For 150 years, the price tag made a simple and universal promise: the price you saw was the price everyone saw. Now, that promise is disappearing. This week, Lindsay Owens, President and CEO of the Groundwork Collaborative, returns to discuss her new book, Gouged: The End of a Fair Price — And What That Means for Your Wallet. She explains how corporations are using algorithms, personal data, and AI to figure out not what something costs, but how much you personally are willing to pay. From Instacart’s grocery experiments to the coming world of AI shopping agents, the conversation asks a basic question: If nobody knows what the real price is, can markets actually work the way we’re told they do?
Lindsay Owens, PhD, is the President and CEO of Groundwork Collaborative, an economic policy think tank focused on corporate power, prices, and an economy that works for workers and families. She is also the author of Gouged: The End of a Fair Price — And What That Means for Your Wallet.
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Further reading:
Gouged: The End of a Fair Price—and What That Means for Your Wallet
“Same Cart, Different Price: Instacart’s Price Experiments Cost Families at Checkout”
When the Invisible Hand Becomes An Algorithm with Lindsay Owens
How Outsized Corporate Profits Raised Prices with Lindsay Owens
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Nick Hanauer:
The rising inequality and growing political instability that we see today are the direct result of decades of bad economic theory.
Goldy:
The last five decades of trickle-down economics haven’t worked, but what’s the alternative?
Nick Hanauer:
Middle out economics is the answer.
Goldy:
Because the middle class is the source of growth, not its consequence.
Nick Hanauer:
That’s right.
Announcer:
This is Pitchfork Economics with Nick Hanauer, a podcast about how to build the economy from the middle out. Welcome to the show.
Goldy:
I would guess, Nick, that you are a little less price-sensitive than I am.
Nick Hanauer:
It is true. Almost certainly.
Goldy:
Right. You go to the store, you see you want some raspberries, you really want them, you don’t care if they’re $6 a pint or 4, you’re going to buy them, right?
Nick Hanauer:
Yes. Correct.
Goldy:
Whereas, I don’t have as much money as you and I’m a little cheap, so it really matters to me. But you do look at prices like-
Nick Hanauer:
I do.
Goldy:
… and you assume that’s the price. You assume that we go into the store that they’re not selling me raspberries for $3 a half pint and they’re charging you $6 a half pint. Whereas-
Nick Hanauer:
No.
Goldy:
… you say you have a thousand times more money, they could be $3,000 a half pint.
Nick Hanauer:
Correct.
Goldy:
You’re pretty confident and we’re all-
Nick Hanauer:
Correct.
Goldy:
… pretty confident that we’re both getting the same price.
Nick Hanauer:
Yeah. It turns out that’s not true.
Goldy:
How’s that happening, Nick? Are you telling me that companies-
Nick Hanauer:
You’re getting a-
Goldy:
… are taking-
Nick Hanauer:
You’re consistently getting a lower price than me, and I think that’s what I’m telling you. At least that’s what our friend Lindsay Owens is telling us. Lindsay is an old friend of ours who is the President of the Groundwork Collaborative, which is an economic policy think tank in Washington, D.C. And she has a new book out that is focused on what I know to be one of her personal pet peeves in the world, which is algorithmic pricing. And her book is called Gouged: The End of a Fair Price-and What That Means for Your Wallet. And the thing is, it’s really hard to see this happen in practice.
Goldy:
Intentionally.
Nick Hanauer:
Exactly. If I’m-
Goldy:
It’s intentionally hard.
Nick Hanauer:
… if I’m on a website and I’m buying something, how do I know what the… You and I would have to spend a lot of time at this for us to be able to determine if I was paying a different price than you were at different moments on different items. And Goldy, I think there may be some validity in certain kinds of markets, airline tickets, hotel rooms being the canonical example probably. If a hotel room has one room left during a big week in a convention, they rightly probably charge higher prices for that than if the hotel is completely empty and no one is around and you want to book the room. You can demand a lower price and often get one. Las Vegas is a great example of that. There are some weeks where a room will cost a thousand dollars and some weeks where that same room would cost $200 depending on whether there are people in Las Vegas filling up rooms or not.
But if you’re buying a box of Tide detergent or something like that, there is no scarcity of Tide detergent. And I know that most people would like to believe that the price that they’re paying for Tide is the same that everybody else is paying when they’re buying it at a particular place, not feeling like, “Well, because I was in a hurry or my income is a little higher or I’m just not as attentive to these things that they’re going to stick me with a higher price than someone else.”
Goldy:
Are you telling me that a rising Tide price doesn’t lift all boats?
Nick Hanauer:
Does not. A rising tide does not lift all boats. But anyway, I think that these predatory pricing practices that people are beginning to find everywhere are another instantiation of the neoliberal inshitification of the world that we live with. But nobody knows more about this than Lindsay Owens, I think. She’s now the global expert, so I think we should talk to her.
