Economists wanted

April 4, 2008

I had dinner with my friend Frances Pinter a few weeks ago. She’s a fellow at the London School of Economics and our conversation got around to my interest in the economics of BookMooch.

I’m interested in getting economists interested in looking at BookMooch, to see if the economy is “healthy” but also if there are changes I could make that would further the goals of the site.

Below is my “solicitation for economists”, which I wrote to Frances for the LSE, which outlines my ideas.

BookMooch is a web site where people exchange books by earning points through a variety of activities.

The “economy of points” is not a zero-sum game, as most exchanges are, but is organized as a micro-economy, with a number of “real economy” attributes:

1) inflationary forces: “points” are created by people entering books they want to give away
2) subsidies: international trades cost 2 points, but the sender receives 3 points
3) deflationary forces: books brought from the outside into the economy
4) savings: people tend to not spend all their points
5) abandonment: people who earn points leave the web site and abandon their earned points
6) charity: people give their points to worthy causes
7) net-givers: people who like to give more than receive, by a substantial ratio

There have been a number of economic criticisms of the BookMooch economy, but I believe this is because they don’t understand the roles of currency injection and inflation as healthy aspects of a rapidly growing economy.

A few interesting economic projects present themselves:

1) is the BookMooch economy healthy?
2) what effects do government (ie, the administrators) interventions tangibly have?
3) What changes could be made to further certain goals (such promoting international trading).

I’m also quite open to devising experiments with the BookMooch economy to see what effect they have. The entire anonymized database is available for downloading, under a creative commons license, and so I believe this presents an interesting opportunity for economic analysis, especially in the area of tightly controlled micro-economies.

47 Responses to “Economists wanted”

  1. John, reading your post, this Frank Herbert line started echoing in my head… “The spice must flow!”

    So my question is — what is defining a healthy bookmooch economy? “The books must flow?” Minimal intervention? A high number of participants? A low/high virtual price per book?

    Just being curious,
    Eylon

  2. Maggie said

    Yes, Eylon. Intellectual rigor demands that terms and goals be defined before the analysis is conducted. Otherwise, the research will just show whatever the researchers want it to show. Just as it always does inside the Beltway.

    Maggie

  3. Analyzing the BookMooch ‘economy’ sounds incredibly interesting.

    One personal thing I frequently ask myself is if I’m ‘spending’ my points on books I need (for work/teaching, and scholarship/writing) versus burning points on ‘impulse buys’…

    I must admit, I’ve become far more impulsive over time. 🙂

    Keep us posted!

  4. Hi. I received my PhD in economics last June, and would be happy to help out. I think the divergence in goals between types of users (i.e. givers, traders, zombies and leeches, among others) is going to be as critical to the analysis as figuring out what the criteria for “healthy”.

  5. JB said

    I consider myself to be a “real world” economist. I’m a self-taught economist and real estate agent. There’s a large difference (IMHO) between academic economists and those who have experience in the real world of investing and trading. I’m also a member of Paperbackswap and I’ve noticed that there’s a difference between the economies of the sites. I’m not sure how I can help but I’m full of opinions!

  6. Marysienka said

    I love the idea of analyzing according to the principles of the “outside world”. I am an amateur armchair economist and therefore of no help here, but it sounds fascinating. Looking forward to the results of inquiries and analysis!

  7. Carol said

    Hi,
    I just love bookmooch. My economical think about being a member of BM is(1)saving others money, (2) I am saving money on great books that I want to read and (3) since I have loads of books to give away to good homes, I can easily afford this website. I do not mind giving more than I receive. I also donate books to outside charities as well as donating my points here.
    One thing I dont understand is how John can afford to run this website. I would be willing to donate money to support this.
    Keep up the great work.
    Thanks for all of your hard work.

  8. That sounds like an interesting challenge. I hope such studies occur and yield practical suggestions for making the BookMooch economy healthier.

    I give more books than I mooch and I accumulate points, not because I want to save, but because the books I want to spend the points on aren’t being offered.

