From gas to housing to food, prices are going up on everything. And depending on who you are, they could be going up even higher — thanks to algorithmic pricing.
That’s the subject of Gouged: The End of a Fair Price and What That Means for Your Wallet, a new book by economist Lindsay Owens. Owens is president and CEO of the progressive economic think tank Groundwork Collaborative.
She joins Lake Effect’s Joy Powers to talk about the book. You can learn more about Owens’ work in the latest episode of WUWM’s podcast Swing State of the Union.
This conversation has been edited for length and clarity.
Joy Powers: Can you tell me a bit about your new book Gouged? How did this project begin?
Lindsay Owens: Yeah. Look, there are a lot of things that are driving up prices in the US right now. It really feels like the price of everything is increasing. But I felt like there was one explanation for that phenomenon that wasn't getting quite enough attention. And that is corporate America's reinvention of the ripoff, the way that pricing in recent years has become a highly engineered science. Children's museums charging you more for admission on a rainy day, when you're trying to shelter from the storm. Expedia charging you more for a hotel room if you log on from a wealthy neighborhood. Walmart patenting a new technology for “smart carts” that raise the price of mayonnaise once they see that you've bought tuna. All of these ways in which new technologies are supercharging an age-old impulse — which is to overcharge or nickel-and-dime you. So, I wanted to catalog the high-tech pricing that's happening in our economy right now and explain exactly how it's contributing to prices across the country.
Joy Powers: As you've said, we're in an affordability crisis of sorts. People point to a lot of different causes. In your view, what are some of the biggest things that are impacting prices right now?
Lindsay Owens: Sure. I mean look, the war in Iran is certainly one of the biggest. The pressure it's putting on energy prices is not just showing up at the pump, but rippling throughout the whole economy. The cost of transportation to get goods to market. Diesel prices are up for farmers who make food. Since "Liberation Day" last year, we have been under a tariff regime that has also increased prices throughout the country. The cost of imports is up, and companies pass that right along to consumers. There are some supply chain issues that can put upward pressure on prices as well.
But, I think a lot of these macroeconomic conditions provide a sort of cover, a fog of crisis that companies then exploit. You think it's the war in Iran, not a company reaching further and further into your wallet.
Joy Powers: Let's get into some of these high-tech tools used to gouge us. Can you explain what surveillance pricing is?
Lindsay Owens: It used to be that you figured out how much it cost you to make something, you put a little profit margin on top, you slapped it on a sticker, and you went about your business. Not anymore. Now, companies hire physicists, they hire engineers, they hire AI companies, they buy up AI companies that help them do sophisticated pricing. We have dynamic pricing, pricing that changes in a nanosecond on electronic shelf labels and grocery stores. We have surveillance pricing or personalized pricing, the nefarious practice of spying on you to overcharge you — two things Americans really hate.
How does this work? Companies collect data on you: a breadcrumb trail of your purchase history, what you put in your shopping cart, what you click on, even what you hover over, maybe the geography that you're logging in from, where you are. Are you near the store? Maybe you're more likely to make a purchase. Let's raise the price. You've already taken the trouble of driving here. We've probably got you. All of those types of personal information then deployed in the service of setting a price. It used to be that if you and I walked into a Target, or fired up the target app and bought the same thing at the same time, we could be pretty confident we were paying the same price. That's not always a guarantee anymore.
You can listen to Joy Powers' full conversation with Lindsay Owens above.
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