Lindsay Owens:
I’m Lindsay Owens. I’m the President of Groundwork Collaborative. We’re a D.C.-based think tank focused on anything that’s impacting your wallet. And I’m the author of a forthcoming book, Gouged: The End of a Fair Price-and What That Means for Your Wallet. That’ll be out with Penguin Viking on September 29th. And you can pre-order it now wherever you get your books, Bookshop, Amazon, Barnes & Noble.
Nick Hanauer:
So Lindsay, your book asks a deceptively simple question. What happened to a fair price? What’s your answer?
Lindsay Owens:
Yeah. The book is about what I call the reinvention of the rip-off and how that is eroding a fair price in America. And there are a lot of answers to that question that are more complicated, but there’s one that’s maybe a bit more simple, which is Big Tech happened to the fair price. Big Tech reinvented the rip-off. Companies have been out to make a buck for a really long time. Some of them have found pretty unsavory ways of doing that. There are a lot of old-school ways to empty your wallet, price fixing where a bunch of CEOs get in a room and hatch a plan to keep prices high.
But there are also a lot of new ways that that is happening to consumers throughout the economy. And most of those new ways are facilitated or accelerated by new technologies that on their face don’t need to be used to rip you off, but are being deployed by companies in the service of emptying your wallet. And so I suppose the quick answer to that is Big Tech is what happened to the fair price.
Goldy:
Can we just start at the very beginning, though? Just I think people in our era are all accustomed to the idea of a price tag, that an item outside of negotiating for a new car, which people always hate, that essentially you walk into a store, it has a price tag. That was not always the case. That was once a new technology. When did that start and when did that become the norm, at least in the West?
Lindsay Owens:
Yeah. So over thousands of years, we all haggled, right?
Goldy:
Right.
Lindsay Owens:
You didn’t get a price on anything you purchased. You walked into the market and you asked for what you wanted and then that began the process of negotiation. And your negotiation skills maybe determined your price, what you showed up in, what you wore maybe determined your price. You looked like you could pay more, you probably did. Social information determined your price. You had a little dirt on the shopkeeper, you probably got a better deal. “Are you sure you want to rethink that price?” But about 150 years ago in the U.S., we stopped haggling. I did a little bit of digging into the history of this and people pegged this moment to a couple of changes.
The first is the Quakers who had really strong moral and religious objections to haggling. They felt like all men were created under God, all men should pay the same price for the same item, and they stopped using haggling and started using a fixed price. The actual price tag that you’re used to seeing on an item of clothing in the store, that’s credited to John Wanamaker shortly after the Quakers made their move. John Wanamaker-
Goldy:
Wow.
Lindsay Owens:
… Philadelphia, a retailer.
Goldy:
Everything starts in Philadelphia. Quakers-
Lindsay Owens:
Oh yeah, all the good stuff.
Goldy:
… John Wanamaker, me.
Lindsay Owens:
Yeah, John Wanamaker. I mean, look, I think he is said to be a deeply religious man. I think he was influenced by the move the Quakers made, but let’s be honest, he was a businessman. And while he wanted consumers to spend a lot of time in Wanamaker’s, there was a Crystal Tea Room, you could have tea and lunch and spend your whole day shopping. It was a place of leisure and commerce. When it was time to check out, haggling is kind of slow and labor-intensive, and it’s much better for you to get your items into your horse and buggy quickly. Yeah. So John Wanamaker is sort of credited with the price tag in the U.S., and for 150 years we’ve had a price tag, we’ve had a posted price, and that posted price has made pricing transparent, which is pretty important if you want pricing to be competitive.
It’s hard to comparison shop and it’s hard to drive people to the lower price or the better deal, which helps discipline prices in the market if people don’t know what prices are. But it also made pricing more predictable, which, of course, is important for things like budgeting, making sure you have enough money to pay for all the items you need and you clear at the end of the month or the end of the week. So the posted price was pretty great and it still is and where you can find it.
Nick Hanauer:
So Lindsay, can you give us some of the more egregious examples of what’s going on? Because, obviously, the strategy is to hide all this from people so they don’t know. It’s not like you get to the website and they’re like, “For you, we’re charging you more,” right?
Goldy:
I think they’re exploiting the fact that we have 150 years of norms expecting one price.
Nick Hanauer:
Yeah.
Goldy:
So we go and expect, “Well, that’s the price,” but what are they actually doing?
Nick Hanauer:
Yeah.
Lindsay Owens:
Yeah. So a couple of examples. I mean, the kind of topic that a lot of people are talking about these days is this idea of surveillance pricing. And there are 40 pieces of legislation to ban or curtail surveillance pricing moving in 24 states and additional localities in the United States right now. The governor of New Jersey just signed a law to ban surveillance pricing in food. The governor of New York is looking at signing a law to ban surveillance pricing, but surveillance pricing is a kind of lay term for something that economists refer to as personalized pricing or sort of perfect price discrimination. And this is the idea that companies set a price just for you based on information they have about your willingness to pay your individual demand for an item. How is this possible? Well, it’s pretty hard to run a personalized pricing play in a grocery store.