    I see the need for a process that results in more books listed. The possibilities I’ve thought of aren’t good and would not be viable — subtracting points from accounts, making points expire after a certain amount of time, giving an incentive for signing up new members, or a point bonus for adding titles that aren’t yet on BookMooch. Each of those ideas aren’t good for several reasons. Surely good solutions can be found.

    I’ll be curious to see the ideas from economists.

    Jon

  9. Heather19 said

    Woah. That’s interesting, and I hope you get responses and people interested, but I just realized how little I actually listened in my Economic class. Most of that flew right over my head. lol

  10. Tina (USA;MO) said

    All I know is Bookmooch has made my economy and myself personally healthier. I don’t spend as much money on books to read once or twice and sit on a shelf, I get to share them with other book lovers, and this is the healthy “habit” I have now to spend my time away from my kids when they are with “Dad”. Thank you for this.

  11. Michelle (Greece) said

    A question from a bookmooch lover but no economist. Is it economically healthy to have so many sites around that have been labelled “possibly inactive”? Not only is it frustrating to come across such a member when looking for a book, but their points, if and when available, just sit there! Is there a way to delete these members and offer their points to charity?

  12. Nancy said

    I also find it interesting what KIND of books I get offered here, what KIND of readers are attracted to the site. I also am a member of both BM and PBS. I maintain the same wishlist at both places. At BM, people post the debut novels, the more interesting fiction, and the travel books. At PBS I get the romance novels and very popular authors. There’s an interesting split there. At PBS, there tend to be extremely long lines for books, because many people keep the books they get and buy more credits. Here at BM, you have to give to get and can’t buy credits. In order to order another book, you have to post one. I like that. I think it keeps the process flowing. Having said that, I have 2 to 3 times more activity at PBS than at BM. I don’t know why. I do make a point though, to make sure I post a book back to the site where I got it from when at all possible to put something back into the system.

    To me, the real question is where do we find more readers willing to give up their books and get new ones- in the spirit of a revolving worldwide library?

  13. I wonder if the 0.1 point given for adding a book be only for books not already listed in the system and not for unlimited copies? This may sound like an administrative nightmare if it were needed to be determined if the .1 point had been given for whether to subtract the .1 point, if the book is subsequently removed. However, I would suggest that not be done. Whether the .1 point is deducted or not (if the book is removed) also depends on the status at the time. If there is still a book in the system, no .1 point is removed (presumably in most cases .1 had not been given originally) but the .1 is subtracted if the book is totally removed from the system.

    Thus, the .1 premium is given more based on the actual value added the economic system. There might be a few instances in which a person is not given a .1 point when a book is added and then had a .1 point subtracted on a subseqent removal, but I think that might be a relatively rare occurrence and more than offset by the economic value of the change. (Incidentally, perhaps the “market” created in a book’s listing “gaining” and “losing” value is analogous to having a bit of “stock market” on the economic system 🙂 )

  14. Mikko said

    “One thing I dont understand is how John can afford to run this website.”

    Amazon affiliate payments from people shopping books through BookMooch links pays enough to support the site. Which is pretty cool. So, if you want to help, buy books from Amazon via BookMooch links!

  15. You talk about “net givers”, people who like to give more than they receive. I’ve ended up as a net giver, but not because I want to. When I joined, I listed my books, which many people wanted to mooch, so I gave them away.
    When I try to mooch books, I’ve been much less successful. I’m waiting on replies for two books that I tried to mooch many months ago and never got an answer. I tried to mooch from one person, who cancelled their account after I sent a mooch for her books. I never got any reply whatsoever from other people I tried to mooch from.
    Also, I think there’s a problem with the US postal system. “Surface mail” no longer exists due to the infite wisdon of the USPS and we in the US must send all books via airmail (I mailed on that cost me over $20), so sending books internationally becomes prohibitive. The more civilized countries on the Continent still have surface mail for books, which is unavailable to those living in the US.
    Perhaps you can allow for that in your points or at least, general information.

  16. sibylle, I feel your pain when it comes to postage. Have you looked at the Flat Rate Priority envelopes? I can get almost any paperback in there, even the larger ones, and postage is $11 to most countries.
    And of course within the US you can still send books cheapest by Media Mail.

