A Pay-What-You-Want Experiment for the Freakonomics Movie

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The producers and distributors of the Freakonomics film have set up a nice little experiment: a one-night sneak-preview screening (tonight) in several U.S. cities with a pay-what-you-want pricing scheme.

We have written about pay-what-you-want pricing on this blog many times. Many people connect it to the “Bagel Man” story we told in Freakonomics, but that was different: Paul Feldman had set prices but no cashier, so that was an honor-system payment scheme rather than pay-what-you want.

The movie experiment is truly pay-what-you-want, with a minimum of 1 cent (finally, something to do with those pennies!) and a maximum of $100. There was no choice for zero, nor an option for giving some of the money to charity. The choices were:

  • From $.01 to $5.00 at $.50 intervals
  • From $5.00 to $20.00 at $1.00 intervals
  • From $20.00 to $80.00 at $5.00 intervals
  • $90.00 and $100.00

To get tickets, people had to fill in a survey with nine questions, asking about age, gender, income, employment and the like. When the experiment is done, the producers will give us the data, and we’ll write up a summary. Let me prime the pump by asking you a few questions:

  1. Which amount do you think will be the most popular?
  2. Of the cities involved (Boston; Cambridge, Mass.; Chicago; Dallas; Denver; Los Angeles; New York; Philadelphia; San Francisco; and Washington, D.C.) which do you think will pay the most? The least?
  3. Which income bracket do you think will pay the most, and the least? (The choices were: less than $25k; $25k-$50k; $50k-$75k; $75k-$100k; and more than $100k.)
  4. The survey also asks people if they’ve read Freakonomics; will payment be higher among those for whom the answer is yes or no?

I’ve seen a bit of the early data and I’ll share one fact with you: out of nearly 5,000 people who “bought” tickets, guess how many paid $100, the top price?

The answer:

Eighteen.

My question: Why?!!

I am guessing most of the $100 payees thought they would be the only person to do so, and would therefore show up in the data set as the sole high-roller. Sorry, folks.

It does remind me of something that happened in college. I had a brand-new girlfriend, Sandy, and we were planning to go to the movies one night, along with a friend of hers. Sandy told me that if you showed up at the movie theater in town (this was Boone, N.C., with only one theater) with a $100 bill, they’d let you in free because they never had enough cash on hand to make change.

How could you not be attracted to such a clever girl?

So I went to the bank, drained my account and walked out with a crisp $100 bill. That night at the movie theater, the cashier took my $100 bill without a second glance, gave me three tickets and gave me back the change. Sandy smiled. I did too. She wasn’t clever in exactly the way I thought, but she was clever nonetheless.


Mike B

When some of the money is going to charity you have to realize that skews what people will pay.

Nick

If there's only one movie time and it's greyed out, it's sold out?

Van

Why not ask people to pay AFTER the movie is over. It's value can't be determined before you see it.

164

Shouldn't the viewers decide what to pay after the movie and pay more if they liked it? By the way I thought all of the discussion about Freakonomics, the movie, was some sort of joke, not real. Then last week in a hotel room a saw an ad on HD-Net. Now I cant wait to see it, but sorry guys, this economist won't pay full price but will wait for it to go to the second run dollar movie houses. No offense, I never see movies full price. Hope all the non-economists overpay. Give them a signed copy of the book if they pay $100.

ElvisInMiami

funny about the $100 bill problem. I normally carry these and usually that is all I have on hand. Spending a $100 bill is very difficult and I find that it takes me a few weeks to actually break it. Gas stations will not accept it (even though I am paying $60 for a tank of gas), fast food and small eateries will not accept it, nor will toll booths or parking garages.

I have received some freebies using this strategy.

Another trick when I was in high school was to go to the bank and always get a fresh $100 (I had about $300 in my account.) Basically when I would spend $10 out of my $100, I would take my $90, deposit it and get a fresh $100 back. People thought I was a high roller even though I spent and made the same as they did.