I mean, Nick, if you and I are standing in line at the grocery store and we’re checking out with the same item and you go before me and you’re charged $2 more than me, you’re still bagging your ice cream and you look up and say, “Hey, wait, what were you-
Nick Hanauer:
For sure.
Lindsay Owens:
… “charged for that item?” And I said, “Oh, I only paid 3.99.” You pull out your receipt, you’re like, “Wait, why was I charged 5.99?” We’d either think there was a mistake or we get pretty ticked off, right?
Nick Hanauer:
Yes.
Lindsay Owens:
It’s sort of not socially acceptable to charge us different amounts for the same item at the same time. But, of course, in e-commerce, I have no idea what you’re buying and what’s in your cart. And we’re in this really atomized marketplace where we don’t have visibility into our contemporary consumer friends, so it’s much easier. And, obviously, other technologies make that atomization more possible still, this idea that companies can create individualized storefronts. So even if you and I were sitting next to each other purchasing the same item, we could be seeing different prices and different items because we’ve been given a personalized storefront. Things like dark patterns are used to create really individualized and sort of curated retail settings.
If we start shopping using an agent in something like Gemini, agentic commerce now headed our way, McKinsey says that’s going to be a trillion-dollar industry by 2030, you have no idea what your chatbot is bringing back to you and at what price versus what mine is bringing back to me and at what price. So all of the ways in which shopping has evolved have made it more possible to run a personalized pricing play without running afoul of consumers. And candidly, when consumers do find out about this kind of thing, and about a year ago, we helped expose some of what Delta was doing using this artificial intelligence company called Fetcher to get better and better at personalized pricing.
When consumers found out about this, it was a PR problem for Delta, and something great happened, which is what we like to see happen, which is the CEOs of Southwest and American came out and said, “Yeah, we’re not going to do that. That’s crazy.” And, obviously, that put pressure on Delta, Delta’s CEO immediately. He just sort of didn’t walk it back. He just said, “We were never going to do that. We got over our skis.” You know?
Goldy:
Because if there’s any industry that’s known for transparent pricing, it’s the airline industry.
Nick Hanauer:
Yeah. Simple, straightforward pricing.
Goldy:
Those prices never change. Everything’s right there. There’s no hidden fees or yeah. Airline, yeah.
Lindsay Owens:
I mean, I could have written about the airline industry in every chapter. It shows up in almost every chapter in the book. The airline industry is where revenue management, which is what a lot of people call this form of dynamic pricing and personalized pricing, originates. The airline industry used to have price controls when it was-
Nick Hanauer:
Oh yeah.
Lindsay Owens:
… deregulated in the Carter era. CEOs had to start figuring out how to price themselves. They hired an army of pricing consultants. Those consultants pioneered the revenue management software that has built dynamic pricing, algorithmic price fixing, and surveillance pricing, as well as drip pricing and unbundling prices, paying for the seat and the luggage and the fare separately.
And they have exported all of that across the economy. I talk in the book about RealPage, this algorithmic price-fixing software that a real estate tech company uses and came under scrutiny in the Biden administration, but all of the RealPage software originated with the airlines. And, in fact, the very people that RealPage hired to put together their revenue management software were the people who built the revenue management software in the airlines decades earlier.
Nick Hanauer:
So if I go to Walmart, not the store, but the website, am I going to pay a different price for something than somebody else?
Goldy:
Did you wonder why that jar of peanut butter, Nick, is $4,000 for you?
Nick Hanauer:
$4,000. It seemed expensive, but I didn’t know. It’s been a long time since I bought one.
Lindsay Owens:
Yeah. So it’s hard to know where surveillance pricing is being used and when it’s being used on you. And that’s, of course, by design, but we have a few clues, and I can give you some specific clues around Walmart. The first thing that we’ve taken a really close look at is Walmart’s patent applications, the ones they filed and the ones that have been granted. And I think what you’ll see if you review Walmart’s patent applications is they’re well on their way to building a whole host of pretty sophisticated pricing algorithms that would allow for personalized pricing, personalized discounting, as well as personalized pricing. The second thing we know about Walmart is they have started using Sparky. Sparky is Walmart’s shopping assistant, AI shopping assistant that you can use to help you navigate Walmart online and in the app. And we listen pretty closely to earnings calls.
That’s a big part of how I did the research for this book, but it’s also something my organization enjoys doing in our leisure time. And when Walmart talks about Sparky, they say a few things. The first is that revenue in Sparky relative to non-Sparky users is up by like 35%. There could be a lot of reasons for that. Higher income folks use Sparky, lower income folks don’t. Sparky’s upselling, Sparky’s closing, making sure you don’t forget to leave the stuff in your cart. Lots of kind of kind of perfectly innocent reasons. But one thing that we are, I think, keeping our eye on and are pretty worried about is Walmart’s executive team has said a couple of times that Sparky is the key to Walmart’s personalized future, this idea that they’re getting better and better at offering you the particular products you want, which could be beneficial and efficient and nice.
