The economics of spam

Junk emails cost $20bn a year. Not just an irritation.

Here's a fascinating new paper (pdf) from the Journal of Economic Perspectives on the economics of spam, by Justin Rao and David Reiley:

The negative externalities imposed by spam include wasted time for consumers: both wading through irrelevant advertisements in one’s inbox and missing an important message that went to the junk mail folder. They also include the costs important message that went to the junk mail folder. They also include the costs of server hardware, which requires more than five times as much capacity as would be required in the absence of spam, as well as the costs of spam prevention services provided by firms to reduce the burden on users. . .

Taken together, the total costs of spam worldwide today appear to be approximately $20 billion, in round numbers.

The authors review literature on the revenue of spammers, and find that it's likely to be around $300m a year. In other words, spam destroys around $19.7bn dollars of value every year. The authors compare this to car theft, which imposes societal costs of around $10bn and brings revenues to the thieves of around $1bn; and to driving a car, which imposes societal costs of around five cents a mile and brings in average revenue of around 60 cents a mile.

Clearly all these numbers are extremely rough estimates, but if they are even in the same ballpark as the truth then it is clear that spam ought to be a public policy priority to a far greater extent than it actually is. Imagine if the number of car thefts doubled overnight; would people really question whether that calls for governmental involvement?

The problem the authors identify is one of negative externalities, similar to the issues raised by carbon emissions. So one would expect the solution to be analogous to the solution economists often call for to deal with externalities, which is a Pigovian tax - charging someone who harms society an amount equivalent to the damage they do. Unfortunately, as the authors show, such a measure is pretty much impossible when it comes to email spam. The spammers would obviously not co-operate, and every alternative involves trying to graft on some form of payment mechanism to email, which is a protocol incredibly unsuited technologically to any such addition.

Instead, the best thing to do is probably to hit the spammers where it hurts: their revenues.

One fruitful avenue is to put legal pressure on domestic banks that process payments from foreign banks known to act on behalf of spam merchants. This could put downward pressure on conversion rates and with them, proifts. Another proposal comes from our colleague Randall Lewis, who imagines “spamming the spammers” by identifying spam emails and placing fake orders on spam-advertised stores. This step would increase the merchants’ costs dramatically, as they would find it much more difficult to fullfil orders, and their banks may raise their fees if they submit many invalid payment authorization requests. Of course, an unintended consequence is that from time to time, a legitimate merchant will be inundated with bogus product orders.

Commenting on the paper, Digitopoly's Joshua Gans points out that, under US law, that may not be entirely legal:

A few years back I contacted Yahoo and Google with an idea to counter spammers. What if for each spam email that they picked up, they responded — perhaps entering details into phishing forms? This would overwhelm spammers and they would not be able to find ‘legitimate’ responses from the gullible few. That would really alter their returns. Unfortunately, it was explained to me that such a measure would constitute an attack by a US corporation and, apparently, that is against US law.

Spam may be here to stay, then. The real solutions are technological, and don't involve fixing email so much as abandoning it altogether; the time for being able to accept free, unsolicited email from anyone seems to be coming to an end. Those who are trying to build its replacement will be happy indeed to hear that.

The full paper is a surprisingly good read; if you're looking for something to flick through on an e-reader over the weekend, why not give it a go?

Spam, spam, spam, spam, spam, spam, spam, spam, lovely spam, wonderful spam. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

Photo: Getty Images
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Can non-voters win the next election for Labour?

Any Labour leader who pins their hopes on getting non-voters to the polling station will be defeated in 2020. 

Question: how can non-voters win the 2020 election for Jeremy Corbyn?

Short answer: they can’t.

This isn’t an anti-Corbyn point, by the way: they also can’t win a general election for Yvette Cooper, Andy Burnham or Liz Kendall. There is no route to a parliamentary majority for any of Labour's leadership candidates which doesn’t involve addressing the concerns of Conservative voters.  Why not?

Well, there’s the obvious point that you can’t only raise your own turnout. Take, say, Barack Obama’s successful presidential bid in 2008: yes, he increased turnout among young graduates and ethnic minorities, contributing to his victories in traditionally Republican-leaning states like North Carolina and Florida. But he also increased turnout among Republican voters, losing by a bigger margin in Tenessee, Arkansas, Louisana, Oklahoma and West Virginia than John Kerry did in 2004.

The problem for British politicians attempting to emulate the Obama strategy is that Britain is less diverse than the United States.  British constituencies are, for the most part, what sociologists call “socially crunchy” – so if you increase turnout among, say, ethnic minorities and young graduates, but turn off, say landlords and middle-managers, there are very few seats where you will feel the benefits but not the punishment. (In fact, most of the seats where this is the case Labour already hold.)

Then there’s the bigger problem. Non-voters aren’t actually all that different from voters. After the election, the Trades Union Congress commissioned Greenberg Quinlan Rosner Research to find out what had gone on. Here’s why non-voters and voters didn’t opt for Ed Miliband’s Labour party here:

As you can see, there is not a vast gulf between the two groups. (“Other” by the way, includes responses like “They weren’t leftwing enough”, "They sold the gold", "Iraq" and so forth.) Even if you assume the 35 per cent of “Don’t Knows” actually mean “I was waiting for a real Labour party”,  and that a more radical Labour party  would attract all of them, look at the worries that people who went on to back Labour despite them in 2015 had:

It’s hard to see how a more “traditional” Labour approach on public spending, welfare, and so on wouldn’t also lose voters from Labour’s existing 2015 bloc. But what about, say, the Greens and the SNP?

It is just possible that the 20 per cent "Other" in the SNP is all "Labour weren't leftwing enough" but it seems likely that at least some of it is "I want to leave the United Kingdom". But even if we take all of that 20 per cent, we're still talking Labour gais in Scotland of fewer than ten seats. Now let’s look at people in social grade DE, semi-skilled and unskilled manual workers, what you might categorise as Labour’s “traditional” core:

Look familiar? Now, here’s what Ukip voters and Tory voters made of Labour in 2015:

That’s not to say that the next Labour leader shouldn’t aim to increase turnout. It’s just to say that there is no evidence at all that policy prescriptions that turn off Conservative voters will have a more natural home among people who didn’t vote – quite the reverse.  Whatever happens, if the next Labour leader wants to win the next election, they are going to have to win over people who thought "they would make it too easy for people to live on benefits", and that "they would spend too much and can't be trusted with the economy". The next Labour leader – whoever they are – is going to have to try to win over people who voted Tory in 2015. This is one of the few times in politics where there really is no alternative.

 

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.