The rise of social media poses a significant challenge for economists seeking to understand and predict economic trends. They struggle to find a way to measure its value.
The debate has persisted for some time over whether something should be included in the country’s overall gross domestic product (GDP). According to a 2019 study, Facebook’s value to American consumers was estimated to be significant each month.
That’s not why we’re here to pay. While social media is ostensibly free, its true cost is reflected only in the metrics that matter most to advertisers: our collective attention, regardless of whether these platforms are essential to our daily routines or not?
As the Australian Senate deliberates on the impact of social media, economists gathered at the Financial Society of Australia in Adelaide unveil groundbreaking research on the value of social media, revealing a profoundly altered landscape. They counsel it’s unfavourable.
That’s a fair conclusion: our research suggests that the benefits of social media far outweigh the costs we incur using it. It’s clear that we would be better off without it.
Should you opt out of social media?
Leonardo Bursztyn, a scholar from the University of Chicago, presented his groundbreaking research at the prestigious academic conference.
The research yields astonishing results that fundamentally challenge a core assumption in modern economics: that we value what we do. Ultimately, one’s actions serve as a far more reliable barometer of their true preferences than any verbal declaration or intention. The individual who formulated this economic principle later received the Nobel Prize in Economics.
Here’s what Bursztyn and his colleagues actually did.
Researchers polled over 1,000 US college students, inquiring about their experiences with TikTok, Instagram, and Google Maps – more on mapping applications to follow.
How much would they need to be compensated or would be willing to pay to take a one-month break from using TikTok and Instagram?
What’s the value of disconnecting from digital noise and social media for a month, embracing quiet contemplation, and rediscovering your inner self?
The negotiation process unfolds through successive quotes that differ substantially until an acceptable price is agreed upon. Scholars are informed that one of their own may be selected by chance to receive or forfeit a financial reward, with their compliance subject to close monitoring.
Customers are advised that the platforms’ services come at a significant cost, with average prices of $59 per month for TikTok and $47 per month for Instagram. A staggering 93% of TikTok users and 86% of Instagram users are willing to pay for something to stay engaged with the platforms, highlighting their significant value proposition.
Notably, these findings align with those uncovered by …
Bursztyn et al. subsequently posed a follow-up set of queries:
Given that two-thirds of the scholars are willing to sign up, you’d need to consider offering a significant incentive to entice the remaining one-third. To calculate this, let’s assume there are 100 scholars in total. Two-thirds would translate to 66 students. This means you’ll need to incentivize 34 students (100 – 66 = 34) to join.
The purported solutions, derived through a similar iterative process and bolstered by the certainty that prior research had identified most participants who would comply, were fundamentally flawed.
Approximately two-thirds of TikTok’s users (64%) and nearly half of Instagram’s users (48%) claim they’ve abandoned the platforms when others have done so, resulting in shared valuation benchmarks across both platforms at $28 for TikTok and $10 for Instagram.
Customers might prefer a world without TikTok’s addictive influence.
The phenomenon of widespread discontent among users towards social media platforms like TikTok and Instagram, despite their compulsive nature.
Bursztyn sought to contextualize the peculiarity of his finding by analogizing it to a more relatable scenario – a refrigerator.
Would you believe that 60% of households with refrigerators have expressed a desire for them to disappear entirely?
The connection he’s discovered shares similarities with the unhealthy dependencies found in toxic relationships or the compulsive attachment to harmful substances like tobacco, which we inherently know can cause harm.
To validate whether their results stemmed from a genuine aversion to the dominance of experts and big tech, Bursztyn and his collaborators sought to confirm this notion. So that they could request questions about digital maps.
While 57% of Instagram users might prefer a world without the platform, surprisingly few – just 4% – would opt for a life without digital maps.
FOMO drives staying in
The majority of customers on both Instagram and TikTok, despite desiring a world without these platforms, continued to utilize them due to their fear of missing out (FOMO)?
If I were to stop using it, I’d likely fall completely behind.
According to the data, a significant proportion of users attribute their usage to either “leisure” (37% on TikTok, 21% on Instagram) or “habit” (34% on TikTok, 10% on Instagram), highlighting the differing motivations behind these popular platforms.
Researchers surveyed homeowners of luxury brands such as Gucci, Versace, and Rolex, discovering that 44% would prefer living in a world without these exterior indicators of social status.
It’s not surprising that some individuals harbor a strong desire to eradicate certain companies from existence, despite their impact on our daily lives. It turns out that our most discerning clients share a common sentiment: precision matters just as much to them as it does to us.
iPhone users don’t crave constant style updates.
Customers would often prefer fewer, more consistent iPhone designs. According to research by Bursztyn and colleagues, an overwhelming 91 per cent of iPhone users expressed a strong preference for Apple to release a new model only every two years, rather than annually.
The company’s suggestion may not necessarily be acted upon by Apple. Despite the temptation to keep up with the latest trends, many clients would rather hold off on purchasing new styles in order to avoid being left behind, even if it means they might not be perfectly suited for their needs.
Economic research suggests that a distinct category of goods exists where their value lies below the price people are willing to pay, even if that price is zero, effectively rendering them priceless.
The Australian Senate, poised to initiate a probe, concludes that strict regulation of social media is warranted, even as many individuals utilize its platforms. Many individuals would likely express gratitude.
