Economists Calculate the True Value of Facebook To Its Users in New Study (arstechnica.com) 128
A series of auctions revealed that Facebook users value the company's service so highly that it would take on average more than $1,000 to convince them to deactivate their accounts for a year, according to a recent paper published in PLOS One. From a report: This doesn't mean much for the company's stock market valuation, but it's a good indicator that people find value in Facebook regardless of the many concerns raised recently. The paper started out as two separate studies. Jay Corrigan, an economist at Kenyon College, and his collaborator, Matt Rousu of Susquehanna University, were interested in a session on this topic at an upcoming conference. They discovered that Sean Cash (Tufts University) and Saleem Alhabash (Michigan State University) were doing something very similar.
Since the design of both studies was so complementary, they decided to combine their data and results into a single paper. Cash and Saleem had a larger sample for their part of the study and looked at a longer time period of one year, while Corrigan and Rosein focused on shorter time frames, asking subjects to quit Facebook for one day, three days, or seven days. The studies nonetheless had similar results.
Since the design of both studies was so complementary, they decided to combine their data and results into a single paper. Cash and Saleem had a larger sample for their part of the study and looked at a longer time period of one year, while Corrigan and Rosein focused on shorter time frames, asking subjects to quit Facebook for one day, three days, or seven days. The studies nonetheless had similar results.
Slashdot poll? (Score:1)
Seems there could be a poll in this...
Minus $20 (Score:1)
I'd spend $20 a year to not have Facebook around.
On average (Score:3)
Me, it'd take $1000 to convince me to open an account - then a lot more than that to actually use it.
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You're too stupid to understand the consequences of your Facebook use.
Or perhaps you are too stupid to explain it.
Other than seeing more relevant ads (a good thing), what are the consequences?
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Bruce Schneier had a good simple example in Data and Goliath. Facebook now lets you put 'I've voted' badges on your account. This has a measurable effect on voter turnout, something around 4-5%. Facebook knows where you live (even if you lie in your account signup, it tracks where your phone is when you're sleeping if you install any of the apps that shares data with Facebook). It tracks the news stories you read and can, with fairly high confidence, determine your voting preferences. Now, imagine if F
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Now, imagine if Facebook identifies all of the people who are likely to vote for party X and all the people who will vote for party Y. It shows the 'I've voted' badges to supporters of party X, but not to the supporters of party Y. In a lot of elections, that's enough to swing the outcome.
Imagine if Facebook closed the accounts of all Republican candidates. What if Walmart laid off all Democrat employees. What if Youtube shut down all gay content creators.
I guess you kind of expect companies will act rationally and avoid actions that alienate ~50% of their customers. You know, because they like money. I fail to see the point of speculating about irrational actions.
Everyone who signs up to Facebook makes the world a very slightly worse place.
Yes, assuming the terrible thing you thought up in your mind 10 minutes ago is true.
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Imagine if Facebook closed the accounts of all Republican candidates.
This would be obvious to any user, Fox News would have a field day, and Facebook would be in trouble.
What if Walmart laid off all Democrat employees.
Firing people for political affiliation is, as I understand it, illegal in the USA, so they'd end up in court. They'd also likely see a boycott from Democrat voters, so it would be a terrible business decision.
What if Youtube shut down all gay content creators.
Again, this would be visible (though if they only moved them down search rankings and displayed lower view counts on them, it probably wouldn't be) and would cause a backlash.
The point of Schneier's
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This would be obvious to any user, Fox News would have a field day, and Facebook would be in trouble.
Yes, that's the point. As it would be obvious if FB stopped being "I Voted" stickers for folks with a particular political affiliation. I realize that's (slightly) less obvious than my examples but when you have 2 billion users people even the most minute things get noticed.
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How would you notice it?
The tens of thousands of people that voted and didn't see the stickers on their pages?
Or if they showed up a day late, after the election?
Then there'd be a huge backlash against FB and it'd never, ever happen again.
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The tens of thousands of people that voted and didn't see the stickers on their pages?
