Neale Mahoney
Appearances
Freakonomics Radio
628. Sludge, Part 2: Is Government the Problem, or the Solution?
At some point, we should talk about my work on subscriptions because it fits in to all of this. Okay, let's talk about that. The starting point for this project is I had a general impression that nobody can keep track of their subscriptions.
Freakonomics Radio
628. Sludge, Part 2: Is Government the Problem, or the Solution?
So me and my team, we took a list of the 50 highest circulation newspapers in the U.S. and we signed up for subscriptions and we canceled them. And we did it in Massachusetts. where there are no special consumer protection laws on the books.
Freakonomics Radio
628. Sludge, Part 2: Is Government the Problem, or the Solution?
Not where the firm is. Not where the firm is. So we did it from Massachusetts and then we did it from California, which is where we're based, and where there were consumer protection laws on the books which say it should be just as easy to cancel as it is to sign up. You should be able to cancel online. You should be able to cancel without unnecessary impediments.
Freakonomics Radio
628. Sludge, Part 2: Is Government the Problem, or the Solution?
We're doing the same thing from those two places. In Massachusetts, 100% of newspapers you can sign up online. I don't think that's surprising. Less than half of them, only 45% of them, can you cancel online? The rest you have to call during business hours. You get passed from operator to operator. They ask you for reasons. Sometimes the call drops. They try to upsell you. They try and upsell you.
Freakonomics Radio
628. Sludge, Part 2: Is Government the Problem, or the Solution?
While you're trying to cancel. Exactly. And even when you can cancel online, it's not click to cancel. It's What is your reason for canceling? Would you like this other offer? What's your favorite color and type of dog? And then you can cancel.
Freakonomics Radio
628. Sludge, Part 2: Is Government the Problem, or the Solution?
The most infuriating thing we discovered is there were newspapers that wouldn't comply with the law, but sort of gesture to comply with the law by allowing you to cancel by chatbot. These are chatbots that would sometimes take 10 minutes to respond. My guess is they're sort of throttling the response of the chatbot because people get busy and they run outside and they forget to cancel.
Freakonomics Radio
628. Sludge, Part 2: Is Government the Problem, or the Solution?
Yes, I think we called it the junk fees agenda, and there's lots of documentation. Including in the 2023 State of the Union, I believe.
Freakonomics Radio
628. Sludge, Part 2: Is Government the Problem, or the Solution?
There's this phenomenon where you think your concert ticket is going to be 70 bucks, you go to checkout, and there's a $35 service fee, shipping fee, etc. The FTC recently issued another rule that forbids this type of fee. Those are going away. The North Star in the space is all in upfront pricing. There shouldn't be any mandatory charges on the back end or in the fine print.
Freakonomics Radio
628. Sludge, Part 2: Is Government the Problem, or the Solution?
The FTC finalize a rule that will make this the law of the land for every player.
Freakonomics Radio
628. Sludge, Part 2: Is Government the Problem, or the Solution?
The policies were championed by progressives that wanted to take a strong stand against what they saw as bad behavior by businesses. But these policies also had this grounding in decades of behavioral economic research, in research of market competition.
Freakonomics Radio
628. Sludge, Part 2: Is Government the Problem, or the Solution?
These policies were about getting markets to work, getting rid of the sludge so that consumers could actively choose the good or service that was best for them. We'll see what the Trump administration does, but there's really broad support for these policies. I talked to economists who I would think, based on their politics, would criticize this agenda, and they don't.
Freakonomics Radio
628. Sludge, Part 2: Is Government the Problem, or the Solution?
Exactly. They tend to be skeptical of regulation, but here's a place where they understand that we need regulation to make sure that firms are competing the way we want them to compete.
Freakonomics Radio
627. Sludge, Part 1: The World Is Drowning in It
Thank you. Thank you. Thank you.
Freakonomics Radio
627. Sludge, Part 1: The World Is Drowning in It
Thank you. Thank you. Thank you.
Freakonomics Radio
627. Sludge, Part 1: The World Is Drowning in It
Thank you. Thank you. Thank you. Thank you.
Freakonomics Radio
627. Sludge, Part 1: The World Is Drowning in It
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Freakonomics Radio
627. Sludge, Part 1: The World Is Drowning in It
I mean, firms are going to try and maximize their profits. There's a long literature on what people call drip pricing. You start out with this initial price and then you drip in fees through the checkout process. And the evidence consistently shows that when you do that, people spend more than they intend to. A good example of this is food delivery apps.
Freakonomics Radio
627. Sludge, Part 1: The World Is Drowning in It
Suppose I want to buy a burrito bowl from Chipotle. For me to figure out whether Uber Eats or DoorDash has the lowest price, I'm going to need to put in my cart, check out, enter my credit card information. Eight minutes later, I realize that $13 burrito bowl is going to cost me $25. And for me to be a good shopper, I would have to do that same process again. add another food delivery.
Freakonomics Radio
627. Sludge, Part 1: The World Is Drowning in It
There's just no way I'm going to do it, which means there's no way I'm going to generate the types of market forces that we need to get markets to work.
Freakonomics Radio
627. Sludge, Part 1: The World Is Drowning in It
No, I've spent $25 on a burrito bowl, which is going to be delicious, but it's too much to spend on a burrito bowl.
Freakonomics Radio
627. Sludge, Part 1: The World Is Drowning in It
My sense is a lot of this arises due to A-B testing. In the online setting, they're just experimenting with things. What happens if I change this font? What happens if I move this button to a different part of the website? What happens if when you're trying to cancel, I put another screen that first gives people some discounted offer? And through that process,
Freakonomics Radio
627. Sludge, Part 1: The World Is Drowning in It
They're basically rediscovering behavioral economics. I don't blame firms for A-B testing and doing what maximizes their revenue. I think it's on policymakers to put in place safeguards so that optimization leads to better functioning markets, to more surplus for consumers, not to this sort of behavior, which makes markets worse and nickels and dimes us.
Freakonomics Radio
627. Sludge, Part 1: The World Is Drowning in It
Have we hit peak sludge? Will we look back in time and say December 2024 was peak sludge when the tide of sludge turned? I don't know. I hope so. I am fighting the good fight. And the signals I see are encouraging. But that is not a reason to, what's the poetic way to say this, to lessen our resolve.