ECO204 Discussion 2 Week 4 The Ethics of Big Data

Class,

Describe the microeconomic principles being used. What is the impact for demand?

          I think the economic principles being used by these companies is described in our textbook by Amacher and Pate in chapter 5.1, in this section, Economists' view of consumer choice is based on five assumptions about the psychology of consumer behavior which are: consumers make choices based on limited income, consumers make rational choices based on those consumption decisions of cost and benefit, choices are made with imperfect information, as more is consumed, less additional satisfaction is gained and many goods have qualities that make them satisfactory substitutes for other goods (2019).  Basically, the companies are taking these economic principles of peoples behavior and targeting the ads and marketing coupons/offers to these people directly to cut right to the chase of showing why their product should be chosen instead of searching multiple sites like their mined data shows proof of them doing.  Demand for products and services from companies that successfully use mined data should go up because people are being offered the deals that they already need due to search engines and social media usage.

Evaluate the different market structures that big data benefits the least and the most from.

          Big data would not benefit at all from a traditional economy market, this type of economy focuses on tradition passed down from their elders and people rarely use technology or go against what has been done in the past (Amacher & Pate, 2019, Ch. 2.2).  The best fit for big data is a market economy: “Which relies on incentives and the self-interested behavior of individuals to direct production and consumption through market exchanges. In practice, consumers can “vote” with their dollars in order to determine what is produced and sold in a market.  Since suppliers are self-interested and seek to maximize their profits, they tend to combine resource inputs so as to produce a good or service at the lowest possible cost” (Amacher & Pate, 2019, Ch. 2.2).  By knowing their competitors’ prices, they can try to lower them due to the successful profit made from rise in demand from sending targeted marketing campaigns to everyone on multiple social media platforms.

While data collection may benefit the business community, discuss the concerns for consumers as big data proliferates.

          Big data collection is concerning to consumers because too much personal data is being mined.  Like the article showed, if companies would see the searching trends of people’s shopping interests and stop, they would be fine.  However, these companies are mining data to extrapolate their personal life to include: Sexual, religious and political preferences (Martin, 2014).

Resources

Amacher, R., & Pate, J. (2019). Microeconomics Principles and Policies. San Diego, California: Bridgepoint Education, Inc. Retrieved from https://content.ashford.edu

Martin, E. R. (2014, March 27). The ethics of big data. Forbes. Retrieved from http://www.forbes.com/sites/emc/2014/03/27/the-ethics-of-big-data/