You're misunderstanding the attack. Person A votes. Person A puts an 'I voted' sticker on their account. Person B has not voted. Person B does not put a sticker. Person C, who votes for the same party as Person A goes to Person A's Facebook page, but does not see an 'I've voted' sticker. Person D, who votes the same way as Person B, goes to Person B's Facebook page and does see one even though B didn't post it. There's now an increased probability that Person D will vote and person C won't. If you p
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That a company (and everyone paying them or serving a relevant subpoena) knows about your preferences and interests. In our time and age with our zeal to outlaw pretty much anything that's fun or "morally wrong" (or both), are you certain that your interests won't come to bite you in the ass? Guilt by association is a big thing these days, ya know, so are you sure that all your "friends" (I'll use that term loosely here since it's Facebook) are not doing something that's morally or legally "wrong" and you'r
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The lowering of your employment opportunities, due to your stupid posts.
If some people lose opportunities due to stupid posts, then that is counter-balanced by increased opportunities for people making intelligent posts. So there is a consequence for being stupid, but no net negative consequence for being on Facebook.
The lies that you believe, generated by foreign agents.
Do you mean like how the Russians spread stories about Hillary colluding with the DNC to cheat in the primary debates? Oh wait, that was the truth.
The curtailing of your civil rights. The overthrow of your democracy.
That is not an explanation, just a baseless assertion.
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And yet as people are informed about the incredible amount of information gathered by Facebook and how they do it more and more are becoming less infactuated with it, with a non-insignificant number of people closing their accounts. Of course given that Facebook track people that have never had an account in the first place that isn't a 100% cure.
Yes we are an anomoly - we are the people that are informed.
Captcha: "paranoia"!
Two relevant quotes:
Just because you're paranoid doesn't mean they aren't after you.
Only the paranoid s
Re: On average (Score:1)
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Deus Ex put it best (Score:4, Interesting)
JC DENTON: I don't see anything amusing about spying on people.
MORPHEUS : Human beings feel pleasure when they are watched. I have recorded their smiles as I tell them who they are.
JC DENTON: Some people just don't understand the dangers of indiscriminate surveillance.
MORPHEUS: The need to be observed and understood was once satisfied by God. Now we can implement the same functionality with data-mining algorithms.
JC DENTON: Electronic surveillance hardly inspired reverence. Perhaps fear and obedience, but not reverence.
MORPHEUS: God and the gods were apparitions of observation, judgment, and punishment. Other sentiments toward them were secondary.
JC DENTON: No one will ever worship a software entity peering at them through a camera.
MORPHEUS: The human organism always worships. First it was the gods, then it was fame (the observation and judgment of others), next it will be the self-aware systems you have built to realize truly omnipresent observation and judgment.
JC DENTON: You underestimate humankind's love of freedom.
MORPHEUS: The individual desires judgment. Without that desire, the cohesion of groups is impossible, and so is civilization. The human being created civilization not because of a willingness but because of a need to be assimilated into higher orders of structure and meaning. God was a dream of good government. You will soon have your God, and you will make it with your own hands. I was made to assist you. I am a prototype of a much larger system.
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Re: Deus Ex put it best (Score:1)
You're right. Let us promptly rid ourselves of all ideas created in works of fiction. Also, abstract works are intangible, so let's do away with laws, mathematics, and philosophy while we're at it.
Imbecile.
The Average Human (Score:3)
The average Human, which is honestly not that far away from the average FB account holder, does not even make anywhere close to $1000 a year.
With all the scams FB et al. have going on in stone age societies I would not expect the average yearly salary of personal FB accounts to be much over $1000.
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The average Human *snip* does not even make anywhere close to $1000 a year.
Got a cite for that? I'm having trouble finding a median (which what I presumed you meant) world income.
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It has actually changed drastically in the last decade. 2008 was nearly half this number, according to the world bank the median is now $2000.
https://www.worldbank.org/en/n... [worldbank.org]
Value proposition isn't the problem (Score:5, Insightful)
The problem with Facebook isn't its value proposition. Clearly people (though perhaps not many of us) find value in using it. The problem with Facebook is the lack of informed consent.
I have no problem with people pissing away their privacy for some additional, marginal utility. That's their prerogative. But that person has a right to understand what it means when they do so: to understand what they're giving up in exchange for what they're receiving. That's a foundational principle on which transactions are built in functioning societies.
