
How companies are using AI to make you spend more money
Clip: 11/11/2026 | 9m 12sVideo has Closed Captions
How companies are using AI to make you spend more money
Companies have always tried to maximize profits, but now there are a host of sophisticated tools to determine the prices of the goods and services they sell. At a time when so many Americans are frustrated with rising costs, those tools are under greater scrutiny. Economics correspondent Paul Solman explains how that technology is transforming the prices we pay.
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How companies are using AI to make you spend more money
Clip: 11/11/2026 | 9m 12sVideo has Closed Captions
Companies have always tried to maximize profits, but now there are a host of sophisticated tools to determine the prices of the goods and services they sell. At a time when so many Americans are frustrated with rising costs, those tools are under greater scrutiny. Economics correspondent Paul Solman explains how that technology is transforming the prices we pay.
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Learn Moreabout PBS online sponsorshipAMNA NAWAZ: Companies have always tried to maximize profits, but now there are a host of sophisticated tools to adjust the price of goods and services.
But at a time when so many Americans are frustrated with rising costs, those tools are under greater scrutiny.
Our economics correspondent, Paul Solman, explains how that technology is transforming the prices we pay.
PAUL SOLMAN: A simple experiment; 400 shoppers across the U.S.
logged in to Instacart and bought the same 20 items from the same stores, then took screenshots of their carts.
The result?
LINDSAY OWENS, President and CEO, Groundwork Collaborative: Seventy-five percent of items in the cart were offered at different price points to different shoppers in the exact same pickup location at the exact same time.
PAUL SOLMAN: Lindsay Owens, who heads Groundwork Collaborative, in conjunction with researchers at Consumer Reports and More Perfect Union, had discovered an experiment Instacart was running on shoppers.
LINDSAY OWENS: To test how much they could charge them for every item in their carts without their knowledge.
The price point differences were as much as 23 percent.
PAUL SOLMAN: Soon after it became public, Instacart halted the experiment and explained -- quote -- "Those tests raised concerns, leaving some people questioning the prices they see on Instacart.
That's not OK."
But Owens says plenty of firms are OK with variable pricing, and not just to experiment.
LINDSAY OWENS: Age-old impulses to nickel-and-dime you or squeeze you or turn a profit have been supercharged by new technologies.
PAUL SOLMAN: Instead of one price for a good or service, companies can now use algorithms to jiggle their prices based on your personal data.
LINDSAY OWENS: They might be able to collect your location from where you log on, your I.P.
address, if you're shopping online.
They may have detailed information about your purchase history because you shop there regularly, you use a loyalty card, or you log in to an app before you make a purchase.
They may be able to ascertain or try to guess demographic information about you.
PAUL SOLMAN: Owens' new book, "Gouged," expands on her work at Groundwork Collaborative, a consumer advocacy group.
ELIZABETH PANCOTTI, Groundwork Collaborative: We did a dive into 315 patents.
PAUL SOLMAN: Walmart patent applications for customer tracking tech, for instance.
ELIZABETH PANCOTTI: We found evidence of Walmart creating the technology that can connect to your Apple Watch or other kind of wearable device and look at things like your heart rate, what your blood sugar is, and they talk about using that in the ice cream aisle.
And so when you open the freezer door, you grab your favorite pint of Ben and Jerry's.
They know which one makes your blood sugar spike or drop or your heart rate responds.
PAUL SOLMAN: Walmart plans to install digital price tags in all U.S.
stores by the end of the year, which could allow them to change prices in a heartbeat.
But in an open letter, Walmart executive Dan Bartlett said -- quote -- "Walmart does not and will not use an individual customer's personal information, income, shopping history, urgency, or willingness to pay to set an individualized price."
And so a reasonable question, will they or won't they?
Owens says so-called personalized pricing technology is everywhere these days.
LINDSAY OWENS: Data gathering, cloud computing, machine learning, such that, when they gather all that information, they can try to figure out what it means about you.
PAUL SOLMAN: To prove the point: ELIZABETH PANCOTTI: So everyone's going to add a Big Mac meal with a medium Coke.
PAUL SOLMAN: Owens, her staff, and I ordered the same meal on Uber Eats from the same location to the same delivery address at the same time.
I have got my total?
Yours.
WOMAN: Yes, mine is $19.25.
PAUL SOLMAN: Nineteen twenty-five.
WOMAN: Eighteen seventy-eight.
ELIZABETH PANCOTTI: Twenty sixty-nine.
LINDSAY OWENS: Whew.
WOMAN: Twenty-two thirty-five.
WOMAN: Eighteen thirty-five.
PAUL SOLMAN: And I have got $22.55.
What could possibly explain?
LINDSAY OWENS: For most of us, it looks like they're varying the fees.
And this is Uber's cut, right?
PAUL SOLMAN: All of us were charged $13.59 for the meal.
It was Uber Eats' delivery fees that varied.
