Battling an Army of Price-Setters - The American Prospect
This article appears in the October 2026 issue of The American Prospect magazine. If you’d like to receive our next issue in your mailbox, please subscribe here.
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When inflation spiked shortly after the COVID crisis
When inflation spiked shortly after the COVID crisis, neoliberal economists kicked into high gear. Their mission was to defend corporations for all price hikes. The reason why prices were spiking, claimed the adherents to the dismal science, owed to demand—rents ostensibly spiked due to growing demand for home offices—or legitimate cost increases, or really any cause other than the firms actually setting prices higher.
The mainstream media dutifully followed suit. Never mind
The mainstream media dutifully followed suit. Never mind that corporate profits were soaring, or that companies were using new techniques to personalize prices and even turning over their pricing decisions to third-party consultants making use of artificial intelligence. Prices were simply the work of the invisible hand of the market, not executives wanting to use the opportunities presented by the inflationary environment to smuggle in higher profits.
Whenever a heterodox economist took a dissenting view
Whenever a heterodox economist took a dissenting view from the dominant explanations for inflation, including your book reviewer, they were ostracized. We saw this most clearly with Isabella Weber, whose modest suggestion of price controls was mocked as being “truly stupid” by none other than Paul Krugman. (Ironically, it was Krugman who peddled the silly home-office theory of higher rents and ignored, for example, the use of a common pricing algorithm by rival landlords.)
Into this debate stepped Lindsay Owens, a Stanford-educated
Into this debate stepped Lindsay Owens, a Stanford-educated sociologist, Capitol Hill veteran, and the author of Gouged: The End of a Fair Price—and What That Means for Your Wallet. She broke through the economists’ bluster, first with a viral tweet on price-gouging in 2022, which turned into a New York Times essay. The essay did something that few economists or political analysts bothered with: It listened to the actual earnings calls where executives laid out their plans to ramp up prices as much as they could. There wasn’t an invisible hand after all, but real people telling on themselves to their investors. The only beneficiaries of personalized pricing are the firms engaged in the predation. The only beneficiaries of personalized pricing are the firms engaged in the predation.
Three years later, Owens went viral again with
Three years later, Owens went viral again with a white paper about Instacart’s brief dalliance with personalized pricing. The study, conducted by the organization she runs, Groundwork Collaborative, along with Consumer Reports and More Perfect Union, showed that roughly 75 percent of the items in identical Instacart baskets purchased at the same time varied in price from one shopper to the next. Owens’s critique of Instacart’s pricing was so stinging that she managed to spur an investigation by Trump’s otherwise sleepy Federal Trade Commission. Instacart eventually relented, disavowing the surveillance technology in which it had invested millions to rob customers blind.
Now Owens has put everything she’s learned over
Now Owens has put everything she’s learned over the past several years together in a book detailing how pricing is distorted, manipulated, and seized upon by profit-hungry corporations. The book is partly a revolt against economists, and deservedly so: As she writes, “I’m sure you can find plenty of economists and CEOs who will tell you that there’s nothing to see here.”
In a seemingly constant audition for corporate funding
In a seemingly constant audition for corporate funding, many (if not most) economists bend over backwards to defend personalized pricing, often by citing literature related to third-degree price discrimination, such as student or senior discounts. The problem is that personalized pricing is a form of first-degree price discrimination, and the benefits from third-degree price discrimination do not carry over. If we permit a company to charge price-insensitive customers more for the same product, the argument goes, the company can also reduce the price for price-sensitive customers, permitting for an expansion of output.
Owens says, archly: “If that sounds like bullshit
Owens says, archly: “If that sounds like bullshit to you, you’re not alone.” What Owens doesn’t say—again, because she’s not trying to convince conflicted economists—is that so long as the company can charge the price-sensitive types one penny below their willingness to pay under a personalized-pricing regime, no consumer benefits from the exchange.
Consumer surplus, one measure ostensibly guiding neoliberal economic
Consumer surplus, one measure ostensibly guiding neoliberal economic thinking, is literally zero when the price is set at each consumer’s willingness to pay. Price-insensitive types see their consumer surplus get drained, while the price-sensitive types realize no improvement from the status quo. The only beneficiaries of personalized pricing, therefore, are the firms engaged in the predation. And the notion, again peddled by certain economists, that we can take these newfound profits and redistribute them to the losers is hopelessly naïve.
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Battling an Army of Price-Setters - The American Prospect
This article appears in the October 2026 issue of The American Prospect magazine.
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Source: Hacker News