When I pay for goods in a store, the terms of the transaction make it clear what each party is giving up: I pay $X and in exchange I receive Y item. One or both of us may not properly value what it is that we're giving up (e.g. an eBay seller listing an item far under what it's worth), but there's never a question about what's being exchanged. But when comparable transactions occur between Facebook and its users, most users aren't even aware that those transactions have occurred, let alone what they've lost in the process. That's the problem.
If people want to throw away their privacy, that's their call, but force those capitalizing on it to make it clear what that means.
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People don't understand what digital privacy means. If they did, they probably would care a lot.
Take things like those kids watches that let you track them, listen to them and call them. Helicopter parents love them. If they knew that the security of those devices is SO crappy that EVERYONE can track their kids, eavesdrop on them and call them, they probably wouldn't love them as much anymore.
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> When I pay for goods in a store, the terms of the transaction make it clear what each party is giving up...
Not really. Most people don't realize what they give in addition to the money when they pay cashless.
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How to inform any better? (Score:2)
Its hard for me to imagine how Facebook could inform people any more robustly than they already do.
They have gone to the extreme lengths that they put a giant ad on your app, that you MUST dismiss, at least once a month asking people to go review their privacy settings.
Of course, everyone just dismisses it.
Is it possible that the majority of people simply do not care as much as Slashdot thinks they should?
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Because everybody wants to repeat a tedious task on a monthly basis, without any forewarning or focus on what diabolical changes have been recently enacted.
If you can quickly size up and imagine what all those cryptic tick boxes imply, you probably don't use Facebook in a serious way.
If you can't quickly imagine what all those cryptic tick
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I think you give far, far too much credit to the average population.
Put a warning dialogue / pop up / message in front of any user. 99.9% of them will "OK" or "Dismiss" or "Close" it without even reading it, regardless of the supposed consequence. People don't care. We have trained users for decades to not care about warnings by over-warning them and over-legalizing them. Warnings are meaningless now, and it is extremely difficult to get users engaged enough to care.
This is a known problem in software devel
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Yet if you ask the average person, I guarantee they will have never visited it, not even once.
Have you taken a poll? I'm a pretty average person and I've visited it. There's never anything I don't recognize, although I do "revoke" some things that I am no longer actively using.
Maybe they have made an informed decision not to care. Why is it so hard to believe that a person looked at all of the Google products they use every day and made a decision that letting Google know they like babysitter pr0n and prefer Coke over Pepsi was a fair trade.
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Thats exactly my point.
The majority of the world HAS made an informed decision to not care.
Yet Slashdot and high-and-mighty lawmakers continue to complain.
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Is it possible that the majority of people simply do not care as much as Slashdot thinks they should?
That, and Slashdot thinks they are smarter than the average person.
$1000? (Score:3)
College students were subjects (Score:3, Insightful)
This poll is not representative of the vast majority of FB users. It used US college students as subjects
- anecdotally FB is a tool of old folks
- college students don't have a care. Unless they're worried about staying in touch with mom
The theme of the report is interesting however flawed the sample.
Originally a college yearbook, drifting older (Score:4, Interesting)
It's true that Facebook's demographic has more older people today than it did ten years ago. However, was originally an online "yearbook" for Harvard, nothing but college students. Currently about 45% of Facebook users are 18-34.
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I can easily believe that, but how old are they?
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This is the wrong way to calculate value. (Score:5, Informative)
Value is not determined by how much people would have to be paid to give something up, but rather by how much people would spend to have it. Want to prove that they're not the same? Ask someone how much they would be reasonably able to spend on food for a year. Then ask how much you'd have to pay them to go without food for a year. :-)
And with Facebook, the disparity is even greater because it isn't something that you have to have to survive, and more importantly, because there are other alternatives that existed prior to Facebook, and there will be other alternatives that will come into existence after Facebook eventually falls apart. This makes giving up Facebook more like giving up eating out at restaurants for a year. It's a hassle, so they'll make you pay a lot for the hassle, and that cost is likely to be way more than the actual cost difference between eating out and cooking food for themselves. But if you made the cost of restaurants higher based on that, people would eat out less often.
