Important English Vocabulary from “The Economist”-(Day-20)

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Important English Vocabulary from “The Economist”-(Day-20):

Dear Readers, to score good marks in English Section first and for most thing is you need to develop your reading skills, while reading a passage you need to highlight the tough words in it and you should know the correct meaning for those words. This will help you understand the passage clearly and also you can learn more new words, it means also you can develop your vocabulary. To help you in this part we have provided a passage along with meaning, synonyms and usages of hard words in the passage, make use of it.

The “free” economy comes at a cost

But economists struggle to work out how much

FACEBOOK, whose users visit for an average of 50 minutes a day, promises members: “It’s free and always will be.” It certainly sounds like a steal. But it is only one of the bargains that apparently litter the internet: YouTube watchers devour 1bn hours of videos every day, for instance. These free lunches do come at a cost; the problem is calculating how much it is. Because consumers do not pay for many digital services in cash, beyond the cost of an internet connection, economists cannot treat these exchanges like normal transactions. The economics of free are different.

Unlike conventional merchants, companies like Facebook and Google have their users themselves produce value. Information and pictures uploaded to social networks draw others to the site. Online searches, selections and “likes” teach algorithms what people want. (Now you’ve bought “The Communist Manifesto”, how about a copy of “Das Kapital”?)

The prevalence of free services is partly a result of history. In the early years of the internet, consumers became used to getting stuff for nothing. They have little idea of how much their data are worth; since digital companies have access to billions of people, the value of one person’s data is tiny anyway. More fundamentally, scarcity is not a constraint in the digital world as it is in the physical one. Data are both inexhaustible and super-cheap to transport. In 1993 MCI Mail was charging people 50 cents for the first 500 characters of a digital message, increasing by ten cents for each extra 500. The internet slashed that price to zero. Charging would have been impractical, so small is the marginal cost.

Users may pay nothing, but companies like Google and Facebook have fixed costs to cover: engineers, data centres, etc. To make money, they squeeze their users indirectly, by charging companies to put appropriate advertisements in front of captive eyeballs. In the second quarter of 2017, Facebook eked an average of $4.65 out of each of its users by peppering screens with ads and promoted posts. (By comparison, just eight cents came from payments and other fees, mainly from people paying for stuff within virtual games.)

In the absence of prices, economists struggle to work out what people are getting back when they barter their data and attention for digital services. Some evidence suggests that they are doing rather well. A recent study by Erik Brynjolfsson, Felix Eggers and Avinash Gannameneni of the Massachusetts Institute of Technology offered people different cash amounts in exchange for giving up Facebook for a month. Based on the responses, they then estimated its average annual value to the consumer at around $750. A simpler survey in the same study (without real cash offers) suggested that on average people value free search engines at $16,600 per year, maps at $2,800 and video at $900.

This sounds like a wonderful deal for the consumer, but it generates problems elsewhere. Take taxes. Professionals are not allowed to evade tax by selling their services for benefits in kind, so why should consumers not be taxed if they are paid for their data in the form of services? Statisticians also struggle in a post-price world. GDP is mostly measured by transactions at market prices. A recent study by Leonard Nakamura of the Federal Reserve Bank of Philadelphia and Jon Samuels and Rachel Soloveichik of the Bureau of Economic Analysis used the amount spent on advertising to estimate uncounted output, and calculated that in 2013 American GDP should have been $19bn higher than reported.

Privacy activists also worry. Consumers tend to respond much more strongly to “free” offers than to prices that are only fractionally higher than zero. When Amazon first offered free shipping in European countries, orders surged—but not in France, where by mistake it charged around ten cents. The activists’ concern is that the “free” label fosters poor decisions, making people, for example, reveal more about themselves than they would in a more formal exchange. Researchers talk of the “privacy paradox”: when asked, people say that they care much more about their privacy than their actions would suggest.

The free economy also troubles competition authorities. Excessive market power can be defined as the ability to raise prices above what would be charged in a competitive market. With no prices to compare, and other options only a click away, companies such as Google seem to operate in an environment of cut-throat competition. It is naive to think so. Consumers are more captive than the low cost of switching might imply. Google, for example, commands a market share for internet search of over 90% in most countries in the European Union, where antitrust authorities in June fined it €2.4bn ($2.7bn) for promoting its own comparison shopping services above its competitors’. Its services may have been free, but the trustbusters judged that its market power was curbing consumers’ choices. In the absence of prices, lack of competition will show up in other ways: demanding more information from users than they want to give, for example; or irritating them by stuffing their service chock-full of adverts.

No such thing as a free exchange

Opinion is divided on whether the free economy needs fixing, and if so, how. In his book “Who Owns the Future?”, Jaron Lanier suggests that tiny payments for digital contributions might correct yet another problem, a misallocation of labour. If companies paid people for useful data, rather than mopping up what they leave behind as they use online services, then prices could nudge people towards more productive online activity. Others advocate tougher regulation, mandating that consumers have the option of paying for a version of their social-media platforms free of advertisements and digital profiles. Neither seems imminent, and each comes with its own problems. But both would at least force people to start counting the cost of that priceless lunch.

Source: “THE ECONOMIST”

1). Apparently (adverb)

Definition: as far as one knows or can see.

Synonyms: seemingly, evidently, it seems (that), it would seem (that)

Usage: The child nodded, apparently content with the promise.

 

2). Devour (Verb)

Definition: quickly and eagerly.

Usage: She spent her evenings devouring the classics.

 

3). Prevalence (Noun)

Definition: the fact or condition of being prevalent; commonness.

Synonyms: commonness, currency, widespread presence, generality

Usage: The prevalence of smoking among teenagers.

 

4). Constraint (Noun)

Definition: a limitation or restriction.

Synonyms: restriction, limitation, curb, check, restraint, control

Usage: The availability of water is the main constraint on food production.

 

5). Eke (Verb) past tense: eked; past participle: eked

Definition: make an amount or supply of something last longer by using or consuming it frugally.

Synonyms: economize on, skimp on, be (more) economical with, make economies with

Usage: The remains of yesterday’s stew could be eked out to make another meal.

 

6). Evade (Verb)

Definition: escape or avoid (someone or something), especially by guile or trickery.

Synonyms: elude, avoid, dodge, escape (from), stay away from

Usage: Friends helped him to evade capture for a time.

 

7). Captive (Noun)

Definition: a person who has been taken prisoner or an animal that has been confined.

Synonyms: prisoner, convict, detainee, inmate

Usage: The policeman put a pair of handcuffs on the captive.

 

8). Imply (Verb)

Definition: indicate the truth or existence of (something) by suggestion rather than explicit reference.

Synonyms: implicit, indirect, hinted, suggested, insinuated

Usage: There was implied criticism of the king’s choice of commanders.

 

9). Curb (Verb) gerund or present participle: curbing

Definition: restrain or keep in check.

Synonyms: restrain, hold back, keep back, hold in, repress, suppress

Usage: She promised she would curb her temper.

 

10). Nudge (Verb)

Definition: prod (someone) gently with one’s elbow in order to attract attention.

Synonyms: poke, elbow, dig

Usage: People were nudging each other and pointing at me.

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