Week 7: Connecting Economic Principles and Ethical Values

Dynamic pricing is generally seen as fair for luxury goods but raises concerns for essential items. This is one of the themes of my trial focus group that I will go more into today.

Hello and welcome back to my blog!

To start this week off, I want to give a quick update on my survey progress. I am now at 211 responses and am still investigating more ways to get it across to people. On Wednesday I uploaded it onto a website called PollPool, which seems like a promising way to get more people to complete it. I will also research other possible websites to upload it to this week as well as alternate methods. Also, I have a friend who is willing to help me put it up on a site that she knows of that she has used previously for a research project. I have also continued the process of analysing the data by grouping people by different demographic characteristics and reading all the responses and will give you updates on that soon hopefully.

Update on my deliverable: Because I am now not focusing my energy on interviews, and only doing a few that I think will definitely benefit my research, I have decided to change my deliverable. I was originally going to produce a document with the questions that I will ask each person I interview, along with the answers and an analysis of what I learned from all the interviews, including things like patterns, flaws, and any general gaps in knowledge. Rather, I will plan on writing a research paper, combining everything from all the articles I have read as well as the data I am collecting from my survey and the few interviews that I do collect. I will plan on start writing that this week.

On the topic of interviews, I have an interview set up for the 20th of May with the friend of a participant who contacted me after completing my survey. He has had major experience with dynamic pricing, first working in the travel industry then founding a company who has clients that utilise dynamic pricing. I’m very excited to get the opportunity to talk to him. The other people that I have emailed have yet to reply to my emails requesting for an interview, but I am hoping they still will yet. 

Unrelated to my senior project, I am currently taking two summer college courses, one of them being Principles of Microeconomics. While I was doing my textbook reading this week a few things stood out to me that I wanted to share here because I thought it to be relevant to my research.

In economics, the concept, marginal change, defined as a small incremental adjustment to a plan of action, helps us understand how the value of goods is perceived. For example, the textbook talks about, while water is essential for life, its marginal cost is low because it is abundant. On the other hand, diamonds, which are not essential for survival, have a high marginal cost due to their scarcity and perceived value. (N Gregory Mankiw, 2021). 

This economic principle resonates with a discussion I had with my focus grou about the ethics of dynamic pricing. One member shared that they believe dynamic pricing can be fair, particularly for luxury goods like concert tickets or flights, where there are alternative options available. They argued that in such cases, dynamic pricing based on factors like demand or time of day can be justified as it reflects the market value of the product.

The connection between these ideas lies in how scarcity influences the perceived value of goods. Just as diamonds are priced higher due to their scarcity, dynamic pricing for luxury goods can be seen as a reflection of their market value. However, for essential goods like water, where equal access is crucial, dynamic pricing could be considered unethical as it may restrict access based on ability to pay. This idea highlights that I should consider both economic principles and ethical values while continuing my research. 

Another thing that stood out to me from the textbook was when it mentioned that “Uber cars often charge less than taxis, but not always. Uber’s prices rise significantly when there is a surge in demand, such as during a sudden rainstorm or late on New Year’s Eve, when numerous tipsy partiers are looking for a safe way to get home. By contrast, regulated taxis are typically prevented from surge pricing.” (N Gregory Mankiw, 2021) Though I was aware that Uber utilised dynamic pricing, I didn’t consider comparing it to regulated taxis, which don’t. This week I plan to research more into this and better understand the differences between the two companies.

This week I also updated my abstract to better reflect my project so far. And today, I started an article today called “Foundations for Pricing” by Thomas Nagle that looks really promising for my research and I plan on sharing the insight that I gain from it next week!

I look forward to updating you next week! We are getting closer to the end of the project timeline!

For Reference:

N Gregory Mankiw. (2021). Principles of microeconomics (9th ed.). Cengage Learning.