Shopping online is hell and comparison shopping is hell and there’s information overload and it’s really nice to think about outsourcing some of this work. But at the same time, the more information you give someone like Sparky, that you’re in a hurry, that your toddler has a birthday party on Saturday, not that I would know about that, the more likely Sparky is to say, “Okay, you need it now. I’ve got you over a barrel. I can offer the higher price point item. I could maybe charge more.”
Nick Hanauer:
How about Amazon?
Lindsay Owens:
Yeah. Amazon’s pricing is a dystopian hellscape. Uncovering all of the different dimensions of Amazon pricing is a task that we could devote the entire D.C. think tank industry to for years and still not get to the bottom of. They have run massive pricing experiments and dynamic pricing experiments throughout their existence at any given time. I mean, the amount of products that are on Amazon that you can be testing pricing on is immense. They are also really investing in shopping assistance. They have Rufus to Walmart’s Sparky. These guys all have funny names, guys or gals, I’m not really sure which. But yeah, I mean, look, Amazon is doing a ton of dynamic pricing at any given time. And there have been some examples of sort of personalized pricing that have arisen from investigations into Amazon, but we really, honestly, are really just scratching the surface of what is possible with pricing at Amazon and what we know about how Amazon prices.
Goldy:
One example you have which is really clear, and we talked about it with you before on the pod, is the experiments that Instacart was doing.
Lindsay Owens:
Yeah.
Goldy:
Just very quickly remind our listeners about what you found.
Lindsay Owens:
Yeah. Late last year, my organization teamed up with Consumer Reports and More Perfect Union and experimented on Instacart’s experiment. And so we recruited about 400 volunteer secret shoppers to buy groceries from Instacart from the same locations at the same time, same basket of groceries, the 12-ounce box of Barilla pasta, the Lucerne eggs. And what we learned is that Instacart was offering groceries from the same store to consumers at different price points. That wasn’t occasionally. 75% of the items were being offered at multiple price points. Sometimes the same item was being offered at five different price points at the exact same time in the exact same store location. The price difference between the low price and the high price in our experiment was as much as 23%. I mean, that’s an enormous difference when you think about groceries because you don’t just buy one grocery item and you don’t buy one basket of groceries.
You buy a big basket of groceries and you go every week. And so the potential price variation across consumers was substantial. We estimated using Instacart’s own numbers for what a household of four spends on groceries in a year, that the pricing experiments could be costing a family as much as $1200 over a given year, which is like a month’s rent in some cities. So we exposed sort of a large-scale experiment. And this wasn’t a big surprise to us. We knew that Instacart was running experiments on grocers. How do we know? Instacart in the early 2020s bought a company called Eversight. Eversight was a company designed to help e-commerce platforms run experiments on shoppers. And Instacart was really proud of this acquisition and talked about it a lot. Eversight was really proud of what they built and has a website letting you know what they do. Eversight’s or Instacart’s CEO, who purchased Eversight, heads over to OpenAI a few years later to join their team.
It was big news at the time, I think. It’s been, I think, really influential in sort of spurring this kind of flourishing body of legislation to ban some of these practices. But I think this core idea that you and I should be charged the same amount for the same item at the same time really violated by the sort of large-scale experiments they were running on millions of Americans while they shop for their groceries. And I also think this idea that they were running these experiments on something as simple as food and an essential item for us also really rubbed people the wrong way. Look, we expect dynamic pricing in the airlines. There’s five tickets left. There’s only so many seats on a plane. You going to pay more if you want one of those last five seats. Dynamic pricing has been used to ration scarce resources.
There are obviously other ways to ration scarce resources. We saw this with the outrage around FIFA, who rolled out dynamic pricing for the first time ever for this American World Cup. You can use a queue, first come first serve. You can use a lottery, you can give everyone a chance to get a seat on the plane. Target isn’t running out of Wheat Thins. This wasn’t about rationing scarce resources. This was about-
Goldy:
Also, the difference between a lottery or an auction is that those are transparent ways of distributing scarce resources. There’s nothing transparent about Instacart just randomly or maybe not randomly assigning you a higher price.
Lindsay Owens:
Yeah. But look, this kind of thing, using dynamic pricing in settings where goods aren’t scarce is becoming more and more common. And there was an interesting example last year of a Las Vegas newspaper sent a bunch of interns to the casinos and had them go shopping in the sundry stores and said, “Okay, shop for the sunscreen, shop for the Monster Energy drink, shop for the six-pack of beer, the bottled water, et cetera.” And they went over and over again different times of day, different days of the week. And what they found is dynamic pricing is really becoming the norm in a whole host of settings, particularly settings in which you’re more captive. It takes a while to wind your way out of Caesar’s Palace and get across the strip to a CVS.
Nick Hanauer:
Yeah. You’re not going across the street to get a Gatorade.
Lindsay Owens:
Yeah.
Nick Hanauer:
[inaudible 00:22:48]-
Goldy:
When it’s 115 degrees outside.
Lindsay Owens:
A hundred percent. Right, and a can of sunscreen, right?