  17. Frances M. Bothwell said

    While I agree that some of the terms should be clearly defined, the idea is important. I think BM might serve as a model for other aspects of the economy, where other objects could be traded. Some of this goes on in business where there is now a small movement to trade one service for another or services for materials. BM might be the start of a really good economic project for the real world.

    One thing that I want to point out is that the point system in BM does help to build up points. My given books and mooches are almost even right now, but because I send a lot of books outside the US and keep a fairly high inventory, I always have more than enough points for my own use and can give to charities and friends in need.

  18. anne said

    I also have said from the beginning of using Bookmooch that I’d be happy to pay a $5-10 a month donation for using Bookmooch.

    However, I do think a mandatory fee or a public appeal for operating funds on the main web page would scare away new users.

    I can’t answer the bigger questions.

  19. anne said

    And to add another comment: The mooch point system may be too generous. I gave away at least 100 points during the last Mooch charity points lottery, and I still have over 100 active points. That is more than I will ever be able to use.

  20. Hercules40 said

    Another interesting aspect John is this:

    I have listed a number of older books (circa 1985 – 1988) and others with no takers. Now, is this, because people are only interested in the latest books? I am not suggesting a reward of points for older books so that they would move — rather, some sort of analysis to understand what that does to the economics of BookMooch…

    In order to get the points to be able to Mooch books I wanted, I listed a number of books, I had either read and didn’t want, but thought others would want, or, hadn’t read, but thought others would be interested in them. Yet, maybe due to age or overall availability, those books have not moved at all. This has allowed me to build up enough points… GREAT. But, what do I do in 2 years if they are still there? If I remove them, the attendant points are gone! SO, I lose. This part of the economy HAS to be looked at!

    Does the economy of BookMooch only serve those who have new and popular books? Should it promote somehow a way for people to turn over their inventory? How can someone turn over their inventory? Is there a way to connect BookMooch to libraries that can take some of these older books, but STILL IN GOOD CONDITION, still get charity out of the deal, BUT not lose the points, and give away the books?

    I dunno, I am just throwing out ideas…..

  21. Lix said

    Just responding to what Hercules40 has said – I rarely mooch ‘recent’ books and tend to use bookmooch for out of print or vintage books. Mind you my interests are mainly knitting and crochet so most of my mooched books are non-fiction. I’d encourage people to list more of the older books as there are people like me who prefer them.

  22. JudyMac said

    If we took the vagarities of International mailing into account for all countries and all postal versions, it would take a lifetime to sort out. I would suggest that Moochers are made aware of media/printed paper/book rates, these are sent via airmail, but are cheap (in comparison). French livre poste takes a week to reach the USA.

    I would also try to limit the hypocrisy. Many people are on BookMooch as ‘Send within my country only’ but are allowed to mooch internationally. That means a raw deal for Moochers who are prepared to send worldwide, and are having trouble finding books.

    Also on that note, I would like the Angel network to be more visible to newbies, perhaps a list via a button on the Member Home page? Having to trawl Wiki to find the list isn’t very helpful.

    As for inventory turnover, it is really the problem of the lister, if you want to list ‘Ancient cultural practises of Outer Mongolian pixies’ do not be surprised if it doesn’t get mooched. The simple thing is to remove the book and replace it with another one, that balances the points and retires it. (maybe a retire button would help)

    All in all though, I believe that BookMooch is doing ok, and succeeding in getting books out there. I have certainly found some new authors this way, as well as new friends.

    Keep up the good work!

  23. Coqueline said

    Hercules,

    It may be because when people are browsing for books to put into their wishlists, they only tagged the latest and most popular edition of the book (since it shows up on top if you search), and then didn’t really bother to look up ‘Related editions’ options.

    I myself have mooched a couple of older edition of a book by using the ‘Related editions’ option and don’t mind it at all as long as the book condition is decent enough.

    Maybe you should take a peek on how other (newer) editions of the books in your inventory fared? Are they circulating fast? Or that the newer editions of the same book also don’t move anywhere (which means the titles are simply not on demand)?

  24. Margot said

    Interesting idea. I hope you find someone to do the analysis.