LINDSAY OWENS: I have $2.49 for the delivery fee.
PAUL SOLMAN: I'm $3.49 here.
ELIZABETH PANCOTTI: I'm $4.49 for -- this is the exact same location.
PAUL SOLMAN: So the algorithm is all over the place because it's so many variables that it can make this kind of discrimination?
LINDSAY OWENS: Yes, look, it could be random.
Like we could all be subject to what is effectively a pricing experiment.
It's a little hard for us to know.
We can't get entirely under the hood of their process.
PAUL SOLMAN: Uber did not respond to our request for comment.
But how to explain these?
LINDSAY OWENS: Expedia was shown to be charging individuals who logged on from the San Francisco Bay Area more for the exact same Manhattan hotel room than individuals who logged on from what they viewed to be less affluent areas of the country.
Another example, Target changing the price in the app as you approach the store.
They think you're getting closer to the store, you're probably going to spring for the purchase.
You're in the parking lot, you're definitely going to spring for the purchase.
PAUL SOLMAN: Now, look, I had a question out of economics 101.
Why shouldn't a company charge me as much as I'm willing to pay?
LINDSAY OWENS: I don't want to be charged the maximum amount I can pay for every single ingredient when I make a lunch sandwich, right, like, the maximum I could fork over for the mustard, the maximum I could fork over for the turkey, the maximum for the cheese, the maximum for the bread.
Prices in this country used to be more tethered to things like the underlying cost of making the good.
Add a fair margin on top, put a sticker on it.
PAUL SOLMAN: And here's another unfairness, says Owens.
NARRATOR: Harness your data to drive results.
PAUL SOLMAN: Firms can now use software to coordinate prices, apartment rentals, gas prices.
WOMAN: Welcome to McDonald's.
Will you be using your mobile app today?
PAUL SOLMAN: And fast-food.
LINDSAY OWENS: McDonald's is pushing algorithmic pricing recommendations to the franchisees.
And one of the things they talk about in the earnings calls is how good the adoption is, meaning how many of the franchisees take the recommended prices that are coming from H.Q.
PAUL SOLMAN: McDonald's was recently sued for price fixing.
The company's comeback -- quote -- "Optional tools are available to franchisees to help them make the best decisions for their businesses and customers.
But these tools do not automate, coordinate, or fix pricing in any way."
But consider how easy it is to actually finagle with pricing.
LINDSAY OWENS: It's virtually costless to change pricing on the electronic menu boards.
All sorts of inputs could go into that, whether local income, traffic.
PAUL SOLMAN: When Wendy's adopted electronic menu boards: LINDSAY OWENS: The CEO told investors that they were going to be experimenting with dynamic pricing as well.
KIRK TANNER, Former CEO, Wendy's: We will begin testing more enhanced features like dynamic pricing and daypart offerings, along with A.I.-enabled menu changes.
LINDSAY OWENS: So the public hated this idea that Wendy's was going to be changing prices based on time of day or traffic or weather, things like that.
And consumer backlash was swift.
PAUL SOLMAN: More than 80 percent of Americans believe that businesses should charge all customers the same price for the same item.
And that was true 40 years ago, when Nobel laureate economist Richard Thaler and colleagues asked consumers about the fairness of several pricing scenarios.
RICHARD THALER, University of Chicago: A hardware store has been selling snow shovels for $15.
The morning after a blizzard, they raise the price to $20.
It's not fair.
As you might guess, most people, like 80 percent of people, say, no, that's not fair.
PAUL SOLMAN: And thus, argues Taylor, if customers think they're being treated unfairly, they will take their business elsewhere.
RICHARD THALER: People don't like it, and if firms are caught doing it, there will be some price to pay.
And whether that price will be enough to make them stop is an empirical question.
PAUL SOLMAN: So, in the end, will it be enough or not?
For the moment, the use of pricing technology seems only to be growing.
And that raises a last question, what's a consumer to do?
LINDSAY OWENS: Sit down with your spouse before you book your airline tickets.
There's a decent chance one of you will get a better price.
Go with the person who gets a lower price.
The other thing I say, change how you comparison shop.
Sometimes, you will be offered a different price point in the brick-and-mortar store, online, in the app, with the loyalty points.
We have seen examples of consumers using a VPN to change their location, and sometimes that can result in a better deal.
We have seen examples of individuals who get a better deal when they're not logged into their loyalty program.
The company knows so much about your habits and purchase history that they know maybe you're a sure thing.
PAUL SOLMAN: Owens also has policy proposals.
They include a ban on using shopper data to set prices.
But, for now -- "Lion King" on Broadway for tomorrow night -- consumer protection... WOMAN: I have got $271.
PAUL SOLMAN: ... seems to be up to us consumers.
ELIZABETH PANCOTTI: Two eighty-two.
LINDSAY OWENS: Ooh.
PAUL SOLMAN: For the "PBS News Hour," Paul Solman in Washington, D.C.
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