Summary

Society versus Princeton Review. Issue is fair pricing.

In 2015, Technology Science students [1] and ProPublica journalists [2] found unexplained price discrimination in online tutoring services for the SAT at the Princeton Review website [3]. A key finding by ProPublica was that Asians were likely to pay almost twice as much as other groups for the same online tutoring service. At the time, these findings were overshadowed by other events. Now, four years later, the time seems ripe to revisit the matter and determine whether discriminatory pricing continues at the Princeton Review website.

Studies

• A study might involve writing a computer program that visits the Princeton Review website from different IP addresses around the country and recording reported prices for the same online tutoring service by ZIP code.
• An alternative study might sample prices by hand using IP addresses around the country to visit the Princeton Review website and record reported prices for the same online tutoring service by ZIP code.
• (Related) Princeton Review also offers in-person tutoring services with a “guarantee” of achieving a minimal SAT score. The labor, travel and office costs for in-person tutoring may understandably vary geographically. A study might examine the socio-geographical availability of these services and their price by writing a computer program that visits the Princeton Review website from different IP addresses around the country and recording reported availability and price. And then compare the prices to the reported costs for those areas. A variant of this study might systematically compare harvested prices and availability to educational disparities.

Introduction

The Scholastic Aptitude Test (SAT) is a standardized college admissions test used primarily in the United States to inform colleges an applicant demonstration of English reading, writing, and mathematics [4]. The Princeton Review is a prominent tutoring service in the United States that offers private in-person and on-line tutoring services for preparing applicants to excel at the SAT [3]. In their most recent offerings, the Princeton Review guarantees high-performing outcomes commensurate with the price of the service [3]. A good SAT score can significantly increase a candidate’s likelihood of being accepted into a top college and receiving financial scholarships. If the Princeton Review’s tutoring service has become so advanced that the company now guarantees a minimal score on the SAT, then the price for the same online service should be equally available to qualifying test takers, regardless of where the applicant lives. Is it? It is easy to understand that the price for in-person tutoring service may vary geographically as labor and space costs change. But costs for the same online tutoring service do not very geographically. Does it?

Background

In 2015, student researchers and journalists found that customers did not see the same price for online SAT tutoring on the Princeton Review’s website [1]. The students searched the website for 33,000 ZIP codes across the United States and found three different prices depending on the ZIP code input, revealing regional designations [1]. However, journalists at ProPublica matched the prices to demographics associated with ZIP codes and learned that Asians are almost twice as likely to pay the higher price [2].

Economists define price discrimination as the business practice of selling the same good at difference prices to different customers [6]. Economists generally recognize three types of price discrimination: (1) personalized pricing where each buyer is charged a different price; (2) quantity discounts where per-unit price may fall as quantity increases; and, (3) differential pricing for different demographic groups such as seniors or children. However, in the United States, price discrimination can be illegal if based on race, religion, nationality, or gender.

Response to the 2015 study was overshadowed by a lawsuit between Asian advocacy groups and Harvard University, the school where the technology science students were located. The lawsuit was about admissions and had nothing to do with the pricing of Princeton Review’s services except on the surface the study had a Harvard affiliation so there was less uptake on the findings. In 2019 a verdict was rendered in the lawsuit, so the time seems ripe now to revisit pricing for online tutoring at the Princeton Review website.

Materials and Methods

Advertisements on the Princeton Review’s website in November 2019, four years after the previous study, shows a price immediately upon loading the page for an in-person tutoring service (Figure 1a). Navigating around the website reveals an option for an online tutoring service that requires the entry of a ZIP code before showing its price (Figure 1c), and references are made to guaranteeing an SAT outcome (Figure 1a). Whether the same price for the same online service appears automatically or differs based on the IP address of the machine visiting the site is not clear. Figure 1 shows different prices shown to the same machine using different IP addresses, one in Massachusetts (Figure 1a, 1c, 1d, 1e and 1f) and one in California (Figure 1b and 1g).

It is not clear from the examples in Figure 1 what is happening or accounts for the different prices reported. Were the price differences due to geographical differences? What made the pop-up appear and what prices might appear based on different ZIP codes (Figure 1c)? The geo-location of the machine’s IP address seems useful in locating sites for in-person tutoring but is it also contributing to price differences?

Figure 1. Different prices reported on the Princeton Review Website in 2019 [3]: (a) from an IP address in Cambridge, Massachusetts (b) from an IP address in California; (c) a pop-up option that appeared for pricing for an online tutoring service based on ZIP code; (d) and (e) show different prices for the same service to two different browsers on the same computer with an IP address from Cambridge, Massachusetts; and, the same price for the same services on the same computer with IP addresses from Cambridge, Massachusetts (f) and California (g).

Studies

Desired Outcome

The envisioned result is for the Princeton Review to offer the same price for the same online tutoring service regardless of the location of the student. As a design statement, the goal is for the Princeton Review to:

Construct a technology for online tutoring pricing

Such that the prices are fair.

Below are possible studies that could be done to further investigate the observations shown above to see whether the Princeton Review no longer offers services with the same kinds of pricing differentials found in 2015.

Enumerated Studies

Study 1. Geographical Survey

The exact study in 2015 cannot be replicated using the same means because the website works differently in 2019. In 2015, the option for online tutoring was only available after the visitor to the website entered a ZIP code. Today, the IP address seems to be used to provide geolocation, with the rare exception of a pop-up box appearing at one point (Figure 1c).

An updated version of the 2015 study would involve writing a computer program that visits the Princeton Review website from different IP addresses around the country and recording reported prices for the same online tutoring service by ZIP code and/or other products of interest.