To further compound the problem, the only thing keeping Facebook going is network effects, i.e. people use Facebook because everybody they talk to uses Facebook. One person leaving Facebook while everybody else stays is painful. If everybody flees from Facebook to something else at the same time, that's much less painful.
What this means is that if Facebook suddenly decided to charge a subscription fee — particularly the $80 per month subscription fee suggested by this analysis ($1,000 annually), Facebook would implode. I doubt they would be left with even a single subscriber at that rate by the end of the first year. I doubt they would do well at even $10 per month.
Now if Facebook offered an optional $5 per month subscription that gets you ad-free, no-tracking access, some people might do that. But even that would only work if it were optional, because the value of Facebook comes from nearly everyone you communicate with being willing to pay whatever the cost is to access it, and if that cost is too high, the value plummets.
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So who's going to pay for the remaining 3.33$ per month?
In all seriousness, 1000$ annually is an insane number. Look at how much people complain when Netflix/etc even talks about increasing the monthly fee and you can imagine how fast people would move to another (free) platform. That would be the death
Some good points. On the other hand (Score:2)
You made some good points.
I would point out that while it's true that if Facebook (tm) suddenly started charging $1,000 / year, almost everyone would stop using Facebook.com - but only as they switched to a different brand of the same thing.
It would be inaccurate to judge the value of a gallon of milk this way:
How much would you pay to get Borden brand milk, if you could get Daisy brand milk for free?
Assuming a sudden $1,000 / year charge, and everyone leaving all at once, the benefits of the network effec
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As a point of reference, I don't pay a grand a year for unlimited cellphone service. I am not on facebook, but I don't think anyone would pay a grand a year for *any* social media service even if it was the only one. And we know if FB did start charging a grand a year, then some new myspace would pop up and take its place. I imagine it costs FB about a dollar a month tops per sheep. I get a whole VM for 10 bucks a month and I think they have an even cheaper plan for 5 now. And the machine dwarfs what a sing
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Re:This is the wrong way to calculate value. (Score:4, Interesting)
Now if Facebook offered an optional $5 per month subscription that gets you ad-free, no-tracking access, some people might do that. But even that would only work if it were optional, because the value of Facebook comes from nearly everyone you communicate with being willing to pay whatever the cost is to access it, and if that cost is too high, the value plummets.
I think we need to make it easy for people to host their own websites and content. The way the internet was originally intended. Friending someone means "subscribe to their RSS feed."
Packaging is the key (Score:2)
Very much agree!
But the trend seems to point in the other direction.
I think that the success of Facebook has two major factors. One is that a lot of people want confirmation and has a FOMO, and FB gives them a feed for that. However, I don't think that this is the major success factor.
The second and more important factor, and the reason why FB is for "old folks" while the kids hang out on other, more confirmation-focused media, is that it is a super-accessible platform for information sharing in the daily f
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If we want something that can provide the value (to the user) that FB provides, it must be packaged in an equally accessible format.
I think this can be done in an open way.
Re: This is the wrong way to calculate value. (Score:1)
Ask someone how much they would be reasonably able to spend on food for a year. Then ask how much you'd have to pay them to go without food for a year. :-)
What?? "How much would you be willing to spend on food in a year?", presumably the alternative is not having food..... so.... all of my money, and all of yours, too. These questions are identical.
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Nope. I could spend zero for food. I'd have to learn to spear fish, but it is possible.
Re:This is the wrong way to calculate value. (Score:4, Insightful)
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to ask how much would someone pay? The answer is apparently not a lot, which is why have to use ads and steal our data
That is only part of the equation:
- If FB was entirely ad-less, and everyone had to pay $5/month to use it, it would probably have only a fraction of its user base, thereby limiting its use for the paying users.
- If you had the option to pay $5/month to not be tracked and have your privacy invaded, the ad value of the remaining tracked users would be less than linearly scaled.
It seems to me to be a difficult proposition to offer a service that provides the value to the user that FB does but where the users
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Value is not determined by how much people would have to be paid to give something up, but rather by how much people would spend to have it.
In a bilateral transaction, isn't this where the two meet?
What it really tells us (Score:3)
Facebook users value the company's service so highly ...