    As to the responses, a couple of things occur to me. Older books: It doesn’t matter to me whether a book is old or new, but I do want to know what it’s about. When people list old books, which are not on Amazon, with no plot outline or comments, it’s pretty much a sure thing that no one is going to mooch it.

    Net givers: Not related to anyone who posted because I don’t know how many points you have, but I often see people with bank accounts of hundreds of points and I wonder what on earth they’re going to do with them. Why not give to charity?

  25. Matt said

    It could be a good idea to examine what the limiting factors are on trading. I don’t think many people are limited by their shipping budget. For me, I’d trade more if I needed more point and I was better able to find books that I’m interested in.

  26. I’ve been thinking about this a bit since Friday, and two main economic concepts seem like they’d be important in exploring BookMooch. The first is incomplete markets: in this case, books people want that nobody is offering, and books that are being offered that nobody wants. The second is incomplete information: here this would mean the inability to find books or information about them, along with the inability to find people who might have or want a particular book.

    It’s pretty common in economics to start out building a simple model that ignores these sorts of market failures and then build them in for greater detail, and I suspect that doing something similar here would be useful.

  27. Tim Haas said

    One aspect of the ‘Mooch economy that deserves study is whether deregulating pricing — currently all domestically sent books are valued at one point regardless of age, condition, form factor, etc. — would help or hinder the market.

    Some quick thoughts: If someone could offer older books at, say, a half-point, might they move more quickly? If books out less than a year or those on a bestseller list were priced at two or even three points, might it entice folks to share newer books here rather than sell them on Amazon, possibly leading to a larger user base once knowledge of the fresher inventory got around?

  28. Lori Dupuis said

    I have found that BookMooch adds value where there was none before. If I can’t sell a book on e-bay, then I used to give it to charity. The concept of synergy, adding value, was not included in your original economic analysis. I might mooch books I would not buy, however since I have more value in my points, I’ve lowered the preceived cost and thus a book gains in value.

  29. Comments from Hercules40 and Tim Haas inspired me to analyze the books I’ve had mooched by the books’ dates. Of course without knowing how many books I offered from each time period, few conclusions can be drawn, except that old books get mooched. I think factors other than age prevent mooches — condition, content, findability, shipping status, number of pages, format.

    Books Mooched from Me
    1920-29: 3
    1930-39: 2
    1940-49: 7
    1950-59: 11
    1960-69: 17
    1070-79: 22
    1980-89: 17
    1990-99: 22
    2000-08: 2

    Jon

  30. Amanda said

    What I have found RE: older books is that they do go, but some better than others. I have posted many older books on what are to me obscure religious subjects (I got ahold of a big box of Calvanist books) and they have been the most consistently mooched books in my inventory. Fiction overall has been mooched less for me. And I find the books that I really want to mooch are nonfiction, books that I want to have on hand to refer to, not fiction books that I can access for free at my library. Most of the fiction books that I post were acquired for pennies at garage sales and secondhand stores. The postage costs of sending books, while definitely cheaper than buying them, is higher than what I’d pay at a garage sale or thrift store, so I prioritize.

  31. Stephanie said

    Wow that sounds really interesting! I’m an engineer and fluent with numbers and charts, but only have an amateur interest and understanding of economics. But I’ve been interested in online economies for a while, including gaming economies, like those in massively multiplayer games.

    If I can assist in the analysis in any way, please do let me know. I can be reached at smoorefu at blackrose dot org.

  32. Just want to chime in to support Paul Dickey’s comment. I think it’s definitely worth considering only giving the 0.1 point for adding a book if that book is currently unavailable or is in high demand by some measure (recently mooched?, on somebody’s wishlist?).

    I think it’s important, however, to remove the same number of points (0 or 0.1 as the case may be) when removing a book from inventory as were originally given — this removes some potential for abuse.

  33. Nic said

    The thought of only getting the 0.1 point if the book is uncommon is interesting, but the theory is flawed.

