Private Sector Redistribution of Wealth?

Private Sector Redistribution of Wealth? January 19, 2015

Just today I learned the name for something I’ve been noticing but only recently becoming more aware of: “Mather pricing.” Go ahead; google it. In today’s corporatism (capitalism dominated by huge corporations that also have virtually controlling power over governments) increasingly prices are being set based on sophisticated algorithms that are computer-driven that take individuals’ perceived ability to pay into account.

For example, many city newspapers are basing subscription rates on: length of time a subscription has been steady, zip code and income statistics, even home values. One subscriber might pay (for example) $25 for a month’s home delivery while another subscriber, a mile away (but possibly even next door), pays $35 for a month’s home delivery of the exact same newspaper. The difference is based on computer models that take into account the factors mentioned above and more.

Large corporations are increasingly hiring companies to set their prices based on statistics with the usual end result that price is based partly on perceived ability to pay.

For example, a cable television company charges one customer in a city much more than another customer for exactly the same services–based on information gathered without the customers’ knowledge or consent.

This is now so common that some are calling it “Mather pricing” (after the name of one company that pioneered in providing this service to client companies). It is also called “Mather economics” after the name of said company. (This information was given to me by a friend in the newspaper business and I have confirmed it through my own research. Nothing said here is meant in any way to impugn any individual or company but only to inform and raise questions.)

I have two things to say about this. First, I applaud it insofar as it benefits the poor at the expense of the rich. I think it’s ironic, though, that many of the people who participate in this practice would probably complain about government redistribution of wealth! Second, I decry it insofar as it is done without the knowledge or consent of customers and especially insofar as it is done (if at all) using personal data that the customers think is private.

Are we moving toward a form of capitalism in which ALL pricing will be based on perceived ability to pay? Will the day come when prices are not stated even on products and prices are only announced at the cash register–at which time people can, of course, set products aside they do not want to buy at the stated price? Why would that ever happen?  Because once a person takes a product to the cash register he or she is more likely to buy it than not–even if the price turns out to be more than he or she predicted.

Should I pay more for a newspaper or cable service or insurance based solely on company perceived economic status? I am told this is already the case in many instances of business transactions but that most customers are unaware of it. I see ethical issues surrounding this practice, the main one being informed consent (or lack of it) on the part of consumers.

If I have misrepresented this practice or wrongly associated it with any company or individual I apologize and will, if corrected, retract. However, nothing written here is meant in any way to call into question any specific individual’s or company’s integrity or harm their reputation.

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