Nick Hanauer:
It takes you 40 minutes to walk there, so you’re definitely captive.
Lindsay Owens:
Yeah.
Nick Hanauer:
But they were changing prices within those sundry stores.
Lindsay Owens:
Unbelievable variation. And-
Nick Hanauer:
Wow.
Lindsay Owens:
… it was a really great piece. They did a couple of interviews. I talk about it in the book. They did a couple of interviews. They did interviews with some of the cashiers who said, “Yeah, we actually, there are no price tags anymore, so we have no idea what anything costs until we ring it up. And the algorithm from HQ displays the new price. So if you were to ask me how much this costs, I couldn’t tell you until I ring it up.” They also did an interview with a guy who was pretty upset about price variation for beer. He was quite cute and said that the first time he went back for another beer and it was a higher price, he wasn’t quite sure if he remembered the right price from the previous time because he’d been drinking a lot of beer, but once he sort of pieced it together, he was like, “Hey, this is really unfair.” You know?
Goldy:
Well, that makes-
Nick Hanauer:
Wow.
Goldy:
… a lot of sense. Every subsequent, once you’ve had a couple, the subsequent beer should be more expensive.
Nick Hanauer:
Yeah, exactly.
Lindsay Owens:
You’re much less price sensitive and price aware.
Goldy:
Yeah.
Nick Hanauer:
Yeah.
Goldy:
Well, I’m curious, you said how many states are pushing legislation to ban this right now?
Lindsay Owens:
Yeah. So we’ve seen 40 pieces of legislation in 24 states since the beginning of the year. Unfortunately, we have already seen some vetoes. So Governor Polis in Colorado vetoed the legislation there, despite the fact that it passed out of their legislature. We’ve also seen a fair amount of watering down. So Maryland claims to have the first piece of legislation cracking down on some of the surveillance pricing and groceries, but actually, by the time it got to Wes Moore’s desk, it’s unclear how much impact it’s going to have. Yeah.
Goldy:
So what is the economic argument opponents are making against these bills?
Lindsay Owens:
They’re not making sort of coherent economic arguments. They’re making advocacy arguments. And their biggest argument is that proponents of bans on surveillance pricing are opposed to discounts and that we hate discounts and that we’re out to-
Goldy:
Oh, they’re… Oh, okay. They’re not using it to raise prices. They’re only doing it to lower prices because-
Lindsay Owens:
Exactly.
Goldy:
… they’re the good guys.
Lindsay Owens:
Exactly. And that if I can’t get that personalized coupon for a dollar off Pantene in the 17th coupon at the end of the CVS receipt, that’s the end of the economy. And our argument back is we love a discount. Give everybody a dollar off Pantene, do a Memorial Day mattress sale, give us an AARP discount, give us a happy hour. We’re fine with discounts. But if you get a discount and I don’t, I paid more than you, and that’s personalized pricing. And we’ve run polling on this to test the efficacy of industry arguments and trade association arguments. And, unbelievably, 72% of Americans say that they’re okay with discounts being a little smaller on average if everyone gets access to the discount.
And I think that’s actually really incredible in a world in which everyone’s looking for a fair price and a low price that people are willing to accept slightly lower discounts on average if it means that we all have access to them rather than that they’re being meted out based on a company’s assessment of whether or not they can get you to pay full freight or they’re going to need to lure you in at a lower price point individually. Pretty interesting that that industry argument falling on deaf ears. Yeah, this is in some cases an 80-20 issue, in some cases a 90-10 issue.
That says to me, this isn’t really a policy conversation, this is a values conversation. And fair pricing touches on a moral issue, the one that the Quakers identified so many years ago, this idea that we should all have access to a fair price. And this is a tough argument to have in public, which is why most of these industry assaults on these pieces of legislation are happening with lobbyists in closed rooms.
Nick Hanauer:
Yeah.
Goldy:
Morality and economics-
Nick Hanauer:
Yeah.
Goldy:
… come on, those two aren’t supposed to-
Nick Hanauer:
Cats and dogs living together. So Lindsay, what should we do?
Lindsay Owens:
Oh man. All right. So in the book, I put forward a few offerings. One thing I did, because everyone always asks me, is I laid out kind of what consumers can do for themselves. I think, Nick, you and I probably agree on this. It really shouldn’t be the job of every consumer to duck and dodge, bob and weave and beat the robot. That’s going to get harder and harder as agentic commerce really takes over and upends what we know today of e-commerce. So I think we had a few options. The first is I put forward something I call a shopper’s bill of rights, which I position as an updating of what consumers are owed in a marketplace in this age of e-commerce, age of agentic commerce, age of new technology. Things like algorithmic price fixing is price fixing and, therefore, is illegal. Things like if you buy it, you own it and you should be able to repair it.
Things like one fair price, there’s no surveillance pricing. You can’t use my data against me to overcharge me. You can’t spy on me and pick my pocket. All-in pricing, we don’t need drip pricing. It’s impossible to comparison shop if one price is being decomposed and one price is full. And it really penalizes the company that offers the full transparent price upfront because their price looks higher initially, even though it may not be by the time you complete the transaction. So I talk about a lot of things like that in the book. I also think in the land of agentic commerce, look, if Gemini is telling you that this agent is shopping on your behalf, then this agent better be shopping on your behalf and not their behalf.
