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Post 2

In today’s world Google has become the go to place for any information you need.  Anyone with a smartphone can access Google and find the answer to practically anything within seconds.  Google has even made it into the dictionary with Merriam-Webster defining it as “to use the Google search engine to obtain information about (someone or something) on the World Wide Web” (Merriam-Webster Dictionary, 2019). According to our textbook, Google uses “its patented PageRankTM algorithm, which evaluates the entire link structure of the Web and uses the link structure to determine which pages are relevant to a specific search.  The process uses hypertext-matching analysis to determine which pages are relevant to a specific search” (Kerin & Hartley, 2020).  This is the process used for Google to determine what should display first after a user searches for something; it decides what sites best match your search by matching the words in your search to the words on the sites.  This is done to attempt to ensure that you see exactly what you want, when you want it.  Google also uses AdWords and AdSense to control what you see and when.  To avoid a user seeing ads for things they don’t care about, these programs allow advertisers to set keywords for their ads so that they appear when someone searches for those keywords.  For example, if a company wants to advertise Information Technology (IT) services it would do no good to appear when someone is Googling “how to cook chicken”, but it would make all the sense in the world for the ad to appear when someone is Googling about an IT issue.  This allows advertisers the opportunity to be seen, and the user the opportunity to see relevant information.  This also allows advertisers to see what benefit they are receiving by using Google to advertise because they will be charged every time someone clicks on their ad through Google.  One problem that has arisen in the last few years is that, with the rise of smart devices, more and more devices are listening to everything going on around them.  An iPhone is always listening for “Hey Siri” or Amazon Alexa’s always listening for when a user needs them.  This has made people uneasy about the amount of information being taken from them without them wanting to give it out.  What can be done about this?  Users can be sure to turn off products when they’re not using them, or change the permissions so that apps can’t listen in. With an iPhone you can turn off the “Hey Siri” function without losing out on the ability to utilize that application of the phone.  Some apps that are listening might not be malicious, but some might be, and it is up to the user to be smart and know what they’re allowing their devices to do.

            An awe-inspiring thought for believers to have is that the biggest search engine in the world, that contains all of the knowledge known to man, is no match for God.  Google still makes mistakes sometimes and you can’t find the information you’re looking for, but God never does.  Google contains all of man’s knowledge, but God is the one who gave us that knowledge, and He has infinitely more.  Google might be always listening to tailor your ads to you, but God is always listening to you; knowing exactly what you need at all times.

Post 3

Netflix Prices Change, but Subscribers Stay

Summary:

This article essentially describes how Netflix increases its revenue. Netflix’s plan is simple, they bet on themselves that their subscribers will not leave when they raise their subscription prices. The author of the article interviews several college students and the consensus is that they do not mind the price changes. Some students even applaud the price change as ‘smart.’ The article explains that Netflix does not simply raise rates whenever they want, but they strategically raise them in small increments so that they do not ‘scare subscribers.’ The article then moves on to talk about how Netflix deals with their competitors. At the end of the article, the author suggests the idea of Netflix possibly losing their younger audiences due to the discounts that their competitors are offering for their streaming services (Mateer).

Discussion:

            Netflix can be seen as a normal good. In the article, a professor of managerial economics and decision science at the Kellogg School of Management Peter Klibanoff suggests that it is unlikely that people will put in the effort to switch their streaming provider unless something like a loss of a job occurs (Mateer). So, as a person’s income goes up that person is more likely to buy more of that product or not care as much about the cost.

            As someone who has a Netflix family subscription, I can relate to a lot of what this article is explaining. While the price hikes are inconvenient, they do not seem to be too inconvenient to the point where we cancel the subscription. Not yet at least. I believe Netflix is playing a dangerous game that they have been able to get away with for the last few years, but if they fail to separate themselves from their competition, I think they could lose a lot of their business to their competitors due to the seemingly routine price hikes. 

Christian Response:

            1 Timothy 6:10 says, “For the love of money is a root of all kinds of evils. It is through this craving that some have wandered away from the faith and pierced themselves with many pangs.” We as Christians can only hope that big businesses like Netflix do not get money hungry because the Bible says that this will corrupt them. 

Post 4

In the case of the University of San Diego (USD), tuition costs have risen significantly over the past decade, increasing by nearly fifty percent (Robbins, 2018). This hike in prices represents a new challenge to both prospective students weighing the increasing opportunity cost of going to school full time to pay nearly fifty thousand dollars in tuition as opposed to getting a full-time job and making money. To combat these hikes in price, USD is trying to reduce its operating expenses to free up more capital to maintain current tuition prices, offer scholarships, and cover other administrative expenses to make their programs more affordable and higher in quality. All the while, USD hopes to maintain the community orientation of the school, fighting against implementing large, impersonal auditorium classes (Robbins, 2018). Their enrollment has continued to grow over the last decade despite the increase in tuition, yet they are still striving to keep costs lower and more competitive.

