How Much Would You Pay to Use Facebook? A Behavioral Perspective

8 Pages Posted: 29 May 2018 Last revised: 7 Nov 2018

See all articles by Cass R. Sunstein

Cass R. Sunstein

Harvard Law School; Harvard University - Harvard Kennedy School (HKS)

Date Written: May 21, 2018

Abstract

There has been a great deal of discussion of the welfare effects of digital goods, including social media. The discussion bears on both private practice and potential regulation. A pilot experiment, designed to monetize the benefits of Facebook use, found a massive disparity between willingness to pay and willingness to accept. The median willingness to pay to use Facebook for a month was $1. By contrast, the median willingness to accept to cease using Facebook for a month was $59. The sheer magnitude of this disparity – a “superendowment effect” – suggests that in the context of the willingness to pay question, people are giving protest answers, signaling their intense opposition to being asked to pay for something that they had formerly enjoyed for free. Their answers are expressive, rather than reflective of actual welfare effects. There is also a question whether the willingness to accept measure tells us much about the actual effects of Facebook on people’s lives and experiences. It may greatly overstate those effects. In this context, there may well be a sharp disparity between conventional economic measures and actual effects on experienced well-being.

Suggested Citation

Sunstein, Cass R., How Much Would You Pay to Use Facebook? A Behavioral Perspective (May 21, 2018). Harvard Public Law Working Paper No. 18-30. Available at SSRN: https://ssrn.com/abstract=3173687 or http://dx.doi.org/10.2139/ssrn.3173687

Cass R. Sunstein (Contact Author)

Harvard Law School ( email )

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Cambridge, MA 02138
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Harvard University - Harvard Kennedy School (HKS) ( email )

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