Nick Hanauer:
Yeah.
Lindsay Owens:
Agents throughout history have been required to serve your best interest. That’s a common law expectation. So when we start to see more shopping in agentic commerce, agents should be working in your best interest. Mark Warner, hardly a anti-tech progressive firebrand, has actually put forward draft legislation to do exactly this. So those are some of the things I talk about in the book. I’m also really interested in some conversations that I’ve gotten to have as folks have reached out to us after the Instacart study and as we’ve been talking more publicly about the book from folks in the business community who are interested in building extensions that help folks find the best price and agents that will shop and work in consumers’ best interests. So I think there’s a burgeoning but kind of interesting element here where some new technologies could be offered in the public interest and consumers could vote with their feet. But look, I think there is, and I’ve said this for a long time, there is a market for companies who are willing to offer fair pricing, cost-plus pricing, transparent pricing.
And there are people who’ve done well in this way. Costco does cost-plus pricing. Mark Cuban’s healthcare empire is going to be cost-plus drugs. There are people who are saying, “Actually, there’s a better way to do this. We could charge you the maximum you’re willing to pay for a cancer drug because you’re about to die, or we could offer it at cost plus a little margin to keep us building the next set of drugs and to pay our staff.” In the sports setting, one of the examples I talk about in the book is the Savannah Bananas, who’ve built this actually kind of really interesting kind of minor league variety show baseball empire that’s doing really well and actually doing better than some major league teams in terms of revenue. And they offer fan-first pricing and fair pricing, all-in pricing. Even concessions are included in some of their ticket prices.
They use a lottery system instead of auctioning off tickets. So I think they’re also a nice set of examples of folks in the private sector who are bucking the trend. And I think there’s a reason why people like shopping at Costco. They feel like it’s transparent, even if it’s not always the cheapest option on the table.
Goldy:
Right. And it’s not always the cheapest option-
Lindsay Owens:
No.
Goldy:
… but the public resentment to surveillance pricing, personalized pricing, I think it’s a great example of loss aversion. That idea, “Oh, you might get a discount,” but nobody wants to be ripped off. And that’s the thing about Costco shopping is you know you’re not being ripped off. Everybody’s paying the same price, you’re getting a fair price. You don’t have to be perfectly informed.
Nick Hanauer:
I mean, the thing about this stuff is it just requires mental energy that people don’t have available.
Lindsay Owens:
Yeah.
Nick Hanauer:
That’s the thing that’s infuriating is to get to the damn store or wherever, I get to the website and I just want to be treated fairly. I don’t want to have to think through if I’m getting ripped off here because my income is a little bit higher than the next or whatever. Do you know what I mean? It just-
Goldy:
Do people try to rip you off, Nick, because your income is higher-
Nick Hanauer:
[inaudible 00:31:38] yeah.
Goldy:
… than the next person almost always?
Nick Hanauer:
Continually.
Lindsay Owens:
I mean look, there’s always this kind of interesting question with surveillance pricing. Will it have this Robin Hood effect by overcharging wealthy people and-
Nick Hanauer:
No.
Lindsay Owens:
… cross-subsidizing poor people?
Nick Hanauer:
No.
Lindsay Owens:
No. Look, like-
Nick Hanauer:
No.
Lindsay Owens:
… if you’re in a time crunch, if you’re desperate for something, if you’re dealing with an essential, even if you’re a poor person, your willingness to pay is high because you need it now. You’re over a barrel. So that definitely won’t happen. The sort of most likely scenario is everyone will get overcharged to the greatest extent that they can be overcharged. But yeah, absolutely. We hear from companies all the time that in this K-shaped economy where consumption is plugging along at a steady clip, particularly in the upper ends of the income distribution, companies are taking advantage of that, right? They are-
Nick Hanauer:
Yeah.
Lindsay Owens:
… charging well more than you need to in part because they know there are shoppers who will pay a premium. So really, the way that it shows up and sort of the extent of it looks different maybe in some settings across the income distribution, but I think the TLDR is everyone’s going to get ripped off, right?
Nick Hanauer:
Yeah.
Lindsay Owens:
Yeah.
Nick Hanauer:
Yeah, yeah, yeah. So okay, so Lindsay, if you were going to do like one thing, what would you do?
Goldy:
Zero political constraints, you can enact one thing.
Lindsay Owens:
Yeah. As I mentioned, I’m sort of pretty fixated on the future of agentic commerce and the extent to which that’s going to upend traditional e-commerce, the way that AI has upended search, the way that Google Search no longer works the way you want it to. Similarly, a lot of e-commerce will be eroded. So I’m pretty worried about that. And I think the good news is most people aren’t shopping in AI right now, not using chatbots to do all their shopping. So I think there’s still time to get out in front of it. And I’d say, look-
Goldy:
But wouldn’t… I mean, I’m just shocked that you think a chatbot wouldn’t have my best interest at heart.