To go to the other extreme, try paying for gas with pennies:) I have received many free tanks of gas by only having pennies and nickels for payment (this only worked in NJ and probably OR where they require an attendant to pump your gas...although now I assume it is required to pre pay)

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David

I can't wait to see those stats.

My guess :

1. Most popular amount : $5

2. City which pays the most : SF; the least : LA

3. Income bracket which pays the most : $50k-$75k; the least : more than $100k (you don't get rich for no reason)

4. Readers will be more generous, for sure.

Dan Fonseca

What?! I can't get into the NYC show? This is upsetting!! I guess I will have to wait...no worries though. Good luck!

www.danfonseca.wordpress.com

Calvin Graham

I think the specific intervals might have an impact; I normally use these sort of occasions to get rid of a bunch of loose change on top of the $5/10 or so I was going to pay. All those pennies and bits of loose change probably add up!

Fittstim

OK. How many mathematicians do we have out here in Freakonomics world?

Take $0.01 (i.e. one cent) and increase it by the $0.50 increment and what do we have? $0.51. Amazing. I doubt that anyone paid using the interval scheme described above excepting for the wise guys that paid only a penny.

Maybe there can be some secondary analysis of the mathematical abilities of researchers and the viewers of the movie?

Chad Troutwine

[to Nick]

We have already sold out each pay-what-you-want venue, except Denver (and it will likely sell out today).

Thanks for your interest,

Chad Troutwine

Producer, Freakonomics

steve

I was going to pay $95, but alas, its not an option

Ben

I'd say the most popular amount will be $10, the closest to a normal movie price. Or maybe I'm a little clueless, that's $15. But $10 is a more round number.

Michael C.

At The Available Theater Company here in Columbus the tickets are "pay what you want." My wife and I saw Sondheim's Merrilly We Roll Along recently and I paid $15 for the two seats. I went back a week later because I enjoyed the production so much , and I paid $30 for one seat. Two friends who went with me paid something before the show, then put more into the payment bowl afterward. Dr. Levitt should contact Available Light Theater about their experiences with "pay what you want."

Tyson F

I would love to see the same thing done but with pay-what-you-want upon exit and compare it against the pre pay-what-you-want

CL

If the income bracket which pays the most turns out to be $50k-$75k, would that support your recent post that that people who make ~$70K are the happiest (or maybe the least worried about money?)

A penny for your thoughts?

The price of the Freakonomics blog is just perfect.

second thought

Hey...how about stopping the movie in the middle and telling everyone then to pay what they want. Let them know that they can go to the bathroom and buy more popcorn, candy and drinks (where the theater makes more serious money anyway), as well.

TBallgame

How do you get from $.01 to $5.00 in 50 cent intervals?

1. 1 cent will be the most popular. There is a novelty to paying one cent to get in the movie, not unlike the $100 novelty payment, but $99.99 cheaper.

2. Boston will pay the most. I wouldn't be surprised if a few Bostonians paid the $100 just to get recognized as paying the most.

3. $75k-$100k.

4. Higher for those who say yes. These are people who are saying they are with you and don't want to let you down.

Julie

People may have paid the $100 because they like you and want to support you. I know I've paid full price on retail items that I could have gotten cheaper (or free) when the artist or creator was a friend of mine or someone I respected, and I wanted to support their work.

Raven

I assume the patrons give their surveys and their money to a person because the amount needs to be recorded. People will, of course, respond differently when they know they are being watched.

It reminds me of going to the MET - you can pay whatever you'd like, but it's uncomfortable to give the museum associate any less than $10.

I think the amount that people pay will be affected by how many tickets they purchase. I'm not sure that the survey will provide that information, but people who buy just one ticket will probably pay about $10, and if they buy two tickets, they might pay a bit less per ticket. If it's a date, they might pay more. If they think their name might show up some place, they might pay more.

Expand the survey!