June 5, 2023

Readout of White House Panel on the Economic Case for the President’s Initiative on Junk Fees

Readout of White House Panel on the Economic Case for the President’s Initiative on Junk Fees

Today, the White House convened a bipartisan panel of leading scholars and business leaders to discuss the economic case in support of the Administration’s efforts to crack down on junk fees. The panelists gave remarks and participated in a moderated discussion with an audience of economists and policy advisors from 16 federal agencies, describing how deceptive pricing harms competition, raises costs for consumers, and disadvantages companies that want to price in a fair and transparent manner.

Director of the National Economic Council Lael Brainard delivered opening remarks on the economic saliency of this issue and its bipartisan support among voters, highlighting that “junk fee regulation isn’t just popular, and it isn’t just a real cost savings for millions of families at a time when every dollar counts – it’s also smart economics.”

In their remarks, the panelists highlighted the prevalence of junk fees in American’s everyday lives and the academic research that supports the Administration’s targeted approach to regulation.

  • David Laibson, Professor of Economics at Harvard, spoke about the strong research foundations for the Administration’s junk fees proposals, emphasizing how junk fees harm competition and impose the largest burdens on the most vulnerable.
  • Vicki Morwitz, Professor at Columbia Business School, described the psychology of how consumers process price information, focusing on the exploitative practices of drip pricing and partitioned pricing that inflate the costs of goods and services.
  • Bill Kovacic, Director of the Competition Law Center at George Washington Law School and former Chair of the Federal Trade Commission under the administration of President George W. Bush, spoke to the long-standing bipartisan history of scrutinizing junk fees.
  • Laura Dooley, Head of Government Relations at Stubhub, spoke to her company’s attempt at breaking away from the industry standard and introducing up front all-in pricing in 2014. Her company experienced such a drastic drop-off in customers that they reverted back to the traditional model less than a year later. She remarked on how Stubhub’s experience – which was the subject of a study in 2020 – illustrates the need for federal regulation to create one standard and a level playing field for the ticket seller industry.

In addition, today the Council of Economic Advisers published a blog post examining five specific instances of junk fees, and how they illustrate drip pricing and price obfuscation practices.

Participants in today’s event included:

  • Lael Brainard, Director, National Economic Council
  • Bharat Ramamurti, Deputy Director, National Economic Council
  • Michael Negron, Special Assistant to the President for Economic Policy, National Economic Council
  • Neale Mahoney, Special Policy Advisor for Economic Policy, National Economic Council
  • Bill Kovacic, George Washington Law School
  • David Laibson, Harvard University
  • Laura Dooley, Stubhub
  • Vicki Morwitz, Columbia Business School

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Official news published at https://www.whitehouse.gov/briefing-room/statements-releases/2023/03/21/readout-of-white-house-panel-on-the-economic-case-for-the-presidents-initiative-on-junk-fees/