Nick Hanauer:
Okay. But it’s an agentic shopper is not a hard thing to set up.
Lindsay Owens:
Yeah.
Nick Hanauer:
There will be a lot of competition in that space. And the number one thing that people will be competing on is price. And I just guarantee you that there will be plenty of agentic shopping options where the company irretrievably commits to being on your side. Who would sign up with one that wasn’t?
Lindsay Owens:
Look, I think the question here is the dominance of some of these major platforms and the extent to which Gemini is going to let your agent go shopping on your behalf or require you to use their agent. So I think there are a lot of questions here about the future-
Nick Hanauer:
Yeah, but somebody-
Lindsay Owens:
… of e-commerce.
Nick Hanauer:
… can license these. Obviously, you can license these platforms and set one of these things up and be like, “No, no, no, no. We’ll show you all the options. Here are your 10 options. Here are the prices. This is the best one.” I don’t know. I mean, agentic shopping may put the kibosh on some of this stuff. I mean, again, there is this scenario where there is no choice and you have to go with whatever the terrible people are offering, but I just don’t think that’s realistic. I think that it-
Lindsay Owens:
And, well, I think the concern that I have in the surveillance pricing setting with agentic commerce is the extent to which these companies have a level of information about you that previous retailers could have only dreamed of. They’re putting together breadcrumb trails based on your purchase history, based on third-party data they buy about you, based on crude proxies they infer about you, like your IP address and what zip code you hail from, and that’s a proxy for your income. The types of information people give to chatbots about themselves, about their families, about buying habits, they can infer a whole host of information about you, but they can also just ask you like, “How soon do you need this? How desperate are you for this? What is the trade off here between how quickly you want it and how premium you want it and what kind of deal you want?”
So I think there’s just a level of sort of privacy concern and how that matches up to personalized pricing that is quite concerning. And so one of the things I’ve been most interested in seeing is, and I don’t know if I have the policy solution exactly right, but I really like this conversation around agents being required to act in your interest in the way we require financial advisors to act in your interest or realtors act in your interest.
Nick Hanauer:
But, in fact, financial advisors often don’t act in your interest.
Lindsay Owens:
Sure.
Nick Hanauer:
And there was a whole-
Lindsay Owens:
We’ve been debating these-
Nick Hanauer:
… you end up [inaudible 00:36:12]-
Lindsay Owens:
… issues in Washington for decades. But-
Nick Hanauer:
I can’t remember the fight that I believe we lost to require financial-
Lindsay Owens:
The fiduciary rule fight in the Obama era.
Nick Hanauer:
Did we lose that fight? I mean-
Lindsay Owens:
Well-
Nick Hanauer:
… Lindsay-
Lindsay Owens:
… we won it until we lost it in the courts.
Nick Hanauer:
Okay. Okay, I couldn’t remember.
Lindsay Owens:
We won it in Washington, and then we got held up in Texas, and-
Nick Hanauer:
Yeah. Oh, that’s right.
Lindsay Owens:
… yeah.
Nick Hanauer:
That’s’ right.
Goldy:
But if we do get it and an agent violates it, we’ll just send that agent to jail-
Lindsay Owens:
What I will say is there’s been some-
Goldy:
… and we’ll prosecute it.
Lindsay Owens:
… there’s been some early research on this by some computer scientists and economists at Princeton and University of Washington. And they had the agents do some shopping for them. They had the agents do some financial advising for them. And what they found is they’re almost always recommending the higher priced product despite the fact that it’s not better necessarily. And they’re often recommending predatory products. So we had an example of someone being offered a payday loan. And so the early indication is not good. The good news is, and why I’m kind of bullish on this conversation, is it’s early. The horse isn’t totally out of the barn. You and I aren’t doing all of our shopping in Gemini right now, right?
Nick Hanauer:
Right. Interesting. Well, this is a fantastic conversation, Lindsay, as always. And congratulations on the book.
Goldy:
You want to do the final question, Nick? We’ll ask her again. We’ll see if she’s got a surveillance answer and she changes each time she’s on the podcast.
Nick Hanauer:
We’re going to match your answer to the other times that you were on-
Lindsay Owens:
Oh, no. What’s-
Nick Hanauer:
… the podcast.
Lindsay Owens:
… what’s my question?
Nick Hanauer:
Why do you do this work?
Lindsay Owens:
Oh God.
Goldy:
It’s a personalized answer to this particular episode.
Lindsay Owens:
Yeah. I mean, I will say I wrote this book because I’m rip-roaring mad about the extent to which the conversation in Washington continues to fixate on this idea that prices fall from the sky and that they are a function of competitive markets. And I think what this book shows over and over again is high prices are a function of corporate decision-making and the deployment of new technologies in the service of ripping you off and emptying your wallet. And I think exposing it and shining a light on it is the first way to start the conversation around how to end it and fix it. And so that’s sort of, I think, the reason I wrote the book and it’s really part of my work as well. I think the imbalance of power between corporations and consumers and workers has gotten to an unacceptable and dangerous level in the U.S. economy and in our democracy as well.