    There may be (say) 40 copies of The Latest Bestseller available to mooch. If 25 copies of these are in the US and are “only to my country”, 2 are in a smoking household, 6 are “email first” but it’s a chunky tome and it’s either too expensive or emails go unanswered, 1 person has doubtful feedback, 2 people haven’t been on the site for weeks – then the availability – to me, in the UK – is very limited and then a new UK listing would be worth the 0.1 point incentive, surely?

  34. Coqueline said

    I’m not in favour of making the system more complicated with additional rules on what books get how many points when and where. I love Bookmooch because of its simple, beautiful working system. Abuser will always find a loophole to cheat the system, no matter how complex you make the rules.

    For one, giving points only to unavailable books will discourage member entering books in their inventory, which means smaller pool of books available. Abuser can cheat this system by hand entering every book so it appears to be of different edition, and thus considered ‘new’ books. Encouraging people to list their books regardless of availability (by giving equal point) also means you will have more copies to choose from when you mooch. This way you can filter away the ‘on vacation’, closed accounts, and people with dodgy records. This dynamics represents the competition in economy. When the market for your book is tight, you just have to compete with others to get your book mooched, either by having better conditioned books, better location (the difference between 1 or 2 points to mooch from you) or better mooch record.

    I’d say keep the 0.1 for all book system (and -0.1 for any books removed).

  35. anne said

    I’ve used Bookmooch to get a lot of old books that nobody else would want.

    If a book doesn’t get a mooch within 60 days I usually remove it from my inventory. I also strive to keep fat books out of my mooch inventory because it costs more to mail them. My mooch inventory books occupy two shelves on my bookcase, and when the shelf gets too crowded, then it’s time to start kicking books off the island.

  36. Bev said

    Hi,

    I’m not an economist, I’m a mathematician. I’m replying for 2 reasons: first, ecomonics as such can be considered an example of a complex dynamical system (which I study) and second, the concept of ‘healthy’ is one that is apt when discussing such complex systems.

    To be brief, ‘healthy’ means that it functions as intended without much, or any, tweaking by the government (admins). A system which is constantly being adjusted, changed, fixed, or futzed with is sick. Healthy systems just roll happily along, doing what they were intended to do.

    If you want, I could analyze your ‘economy’ from the point of view of a complex system which may give you a good idea of its ‘health’.

    One suggestion: any economy needs a ‘standard’ by which value can be measured. This means that there has to be a rational relationship between value received and value given. This means that your point system, as it stands now, is not varied enough to account for, say, shipping to Mexico from California vs shipping to India from California. But the differences in cost to the shipper means that there is a negative incentive to ship internationally in your system.

    They key is to make it so that any person using your system won’t experience a net loss of value by participating.

  37. Bev said

    Oh, and just because I don’t quite get it, why is there no option to have the party getting the book pay for shipping? It seems like that would solve a lot of problems.

  38. Roberta said

    As an economist, I found the questions raised very interesting! I had never thought of Bookmooch that way.
    I’d like to point out that in a “free market” setting, equilibrium is achieved as each individual seeks its OWN benefit. I wouldn’t call BM a “market” though. BM, to me, is a “community”, where, of course, we seek individual benefit, but ALSO the benefit of others – ie – many people here I believe, like me, see a benefit in sharing, in giving. And I think that’s why it works!

  39. anne said

    I think the option to have the reciever pay for shipping is an interesting idea to consider.

  40. Coqueline said

    I think having the receiver pays the shipping will complicate matters exponentially. How would the paying mechanism works? How much to pay, for example if you need to send in 1.5lbs of books from France to India, how would the international postage calculation work? Who would make sure moochers paid? Furthermore, introducing payment into the system would only make the place more attractive to abusers (who could actually get hard cash instead of used books like it is now).

  41. John Buckman, David A. Spitzley and Bev: I’m interested in participating in this discussion as well.

    I’m an economist by training (BS – Economics) and a manager by experience and training (MBA). I am also an itinerant tinkerer and poker of systems.

    I will assume that the most important measure is the system is books mooched [M] (since the stated purpose is to help people share books). In this case a “healthy” economy for BM is one in which M is sustainable and increases over time without intervention.

    My first question is: does the point system support M?

