Re: SPAM

First off let me open by saying that I totally agree with your first paragraph. I'm sure we will get bogged down (no pun intended) in the intricacies of grandiose economics at some point, but I think in order to be readable, this blog needs to intermix the everyday of economics with the hardcore mathematical modeling.

So in that vein I turn to your argument about SPAM. It seems to me that you are missing one of the fundamental rules of economics when you question SPAM and in particular, the result of SPAM. I did some research on the effectiveness of SPAM can could find nothing. Perhaps those who engage in it prefer to call it something else. But in the absence of proof I will fall back on good old economic reasoning.

SPAM must have some success rate as those who send it wouldn't do so unless there was some benefit. Rational actors, if presented with a welfare loss will cease that activity. The problem is that the marginal cost of SPAM must be very small. I'm going to guess that it approaches zero. Therefore, it doesn't take but a few people to open those emails or respond to an offer to make it worthwhile. As far as creating jobs, I'd be surprised if it actually created a job as I'm going to guess they buy a program, buy a list and have someone already working there spend five minutes a day pushing out SPAM. I'm sure internet savvy people like me or yourself, filter these emails, send them to the trash without reading them, but I am sure many do not. Case in point, the fake emails that come from Nigeria, saying they have 2.5 million sitting in a bank account and they need the $1000 transfer fee plus your credit information in order to be able to give it to you. People actually fell for this and continue to do so. Likewise, I'm sure SPAM has some success rate that creates incentive for a company to engage in it.

Are there larger welfare questions for society at large? I'm sure SPAM creates disutility and causes costs to society. But outlawing it seems difficult. The fact is, you don't get much SPAM in companies or schools for that matter. There are very good filtering systems in place. Yes they probably have a high capital cost, but again, marginal cost goes to zero. SPAM is really only a problem in personal emails in web-based email clients such as Gmail, Hotmail or Yahoo Mail. In this case, the email user makes a personal choice to use this email. Any disutility experienced is done so by choice. Also, I must admit, as one who has all three, Yahoo has by far the worst filter. Gmail is the best. I almost never get SPAM in my Gmail inbox.

I'm not saying I like SPAM, but I think that the effects are much smaller than you make them out to be on the consumer side. On the producer side, there must be some net positive gain or companies would not engage in it. And plus, sometimes the subject lines are really funny.