Saturday, September 5, 2015

Princeton Review jacks up its prices in areas with lots of Asians

But few, if any, realize that the prices for The Princeton Review’s online SAT tutoring packages vary substantially depending on where customers live. If they type some zip codes into the company’s website, they are offered The Princeton Review’s Premier course for as little as $6,600. For other zip codes, the same course costs as much as $8,400.

One unexpected effect of the company’s geographic approach to pricing is that Asians are almost twice as likely to be offered a higher price than non-Asians, an analysis by ProPublica shows. (Read ProPublica’s research methodology here.)

The gap remains even for Asians in lower-income neighborhoods. Consider a zip code in Flushing, a neighborhood in Queens, New York. Asians make up 70.5 percent of the population in this zip code. According to the U.S. Census, the median household income in the zip code, $41,884, is lower than most, yet The Princeton Review customers there are quoted the highest price. ...

Earlier this year, Harvard undergraduate Christian Haigh stumbled on The Princeton Review’s variable prices doing research for a class he was taking called “Data Science to Save the World.” ...

Today, Haigh and three fellow students are publishing their findings that The Princeton Review’s higher prices correlate to areas with higher income. ...

ProPublica tested whether The Princeton Review prices were tied to different characteristics of each zip code, including income, race, and education level. When it came to getting the highest prices, living in a zip code with a high median income or a large Asian population seemed to make the greatest difference. ...

Customers in areas with a high density of Asian residents were 1.8 times as likely to be offered higher prices, regardless of income. For instance, residents of the gritty, industrial city of Westminster, California, which is half Asian with a median income below most, were charged the second-highest price for the Premier tutoring service.
--Julia Angwin, Surya Mattu, and Jeff Larson, The Atlantic, on what happens when demand is inelastic