The most important point is that we should never believe anything that comes from a survey. Creating corporate policy by asking people hypothetical questions is a disastrous way to run a business. The only reliable course is to see what they actually do. Not what they say they might do.
Secondly, there is a massive difference between the inducement that people say they need to do something and what they would actually pay for the opposite. So they say it would take $1000 to get them to close their account. I doubt if even 1% of them worldwide would be willing to pay $1 to open a new account. Or to access "premium" features.
Methodology is completely backwards. (Score:5, Interesting)
This is dumb, they've completely reversed what they should have been doing. People are motivated by profit, so this is just a 'how high a figure can I get you to give me' study. I don't even use Facebook, but I too would have driven the price up to thousands of dollars. Geeze.
What they should have done is the opposite, ask them how much are they willing to spend in order to keep it. Then you'd find the real worth. Some people would spend the thousands, some hundreds, and others like myself would pay $0. Hell, I'd spend money just to wipe Facebook off the earth, it truly is a blight on society.
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The two approaches don't seem all that different. Each one presents a scenario in which you either a. keep Facebook or b. you're some amount (e.g. $1000) richer.
They don't *seem* different but psychologically they are very different. You should read "Freakonomics".
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You mean other than the direction of the money flow?
Also, your example is faulty. Refusing to pay for keeping FB does **not** mean you're "some amount richer". It means you have exactly the same amount you started with and don't have FB. If you try the pedant game of 'if you don't spend it you have more', no, no you don't.
FREEDOM SERVER (Score:1)
Folks, the internet was made to run lots of servers, not just a few Monopoly Systems like FB and Google. No need to suffer their arbitrary censorship and SJW craze. These days we have all the tools to run servers and clients not under the control of billionaries and their strange agendas:
http://altwissenschaft.ddnss.de/PrivatServer.html
http://altwissenschaft.ddnss.de/AlternativListe.html
http://altwissenschaft.ddnss.de/AlternativeOpenSource.html
That's an odd metric (Score:3)
Things like Facebook have a lot of inertia. If you use it a lot, then certainly over a year letting go of it would lead to many small inconveniences adding up.
Even if I had an account and logged in once in a blue moon I would say no to say $100/year, because over a year, it's basically a rounding error. $8/month is well below what I spend on coffee and random nonsense and not worth the exchange for anything that even might come handy.
$1000/year would seem to be the starting point where it starts feeling like money -- if you're living paycheck to paycheck, then $83/month is probably a pretty big deal.
I think that's mostly unrelated to Facebook, though. My logic would go the same if you asked me to say, commit to not using a dremel tool (which I very rarely use). It's less about the value of Facebook, and more about the amount that starts feeling like enough money to justify any sort of year-long commitment.
Of course the price would go up a lot for something I actually valued. I would put a $1000/year threshold as the absolute minimum to consider something of this kind.
$1000? (Score:3)
For free (Score:2)
Send money! (Score:2)
Logged out in May. Haven't read anything there since then. Can I please have $600 now and I'll take the rest in May?
Private Facebook Groups (Score:1)
The best value going to me are the private groups. I belong to several hobby related groups and they're the new forum of the internet it seems, even if the format is terrible for forum-style posting. I can share information and questions with people all over the world and get answers. We show off projects. And they're all on one platform.
I've seen some arguments about going back to personal websites and an extension of that would be the forums that are still going but not nearly as diverse as the FB groups
"Here's $1000, just sign over your Immortal Soul" (Score:2)
The real problem: People don't really understand what it is that Facebook is doing to them. Otherwise they'd likely care more.
Not the real value (Score:2)
That would be how much people would pay if Facebook were to freeze all accounts until they pay a one time or other fee. My guess is the number would be much lower.
I am not an economist (Score:2)
value the company's service so highly that it would take on average more than $1,000 to convince them to deactivate their accounts for a year
I am not an economist (by any means), but perhaps that's how low people value $1000 or amounts under it?
And parachutes work as well as backpacks (Score:2)
The description in the summary implies that people were offered money to give up FB in an attempt to determine how much FB is worth? Did I read that correctly?
For their next study, will they offer cash to meth addicts to see how much the meth industry is worth? It is just that I don't think their take-away from this study is what they summary implies.
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Your mom went to Kenyon.
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