If you ever needed proof of the value of the data that resides on your smartphone, then you only need to check out a recent conversation between Uber’s Head of Economic Research, Keith Chen, and NPR. Firstly, if you are surprised that Uber has a Head of Economic Research, then this will be the first revelation worth noting. More to the point though, is the findings that Chen’s department disclosed during the conversation and their observations on human behavior which can be obtained from your smartphone.
The conversation revolves around surge pricing and how, in spite of what is understood to be a common dislike of the ‘paying more because Uber says its busy’, riders will still pay more. What makes the conversation so interesting though, is how Uber has identified trends in the way consumers deal with surge pricing. For instance, Chen notes that if Uber lists a surge price which is a decimal higher number than a round number, riders are more likely to take the ride. The example given is when surge pricing is listed as ‘2.1 times higher’, compared to simply ‘2 times higher’. While the former is more and consumers understand they will pay more, Uber’s research suggests that consumers relate the decimal-based increase (2.1) to be a genuine reflection of the current conditions. In contrast, the rounder (2 times) price increase is sometimes interpreted as Uber just doubling the price. In short, the round figure is too neat and therefore likely to be perceived as untrue. In a more glaring example of how Uber’s surge pricing can affect rider judgement, Chen notes that when a potential rider’s battery is running low, they are more likely to accept a higher surge pricing rate, then when they have a full battery. While this is somewhat to be expected – if you have enough battery you might be willing to wait until the surging is over, it still does highlight that those who have more battery do pay less. As well as highlighting that Uber is aware of aspects like your current battery status and the fact that consumers are more likely to accept surge pricing in such instances.
It should be made clear that Chen explicitly explains that Uber does not use any of this information when setting prices and the very fact they are offering the information in the public domain is likely to be testament that they don’t. But what this does do is not only highlight the way in which we interpret aspects like ‘how much something costs’ or ‘its worth’, but more importantly, the level of information that you offer through your smartphone and sometimes without knowing.