dominique Fishback
Director: Henry Joost and Ariel Schulman
Rating: 3.5/5
The biog
Favourite book: Men are from Mars Women are from Venus
Favourite travel destination: Ooty, a hill station in South India
Hobbies: Cooking. Biryani, pepper crab are her signature dishes
Favourite place in UAE: Marjan Island
Ibrahim's play list
Completed an electrical diploma at the Adnoc Technical Institute
Works as a public relations officer with Adnoc
Apart from the piano, he plays the accordion, oud and guitar
His favourite composer is Johann Sebastian Bach
Also enjoys listening to Mozart
Likes all genres of music including Arabic music and jazz
Enjoys rock groups Scorpions and Metallica
Other musicians he likes are Syrian-American pianist Malek Jandali and Lebanese oud player Rabih Abou Khalil
How will Gen Alpha invest?
Mark Chahwan, co-founder and chief executive of robo-advisory firm Sarwa, forecasts that Generation Alpha (born between 2010 and 2024) will start investing in their teenage years and therefore benefit from compound interest.
“Technology and education should be the main drivers to make this happen, whether it’s investing in a few clicks or their schools/parents stepping up their personal finance education skills,” he adds.
Mr Chahwan says younger generations have a higher capacity to take on risk, but for some their appetite can be more cautious because they are investing for the first time. “Schools still do not teach personal finance and stock market investing, so a lot of the learning journey can feel daunting and intimidating,” he says.
He advises millennials to not always start with an aggressive portfolio even if they can afford to take risks. “We always advise to work your way up to your risk capacity, that way you experience volatility and get used to it. Given the higher risk capacity for the younger generations, stocks are a favourite,” says Mr Chahwan.
Highlighting the role technology has played in encouraging millennials and Gen Z to invest, he says: “They were often excluded, but with lower account minimums ... a customer with $1,000 [Dh3,672] in their account has their money working for them just as hard as the portfolio of a high get-worth individual.”
COMPANY%20PROFILE
%3Cp%3E%3Cstrong%3ECompany%20name%3A%3C%2Fstrong%3E%20Klipit%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStarted%3A%3C%2Fstrong%3E%202022%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EFounders%3A%3C%2Fstrong%3E%20Venkat%20Reddy%2C%20Mohammed%20Al%20Bulooki%2C%20Bilal%20Merchant%2C%20Asif%20Ahmed%2C%20Ovais%20Merchant%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EBased%3A%3C%2Fstrong%3E%20Dubai%2C%20UAE%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EIndustry%3A%3C%2Fstrong%3E%20Digital%20receipts%2C%20finance%2C%20blockchain%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EFunding%3A%3C%2Fstrong%3E%20%244%20million%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EInvestors%3A%3C%2Fstrong%3E%20Privately%2Fself-funded%3C%2Fp%3E%0A
The Great Derangement: Climate Change and the Unthinkable
Amitav Ghosh, University of Chicago Press
Three ways to get a gratitude glow
By committing to at least one of these daily, you can bring more gratitude into your life, says Ong.
- During your morning skincare routine, name five things you are thankful for about yourself.
- As you finish your skincare routine, look yourself in the eye and speak an affirmation, such as: “I am grateful for every part of me, including my ability to take care of my skin.”
- In the evening, take some deep breaths, notice how your skin feels, and listen for what your skin is grateful for.
