I always feel like I’m overpaying whenever I buy something these days. I never seem to have access to the best coupons, and apps with algorithmically adjusted prices don’t exactly lower the cost of what’s in my cart. It feels like prices are constantly creeping up and my budget is being stretched thin.
These core frustrations were what drew me to Gouged: The End of a Fair Price and What That Means for Your Wallet. Author Lindsay Owens knows what it’s like to advocate for consumers’ economic interests. She’s the CEO of Groundwork Collaborative, a DC think tank and corporate watchdog, and previously worked as an economic policy adviser in Senator Elizabeth Warren’s office.
Before the launch of her book, available now, we spoke about how software has been instrumental in changing how goods are priced, and how generative AI could make existing issues worse. Owens also shared a couple of tips for readers who want to claw back a fair price.
The following conversation has been edited for length and clarity.
WIRED: The era of fixed prices for goods and services already feels like it’s in the rearview mirror. How did we get to this current cultural moment where costs are so variable?
Lindsay Owens: It turns out we all got a little too comfortable with the fixed price. We’d had it for 150 years, since John Wanamaker stuck a price tag on the items in his department store in Philadelphia in the late 1800s. Maybe we just assumed it was a law, but it was actually a norm.
It is under attack, if not gone. I think the biggest contributor to the end of a fair price is new technology. There was, of course, always an impetus to overcharge, but new technologies have supercharged that impulse. Big tech reinvented the rip-off. They supercharged these age-old impulses, and they made it possible to squeeze more out of Americans in almost every transaction. New technologies are the cornerstone of this shift.
An eye-opening moment for me earlier this year was when I requested all the data McDonald’s keeps based on my app interactions. I got a 515-page dossier that estimated a zero percent chance I’d ever stop being a customer. How can loyalty apps negatively impact what people pay?
Loyalty programs are sophisticated data harvesting. Most of us kind of know that. We enter knowing it’s a bit of a devil’s bargain. We are giving up a lot of data, but we do it in exchange for the promise of deals and discounts tied to our loyalty. It turns out they’re not holding up their end of the bargain.
In 2004, a Duke economist named Curtis Taylor put out a piece asking what would happen once companies could buy and sell records of what shoppers purchased. He said that once loyalty programs go high-tech, firms will use those records to identify their most eager customers and charge them more. The effect was that consumers would pay a price for their loyalty. I think his warning rings true today.
Could you explain what you mean by surveillance pricing?
Surveillance pricing is a technique that’s at the intersection of two things Americans hate: getting preyed on and being ripped off. It’s a colloquialism for something you might have learned about in economics class called personalized pricing. This is the idea of changing prices not based on market conditions, not based on demographic groups. In first-degree price discrimination, the company uses information about me personally to decide and estimate my willingness to pay.
Importantly, willingness to pay isn’t the same thing as ability to pay. Maybe you need something urgently—you’re a mom in the middle of the night with a sick kid, and you need Tylenol on your doorstep in the morning. There are all sorts of reasons why you might be desperate.