Through a series of auctions, three economists and one social media researcher found how much Facebook users would require to walk away from the platform.
With over 2 billion monthly users worldwide, Facebook has gained the title of the most popular social network.
Social media has changed the way we live and communicate, but it can be difficult to put a monetary value on a free service such as Facebook.
Using a series of auctions in which researchers paid people to close their accounts, the team found that users required around $1,000 to deactivate their accounts for 1 year.
They published the findings recently in the journal PLOS ONE.
The role of auctions in the study
The researchers included: Saleem Alhabash, at Michigan State University in East Lansing; Sean B. Cash, at Tufts University in Boston, MA; Jay Corrigan, at Kenyon College in Gambier, OH; and Matthew Rousu, at Susquehanna University in Selinsgrove, PA.
They organized three auctions, during which they asked participants to consider the amount of money they would require to close their Facebook accounts.
The auctions included college students, a community sample, and an online sample. The scientists made the payment after verifying the deactivation of memberships.
"Auction participants faced real financial consequences, so had an incentive to seriously consider what compensation they would want to close their accounts for a set period of time and to bid truthfully," says Cash.
The details of the three auctions are as follows:
1. At one Midwestern college, the average bid for deactivating Facebook for 1 day was $4.17 among 122 students. Researchers calculated a 1-year estimate and found a range of about $1,500–$1,900.
2. A sample of 133 students from a Midwestern university, plus 138 adults from a large Midwestern town, revealed that the average bid to deactivate Facebook for 1 year in the student group was around $2,000. In the community group, it was slightly more than $1,000.
3. Researchers used the Amazon Mechanical Turk open marketplace to select 931 adults (aged 33, on average) in the United States. In this case, the average bid to deactivate Facebook for 1 year was almost $2,000.
"Students placed a higher value on Facebook than community members," concludes Cash. "A number of participants refused to bid at all, suggesting that deactivating Facebook for a year was not a welcome possibility."
Facebook's benefits are larger than expected
The results of the study contrast the company's market value. Based on a market valuation of about $400 billion and more than 2 billion users, the market value of Facebook would be around $180 per user, which is less than 25 percent of the annual average value bid by auction participants.
"While the measurable impact Facebook and other free online services have on the economy may be small, our results show that the benefits these services provide for their users are large," write the study authors.
The researchers note that the samples they used in the study, which seem to represent students more than other groups, are not necessarily representative of all Facebook users.
However, the authors also believe that the results show consistency in price valuation by users across the samples and different timeframes.