            The economic concept exhibited by this story is elasticity of demand (Mateer and Coppock, 2018). College education is expensive, and there are many factors for prospective students and applicants to consider in a college such as prestige, credibility, quality, culture, opportunity, and proximity. While other macroeconomic elements are at play driving up tuition prices nationwide, USD is hoping to keep their fees low enough to stay competitive and reasonable in a market in which price is a big factor for many students. Schools must be concerned with the cross-price elasticity of their service compared to other universities (Mateer and Coppock, 2018). If UCLA, for example, were to go to less efforts to reduce costs and their tuition were to track with national indexes, then USD would attract many students who would be dissatisfied with the cost of UCLA. With the number of substitutes and competitors in the college industry, keeping costs low can increase the quantity demanded for enrollment (Mateer and Coppock, 2018). 

As far as what I think of the situation, keeping tuition costs competitive is important for the rate of enrollment by increasing the quantity demanded, but increasing the demand (shifting the demand curve itself) is the direction better suited for USD. A survey study at South Dakota State University sought to measure the elasticity of demand for higher education. Based on survey information, researchers constructed a probability of attendance graph showing the percent probability on the x-axis and the price of tuition on the y-axis. The results showed that the probability of attendance drops eighteen percent with a $2,500 increase in price (from $7,000 to $9,500). Given that these university tuitions are different in scale, a 36% increase in tuition costs leads to an 18% drop in the probability of attendance(Langelett, Chang, Akinfenwa, Jorgensen, & Bhattarai, 2015, p. 117). With a nearly 50% increase in tuition over the past decade, this statistic exhibits a similar increase in tuition cost to USD (Robbins, 2018). Thus, maintaining the current level of tuition is a way that USD can increase the quantity demanded for their school. 

This same study found that other factors are actually more influential to students than price, though. The school’s distance from their home and the majors and courses offered were the primary factors of school decision for over 50% of the students surveyed, while price was the primary factor for only 14% of students (Langelett, Chang, Akinfenwa, Jorgensen, & Bhattarai, 2015, p. 115). Proximity to students’ homes is not something the university can control, but the quality of the school and the tuition are. Since the criteria of major (course of study/quality of school) was 31% of surveyed students’ primary decision factor, optimizing funds more towards increasing the quality of the existing institution could shift demand to the right. California is not a market seriously limited by demand. Of its population that is twenty-five years or older, 40.4% have achieved an Associate’s Degree or higher, with another 21.5% having attended college in some capacity but not achieving a degree (Data Access and Dissemination Systems, 2010). This means that a significant majority portion of the population pursues higher education.  About 42.15% of the state’s population resides within the nearby counties of Los Angeles County (25.68%), Orange County (8.7%), and San Diego County (8.39%), showing that the school is within reasonable range for recruitment of a large portion of the population in a state in which the rate of pursuing college education in some capacity exceeds 60% (State of California Department of Finance, 2019). While California is not on track to explode in population (increasing demand based on the number of citizens), USD itself can increase the demand by increasing the quality of its educational aspects (Mateer and Coppock, 2018). Within the article in question, representatives of USD say that they want to keep the school as a place where people know each other’s names, where there is a level of intimacy and familiarity (Robbins, 2018). Thus, to keep the school’s program in high demand, I think the school should focus its funds, at least in part, on improving quality and capacity of teaching staff, curriculum, major offerings, and other educational metrics. The school is already near its maximum capacity (Robbins, 2018), so maintaining an environment of quality education that draws quality students is the best way to pursue their stated goals. Funds can still be applied for scholarships and reducing tuition, of course, but the mission should be to increase demand for the school rather than increasing the number of students.

Concerning how we should respond to these economic forces as Christians, I think we should be concerned with stewardship of our finances deciding where we should go to college or make any other life decisions. Money is not everything, the prestige of our schools or jobs is not everything. Rather, honoring God in our decisions and allowing Him to guide us is what is important. Proverbs says, “Better is a little with righteousness than great revenues with injustice,” (Proverbs 16:8, ESV). While money is a big factor of going to school, and other concerns like major and field of study are things we can pursue, following God in righteousness brings us greater peace than the deal we got on our degree or the title we get afterwards. We should do everything, including going to college, for the glory of God (1 Corinthians 10:31) rather than for our own glory or benefit. Thus, our decision can be based on many factors that determine demand, elasticity, and opportunity, but our ultimate peace for choice should come from God.