And while folks are focused on prices and while I think those types of conversations can sometimes feel abstract, when you bring them down literally to the level of the pocketbook, I think it starts to make things a bit clearer. And so I think this is an important kind of entry point into larger conversations about the role of Corporate America and how far we will let them go and when the American people’s taste for fairness should overrule a corporation’s ability to extract from you.
Goldy:
So I was actually struck, Nick, by what Lindsay said at the end of the interview when we asked her why she did this work. And this gets to a fundamental of economics about pricing. You can have dynamic pricing. You talked at the beginning of things like hotel rooms. There’s a limited inventory of hotel rooms and if there’s only one or two rooms left, they’re going to raise the price. The demand is exceeding the supply.
Nick Hanauer:
Yeah.
Goldy:
But what we’re actually seeing is something very, very different. What we’re seeing is dynamic pricing on goods that are not scarce.
Nick Hanauer:
Yeah, that’s right. For which there’s-
Goldy:
And-
Nick Hanauer:
… infinite supply-
Goldy:
… right.
Nick Hanauer:
… effectively.
Goldy:
They’re not running out of pasta. So there’s no reason for Instacart to charge one person 2.50 a pound and the other person $1.75 a pound. There’s plenty of pasta. They’re charging dynamic pricing on a non-scarce good.
Nick Hanauer:
Yeah.
Goldy:
And if you understand economics, the way it’s taught at the introductory level, that’s not possible in a functional market. There are some really basic assumptions. We know, we go back, Mankiw’s textbook, economics is the study of how society distributes scarce resources. It’s all about distributing scarcity and it’s all this equilibrium system in which there is this natural inverse relationship between price and demand. And that is how markets efficiently and fairly allocate resources because when the price goes up, some people will purchase less of it, it will reduce demand, and producers will create more because the price is high and eventually you will balance supply and demand.
But when the price is totally disconnected from demand, even if you believed that’s how a market economy basically works, and we don’t say that supply and demand isn’t a thing. We just say that it’s not the thing that really describes how the market produces benefits. But regardless, whatever you believe, if that’s what it is, that market isn’t working. It’s not a market anymore. It’s not efficient. It is what Lindsay says in the title of her book, it’s gouging.
Nick Hanauer:
Yes.
Goldy:
And so for me, anybody who defends market capitalism, who defines themselves as a capitalist, who believes that markets are the best thing since non-dynamically priced sliced bread, To defend this dynamic pricing, personalized pricing, it’s the end of capitalism.
Nick Hanauer:
Maybe not. For sure-
Goldy:
I’m just saying it’s not capitalism, Nick. It is not efficiently as they define it.
Nick Hanauer:
No-
Goldy:
It’s not-
Nick Hanauer:
… that’s for sure.
Goldy:
… efficient. It’s not fair, and important, and we know it’s not fair, it can’t be efficient because there’s-
Nick Hanauer:
Because nobody knows what the real price is.
Goldy:
… right. And that’s part of the magic of the price tag is that it helps in one of the other assumptions behind Orthodox economics. And that is for you to make a rational decision based on price. Price is information. You need to be perfectly informed. And when there’s a price tag, you are perfectly informed of the price you are going to pay.
Nick Hanauer:
Yeah.
Goldy:
When there is no price tag and you could log on in one minute it’s this price and the next minute it’s that price and you might get a different price than me who might get a different price from my neighbor, there’s no way to be informed about pricing anymore. And that assumption is really important. Again, for it being an equilibrium model, it can’t be working that way if we have no idea what the price is. And it also gets to another core claim of orthodox economics about price, is that price reflects both value and cost. That is what they teach you in that textbook, that the price is reflecting both value and cost. Now, I think that’s silly, but that’s what they’re claiming. It clearly is not reflecting either. It’s reflecting some algorithm’s ability to gouge you for as much money as it possibly can.
Nick Hanauer:
Yes. Yeah.
Goldy:
That’s not a market economy.
Nick Hanauer:
And it’s certainly not good for most people.
Goldy:
No.
Nick Hanauer:
That’s for sure.
Goldy:
So if you want to learn more about this, we urge you to go online and search for the lowest price for pre-ordering Lindsay’s book, Gouged: The End of a Fair Price-and What That Means for Your Wallet.
Freddy Doss:
Pitchfork Economics is produced by Civic Ventures. If you liked the show, make sure to follow, rate, and review us wherever you get your podcasts. Find us on other platforms like Twitter, Facebook, Instagram, and Threads, @PitchforkEconomics. Nick’s on Twitter and Facebook as well, @NickHanauer. For more content from us, you can subscribe to our weekly newsletter, The Pitch, over on Substack. And for links to everything we just mentioned, plus transcripts and more, visit our website, pitchforkeconomics.com. As always, from our team at Civic Ventures, thanks for listening. See you next week.