The First Post

OK, so I was thinking of kicking off our arguments with some topic of great importance like poverty, sustainable development, the pending economic recession, or something that sounds at least as monumental, if not more. As I sat down to write about this stuff I realized that we are going to discuss economics here, and to be fair to the discipline economics is much more than just these grandiose topics that seem to have no solution (and do not let yourself be fooled they do, but any solution that economists come up with is heavily affected by politicians, who like any rational actors follow their own interest). Standard econ textbooks tell us that economics studies how people make choices. I think economics try to explain every day life in highly stylized mathematical models that only the select few understand, or as a student of mine once put it, without the math and the graphs econ is nothing but common sense (whose sense, though, is still to be determined). Thus, I paused trying to come up with something more mundane, and, as any good citizen of cyber land I checked my email (yet again today). And then it hit me. The first post ever on this blog should be about something so basic, so trivial that we hardly ever think about it: SPAM.

So, here is my take on spam. Companies who advertise through the use of such emails are either stupid or are engaging in negative advertising. How many spam emails do you get every day? I get on average 50 or so. How many do you read? Absolutely none. Why? Because it’s SPAM. Then why do they still do it? My guess is that someone told the execs in these companies that this is a relatively cheap way to advertise. Indeed, in between advertising methods, it really is. The problem with it, though, is that it creates a lot of disutility to the user whenever the message passes through one’s spam or junk filters. Every time one of these buggers makes it though, you have to go through the trouble of deleting it. That takes time. And time is money. Additionally, you have to sometimes report the message as spam, and that takes time as well. You may have to reset your junk mail filters, and, guess what, that takes time as well. And when all this is said and done, you feel a little upset over the whole thing, and that is disutility as well.

Overall, there seem to be few benefits to a spam campaign, and quite a lot of negatives, though I have to admit that sometimes people do click on the links, and many times they find out that the product advertised requires you to buy another 15 products that you have no use for but may seem to be cool. When all is balanced, though, I am amazed at the low success rate of spam emails. I read somewhere that telemarketers have a 1-2% success rate. I don’t know what the rate for spamming is, but I am sure it is at least 100 times smaller.

So why do companies do it? Because spam does have positive benefits overall. First it creates jobs. On the one hand it creates jobs for people who have to write the program for the mass emailing, those who have to write the message and those who actually pack and ship the products that people who are fooled by this kind of emails to order. On the other hand, it creates jobs for people who set up and maintain the junk mail filters and for customer support representatives who deal with clients angry over the amount of junk in their inboxes (alas these jobs have already been shipped oversees).

Second it can be a useful tool for negative publicity. Not that I know of anyone using it this way, but that is just because marketing people, for all their “creativity” seem to follow the status quo. If I were Nokia and was about to come out with some kickass phone, I would make sure that your inbox is flooded with various emails trying to woo you into buying an Iphone (but of course you would have to buy the other 15 things as well). By the time I’d be done with you, you’d be so fed up with the Iphone that when you see my Nokia add you will think that is a refreshing change and would want to give it a try. There is such a thing as saturation level advertising and spamming can definitely get one there fast.

You may wonder why I am ranting about the pluses and minuses of spam. The answer is simple, I am guessing that spamming is more damaging to the economy than it is actually supporting it. A simple model can test that. Take the number of hours required to put together a program needed to mass email. Now add in a database that you buy from Walmart or CVS. Now imagine how many times one can use that database and the program. This is your spamming cost on the producer side. Now imagine all the people at work who have to delete these emails. Let’s assume one second per email, with a recipient list of 6 million people (and many times lists are much larger than that) simply deleting one email that goes out to all these people would take more than 1,500 hours. Now multiply this by the number of emails that go out every day. And now remember that most of us do this while at work, thus all of these hours are work time that we forgo so we can just get rid of spam. That is the user’s spamming cost. Makes you wonder how come it has not been outlawed yet….

Attached is a simple computation with purely fictitious numbers to show how much time spam takes a day. This computation ignore costs that go into setting up spam filters as well as the assumption that inboxes on Mondays have more spam than any other day, thanks to the time off we have on weekends. These numbers have no scientific basis and are used for purely illustration purposes.

Email accounts economy wide: 300,000,000
Average time it takes to delete an email: 1 sec.
Expected number of junk emails that bypass spam filters and end up in people’s mailboxes: 5/day
Number of hours spent daily on erasing junk email: 416,667 (or 208+ yearly FTE wasted every day)
Number of working days in a calendar year: 250
Yearly hours spent on deleting junk email: 104,166,167
Average hourly wage of people deleting spam: $15/hour
Yearly cost of deleting junk email: $1,562,500,000 (that’s right, over $1.5 billion)