Hostname: page-component-78c5997874-mlc7c Total loading time: 0 Render date: 2024-11-20T02:20:58.708Z Has data issue: false hasContentIssue false
  • English
  • Français

Valuing Facebook

Published online by Cambridge University Press:  27 February 2019

CASS R. SUNSTEIN
Get access Rights & Permissions [Opens in a new window]

Abstract

In recent years, there has been a great deal of discussion of the welfare effects of digital goods, including social media. A national survey, designed to monetize the benefits of a variety of social media platforms (including Facebook, Twitter, YouTube and Instagram), found a massive disparity between willingness to pay (WTP) and willingness to accept (WTA). The sheer magnitude of this disparity reflects a ‘superendowment effect’. Social media may be Wasting Time Goods – goods on which people spend time, but for which they are not, on reflection, willing to pay much (if anything). It is also possible that in the context of the WTP 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 may be expressive, rather than reflective of actual welfare effects. At the same time, the WTA measure may also be expressive, a different form of protest, telling us little about the actual effects of social media 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.

Type
Articles
Information
Behavioural Public Policy , Volume 4 , Issue 3 , November 2020 , pp. 370 - 381
Copyright
Copyright © Cambridge University Press 2019

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Adler, Matthew (2011), Well-Being and Fair Distribution, Oxford, UK: Oxford University Press.Google Scholar
Bewley, Truman (1999), Why Wages Don't Fall During a Recession, Cambridge, MA: Harvard University Press.Google Scholar
Bronsteen, John et al. (2013), ‘Well-Being Analysis vs. Cost-Benefit Analysis’, Duke Law Journal, 62: 1603–1689.Google Scholar
Brookshire, Dan and Coursey, Don (1987), ‘Measuring the Value of a Public Good: An Empirical Comparison of Elicitation Procedures’, American Economic Review, 77: 554–566.Google Scholar
Brynjolfsson, Erik et al. (2018), ‘Using Massive Online Choice Experiments to Measure Changes in Well-Being’, NBER Working Paper No. 24514. Available at http://www.nber.org/papers/w24514.Google Scholar
Dietz, Simon and Venmans, Frank (2017), ‘The endowment effect and environmental discounting’, available at http://www.lse.ac.uk/GranthamInstitute/wp-content/uploads/2016/08/Working-paper-233-Dietz-Venmans-updateMarch17.pdfGoogle Scholar
Dolan, Paul (2014), Happiness By Design, New York, N.Y.: Avery.Google Scholar
Ericson, Keith and Fuster, Andreas (2013), ‘The Endowment Effect’, NBER Working Paper No. 19384. Available at http://www.nber.org/papers/w19384.Google Scholar
Frederick, Shane et al. (2009), ‘Opportunity Cost Neglect’, Journal of Consumer Research, 36: 551–559.CrossRefGoogle Scholar
Hammock, Judd and Brown, G. M. (1974), ‘Waterfowl and Wetlands: Toward Bioeconomic Analysis’, Baltimore, MD: Resources for the Future.Google Scholar
Hayek, Friedrich (1945), ‘The Use of Knowledge in Society’, American Economic Review, 35: 519–530.Google Scholar
Hu, Xiaomeng et al. (2017), ‘The Facebook Paradox: Effects of Facebooking on Individuals’ Social Relationships and Psychological Well-Being’, Frontiers in Psychology, 8: 87–94.CrossRefGoogle ScholarPubMed
Isoni, Andrea et al. (2011), ‘The Willingness to Pay-Willingness to Accept Gap, the “Endowment Effect,” Subject Misconceptions, and Experimental Procedures for Eliciting Valuations: Comment’, American Economic Review, 101: 991–1011.CrossRefGoogle Scholar
Kahneman, Daniel et al. (1986), ‘Fairness and the Assumptions of Economics’, Journal of Business, 59: S285–S300.CrossRefGoogle Scholar
Kahneman, Daniel et al. (1998), ‘Experimental Tests of the Endowment Effect and the Coase Theorem’, Journal Political Economics, 98: 1325–1348.CrossRefGoogle Scholar
Kloss, Ethan et al. (2013), ‘Facebook Use Predicts Declines in Subjective Well-Being in Young Adults’, PLOS One. Available at http://journals.plos.org/plosone/article?id=10.1371/journal.pone.0069841Google Scholar
Kogler, Christoph et al. (2013), ‘Real and hypothetical endowment effects when exchanging lottery tickets: Is regret a better explanation than loss aversion?’ Journal of Economic Psychology, 37: 42–53.CrossRefGoogle ScholarPubMed
McCaffery, Edward et al. (1995), ‘Framing the Jury: Cognitive Perspectives on Pain and Suffering Awards’, Virginia Law Review, 81: 1341–1420.CrossRefGoogle Scholar
Morewedge, Carey K. and Giblin, Colleen E. (2015), ‘Explanations of the Endowment Effect: An Integrative Review’, Trends in Cognitive Sciences, 18: 339–348.CrossRefGoogle Scholar
Plott, Charles and Zeiler, Kathryn (2005), ‘The Willingness to Pay-Willingness to Accept Gap, the ‘Endowment Effect,’ Subject Misconceptions, and Experimental Procedures for Eliciting Valuations’, American Economic Review, 95: 530–545.CrossRefGoogle Scholar
Posner, Eric and Sunstein, Cass R. (2017), ‘Moral Commitments in Cost-Benefit Analysis’, Virginia Law Review, 103: 1809–1860.Google Scholar
Rowe, Robert et al. (1980), ‘An Experiment on the Economic Value of Visibility’, Journal of Environmental Economics and Management, 7: 1–19.CrossRefGoogle Scholar
Sunstein, Cass (1993), ‘Endogenous Preferences, Environmental Law’, Journal Legal Studies, 22: 217–254.CrossRefGoogle Scholar
Sunstein, Cass (2002), ‘Switching the Default Rule’, NYU Law Review, 77: 106–134.Google Scholar
Sunstein, Cass (2008), ‘Illusory Losses’, Journal Legal Studies, 37, S157.CrossRefGoogle Scholar
Sunstein, Cass (2018), The Cost-Benefit Revolution, Cambridge, MA: MIT Press.CrossRefGoogle Scholar
Tandoc, Edson et al. (2015), ‘Facebook Use, Envy, and Depression among College Students,’ 43 Computers in Human Behavior, 43: 139–146.CrossRefGoogle Scholar
Thaler, Richard H (2015), Misbehaving: The Making of Behavioral Economics, New York, NY: W.W. Norton & Co.Google Scholar
Valenzuela, Sebastiàn et al. (2009), ‘Is there social capital in a social network site?: Facebook Use and college students’ life satisfaction, trust, and participation’, Journal of Computer-Mediated Communication, 14: 875–901.CrossRefGoogle Scholar