    If it does, great, we can discuss the merits and flaws of the point system. However, we must keep in mind that the goal isn’t the point system, it’s M.

    If the point system doesn’t support M then discussing the point system is wasting a lot of time.

  42. Well, I’ve just spent an hour or so banging on the data available at http://bookmooch.com/about/stats_choice, and my preliminary estimate is that the economy probably isn’t sustainable as it is currently constructed. My main reason for thinking this is that the ratio of “Total points in the system” to “Books listed for mooching” has risen by 140% in the last year. If you think of that as the ratio of dollars to available goods, we’ve essentially got a 140% annual inflation rate. Since each Mooched book reduces the pool of books while increasing the pool of points, and the cummulative number of books Mooched surpassed the number currently available in November of 2007, so this isn’t entirely surprising.

  43. I’ve been doing a few more calculations, and one interesting thing I’ve worked out that roughly 17% of all Mooches since mid-September 2007 appear to be foreign (obviously John Buckman has the data to confirm or contradict this estimate). Basically, the pool of Mooch Points currently available should equal
    .1 per book currently available +
    .2 per book Mooched to date +
    1 per book Mooched internationally to date, or

    MP = .1X + .2Y + Z

    Now, the datasets available at http://bookmooch.com/about/stats_choice include MP, X and Y, from which I estimated Z. As I note, it’s been pretty stable at between 16.5 and 17.2% since a one-time drop in the number of Books Mooched reported on September 12, which I assume represents the start of accounts being aged out. So, what does this get me? Follow along to my next post and you’ll see.

  44. First, I should say “oops”, as it turns out that the annual inflation rate is actually higher than I calculated originally due to an error; the ratio of the growth rate of Mooch Points to the growth rate of available books is actually 2.75, making the estimated annual inflation rate 175%.

    Now, with that out of the way, what does the observation that roughly 1/6 of all Mooches are international get us? Well, I set up a relatively simple model of inflation based on the model above in order to estimate how much of an effect the subsidy was having on the inflation rate.

    Mooch Points are defined by
    MP = .1X + .2Y + aZ
    Where X is books available, Y is total books mooched, Z is books mooched internationally, and a is the international subsidy (currently 1 point). In order to measure the effect of the subsidy on how many books were traded, I defined
    Z = f(a)*Y
    where f(a) measures the effect of the subsidy on the number of international mooches.

    MP = .1X + (.2 + a*f(a))Y

    Inflation is then calculated by the percent change in MP, divided by the percent change in X. In order to estimate the effect of the subsidy on the inflation rate, I made the assumption that for a subsidy of a=0, f(a)=0, and 1/6 of the mooches made would not have taken place, and then compared the inflation rates with and without the subsidy. With all of that in mind, it appears that the subsidy accounts for roughly 40% out of the 257% annual inflation rate I estimated above.

    On another front, the throughput on the site is astounding, and is itself a major reason for the level of inflation. As of 4/13/08, there were roughly 465,000 books currently listed for mooching, compared to 272,000 one year ago, for a net increase of 193,000 books. However, during that same time 538,000 books have been mooched, so combined new additions and mooches amount to nearly 3 times the number of books in the system one year ago today. Scary!

  45. Damn typos. The phrase “out of the 257% annual inflation rate” above should read “out of the 175% annual inflation rate”

  46. david said

    Before saying anything, I’ll say that I’m no economist, and that I absolutely love bookmooch.

    To me, much of the discussion about how “real” the bookmooch “economy” might be misses the part that is most unreal: that “prices” are fixed, all books are effectively equal. I think that supply-and-demand is the most basic part of a “real” economy, but is for the most part not at play at bookmooch. I understand that we do this in order to keep things simple, and that does make sense, but it is the thing that keeps this from being anywhere near a “real” economy.

  47. scott said

    I know this comment is kind of late. To be honest, no matter how complex an economist could make the equation – i would not consider the system as it is healthy for a long term sustainability due to a single fact: theres more points going in than there can possibly be coming out. This essentially is just creating an ever-increasing debt. Some inflation is good, but there has to be some sort of leveling force – or in this case another method for those points to be spent without effecting the “balance” of books.

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