Study 2. Sample Survey

A version of Study 1 that uses a web browser to manually visit the website using different IP addresses that account for a sample of geolocations.

Study 3. (Related) Guaranteed Results

Princeton Review also offers in-person tutoring services with a “guarantee” of achieving a minimal SAT score (Figure 1a and 1b). The labor, travel and office costs for in-person tutoring may understandably vary geographically. A study might examine the conditions for the guarantee to see whether they appear fair to consumers. A variant my examines the socio-geographical availability of these services and their price by writing a computer program that visits the Princeton Review website from different IP addresses around the country and recording reported availability and price of guaranteed services and then compare the reported prices to the relative living costs for those areas. Another variant of this study might systematically compare harvested prices and availability to educational disparities. (Note: This is a related study, so many of the motivations and predicted events described elsewhere in this writing do not apply.)

Predicted Events

Suppose a study was done that showed that prices for the same online tutoring service varies by the ZIP code provided or the geolocation of the IP address of the machine visiting the website. Such a study would raise the question of fair pricing at the Princeton Review.

The decision-makers most likely to respond to a such a study are journalists, consumer advocacy groups, the U.S. Federal Trade Commission (FTC), and the Princeton Review. If the results of the study revealed a similar result to that of the 2015 study, then the advocacy group would likely be specific to Asian Americans.

Journalists primarily want to write attention-grabbing stories, so the study would likely garner some media attention. The Princeton Review wants journalists to write stories about its services, but it wants those stories to support sales.

A likely response by the Princeton Review about the study to journalists and others would be an attempt to change the issue to become one about the fact that they offer different products at different prices because costs, such as labor, office space, and travel, differ around the country. This would be an attempt to gloss over the fact that the study was about an offer of the same online service at different prices.

The Princeton Review would also likely attempt to get supportive media stories written about its services. Examples would be stories about dramatic improvements some students experience in their SAT scores as a result of their service.

The media attention spawned from the study could also motivate action from consumer groups involved, especially if like the 2015 study, one racial group is likely to have to pay the higher price significantly more often that other groups. An advocacy group may write a letter or issue a statement of concern, to which the Princeton Review would likely respond in the manners described earlier.

If attention mounts, the U.S. Federal Trade Commission (FTC) may launch an investigation into the Princeton Review. If so, there would likely be little or no public attention as the communications would likely be done in private. If enough public attention warranted, the FTC may meet with related consumer advocacy groups. The Princeton Review would likely continue to respond in the manners described earlier.

Eventually, the media attention, advocacy group concern and FTC investigation would likely lead to the Princeton Review changing its pricing practice. Media attention alone may not lead to a change in the practice at Princeton Review if the company is good at getting the public to falsely believe that the study is just reporting on the fact that the Princeton Review charges different prices, but the study failed to understand that the different prices result from in-person tutoring costs being different geographically. If the FTC does not launch an investigation but advocates express public concern, then the Princeton Review would still be likely to change its practice. If the media fails to pay attention to the study, however, the advocates and the FTC are unlikely to learn about the issue, so no change would be expected by the Princeton Review in its practice.

Discussion

In summary, a study (Study 1 or Study 2) that showed geographical or racial bias in prices for the same service at the Princeton Review website could first lead to media attention, to which the Princeton Review might respond with statements that confuse the issue. For example, the study might show prices differ for the same online tutoring service –i.e., the costs are the same regardless of the geolocation of the student, but the price offered by Princeton Review varied. Princeton Review offers many different services, including some that are in-person tutoring services. The costs for in-person tutoring differs, and so understandably might the price. Princeton Review might make public statements that confuses what the study shows.

If advocacy groups get involved and understand the study, then they may issue a letter or statement of concern. The U.S. Federal Trade Commission might launch an investigation if the pricing was unfair or deceptive to consumers.

The responses from media, advocacy groups and the FTC, would provide all the attention and will necessary to lead to a change –namely, the Princeton Review offering a consistent price for the same online tutoring service.

Of course, a scientific study (Study 1 and Study 2) may reveal the opposite: there is no substantive price differences for the same online tutoring services. In which case, none of the predicted events would occur. However, the knowledge would be important to know because it means that the practice documented in 2015 no longer holds and suggests that eventually the studies had impact: Princeton Review stopped the practice.

The related study (Study 3) involved an analysis of the high cost of getting a “guaranteed” SAT score and who can afford it. This study is not about differences in prices offered at the website, so none of the predicted events apply.

Acknowledgements

Citation

Be sure to cite this writing in all related and inspired work.

Sweeney, L. Investigation Plan: Revisiting Price Discrimination at the Princeton Review. Public Interest Investigations. 2019111901. November 18, 2019. Version . https://techscience.org/researchnetwork/investigations/2019111901

References

1. Vafa K, Haigh C, Leung Al, Yonack N. "Replication Data for: Price Discrimination in The Princeton Review’s Online SAT Tutoring Service." Harvard Dataverse. September 1, 2015. http://dx.doi.org/10.7910/DVN/U4OKBP [1]

2. Angwin J, Mattu S, Larson J. "The Tiger Mom Tax: Asians are Nearly Twice as Likely to Get a Higher Price from Princeton Review." ProPublica.org. Sept. 1, 2015. http://www.propublica.org/article/asians-nearly-twice-as-likely-to-get-higher-price-from-princeton-review [2]

3. "The Princeton Review, SAT webpage." Accessed November 2019. https://www.princetonreview.com/college/sat-test-prep?ceid=newhp-nav [3]

4. "Scholastic Aptitude Test." The College Board. http:// sat.collegeboard.org/about-tests/sat [4]

5. Mankiw G. "Principles of Microeconomics." South-Western College Publishing. 6th edition (February 7, 2011) [5]