I have always hated buying cars.

You have to go into the dealership, endure a commissioned salesman’s manipulative mind games, and then haggle over the price. It always feels like the system is designed to make it easier for the dealer to screw me over, and I have been screwed over. The salesman knows more than I do; there’s an information asymmetry. The whole thing makes me feel angry and anxious. Any financial decision that large would be stressful. Giving the dealer an informational advantage just compounds that.

Luckily, in the last decade or so, it has become easier to buy used cars (I always buy used, we’re not Rockefellers!) in a more straightforward way. Chains like Carmax and online retailers like Carvana tell you what the car is going to cost upfront. I know from the beginning what they have in stock and what it will cost. There’s no haggling, the salespeople aren’t sweatily trying to manipulate me, I have the ability to return the car within a certain time window if I discover something wrong with it, and I don’t end the process wondering if I just got swindled. It’s much better.

You could argue that much of our capitalist system is built on information asymmetry or at least confusing consumers about prices.

When I go to the grocery, I’m confronted with several prices for some items — one standard price, one if I have a shopper’s card, another if I’ve “clipped” a digital coupon, making it harder to keep track of what I’m actually spending. Many subscription services have a business model that relies on hooking you with a free or discounted first month, hoping that you’ll forget to cancel it (or knowing that they’ve made cancellation very difficult and then banking on the fact that you’ll give up and keep paying). Finding a vacation rental or buying tickets to a concert is an exercise in frustration — when you search through listings, the site presents you with one price; then when you get to the checkout you find that the price has doubled due to “cleaning” or “service” fees.

These are mostly small examples, and ones that I’ve learned to watch out for. But it forces me to approach each purchase with a wariness bordering on paranoia — this looks good, but how am I getting taken advantage of this time? It diminishes my faith in the companies I’m buying from, and in the system of capitalism itself. Sure, there are ways to be a savvy consumer and avoid most of these pitfalls most of the time, but wouldn’t it be nice to buy things without always having your guard up?

It’s not just concert tickets. Many of our biggest, most important purchases are also the ones where you’re most likely to get exploited by confusing or opaque prices. Higher education and health care — two industries that you would hope care about the interests of their consumers — are two of the worst offenders in the world of price opacity.

A few weeks ago, a member of my family injured themselves. They went to see an orthopedist, who ordered an X-ray and prescribed some pills and physical therapy. Later, when the problem didn’t resolve, we went back to the doctor. He ordered an MRI and eventually did some injections to help my family member feel better.

The whole thing will likely be our family’s biggest medical expense of the year (we have a high-deductible medical plan like 70 million other Americans, which means we will likely pay for all of the treatment), and I am only now learning, weeks later, what it will cost. The initial doctor’s appointment turned out to be about $300, but he could have honestly charged us anywhere between $100 and $500 or more — who knows? Each physical therapy appointment was $67, but the physical therapy people couldn’t give me a firm number when we first scheduled the appointments. I called ahead of time about the MRI because I knew that MRI prices could be all over the place and actually got an answer: $300. I have no idea what the injections will cost — hundreds? Thousands? We’ll find out!

This fairly routine injury could have cost our family anywhere from hundreds to many thousands of dollars. And no one, at any point during the process, made it easy for us to understand what it was going to cost, or even provided an opportunity for us to find out. Even the one procedure that I was able to price out ahead of time — the MRI — required two calls, getting transferred around, a long wait on hold, and a conversation with a woman who seemed kind of surprised that anyone would ask her such a question.

What a stupid system. One of the core ideas of market-based healthcare is that people will supposedly be able to shop around for procedures and let the invisible hand work its magic. This was a big selling point for the high-deductible health plans that have become more and more common in recent years — supposedly, they are structured to “encourage strategies such as price shopping to mitigate out-of-pocket spending.” But in a 2019 study, fewer than half of the people interviewed considered price shopping, even in hypothetical scenarios.

You’re not supposed to ask what health care is going to cost in America, even though it’s an industry that consumes 20% of our national income.

Of course, a lot of the rhetoric around markets breaks down in medical situations: if you’re unconscious after a car accident or you’ve just had a stroke, you’re not going to shop around for the best deal. But even on pre-arranged procedures, as a consumer, you’re made to feel like talking about price is tacky — your health is too important to be quibbling over dollars and cents, right?

The medical industry uses price opacity — combined with our reticence to look like we care more about money than health — to make gargantuan profits (the industry will make $31 billion in additional profits from 2021–2025). Consumers deserve better.

Higher education is another industry that uses price opacity and a convenient narrative to its advantage. As with your health, you’re supposed to believe that your child’s future is too important to be bogged down by concerns about money. With the middle class shrinking and economic precarity lurking around every corner, many Americans feel like they have to send their children to the most prestigious college possible, whatever the cost. Seventeen-year-olds are probably pretty bad at understanding what long-term debt will do to their lives. And the higher-ed industry capitalizes on this by obscuring the real cost of college.

There are some colleges — mostly public ones — that are refreshingly upfront about what they will cost. They don’t discount their tuition much for a lot of students, and when they do, they follow federal student aid guidelines, which are relatively easy (which is not the same as easy) to understand. Many of them have straightforward merit scholarships, too — Miami University, a public college in Ohio, gives students a pretty clear sense, before they apply, of the scholarships they can get with a certain GPA and SAT score.

But many of the colleges in America don’t provide such certainty. They operate “flexible pricing” schemes in which they advertise a ruinously high sticker price that few of their students pay. Why do this? There seem to be a couple of reasons. One is the “Chivas Regal Effect,” which holds that people associate high prices with high quality. If one college has an official price of $80,000 per year (even though most students pay $50,000 or less) and another charges $50,000 per year, people will think the more “expensive” one is better.

Another is the fact that these colleges know that they can get some students to actually pay $80k per year. The children of multimillionaires won’t qualify for any financial aid, and there might be some deluded strivers who are willing to take on a life-altering amount of debt to put a prestigious college’s sticker on the back of their car. So, from the colleges’ perspective, it works well — they get some people to cough up an unreasonable amount for college, while most people get some financial aid and pay a slightly more reasonable amount.

Unfortunately, the system works much less well for the people who are actually paying for college because it is a complete black box to them. When students apply to colleges, they have no idea if they can realistically afford them. Yes, the federal government requires colleges to provide a cost estimator tool, but these are imprecise, as they don’t include the “merit aid” colleges use to attract the students they really want to attract.

The result: Many students put hours of work into writing essays and pay a $75 application fee in order to apply to a college that they will never be able to go to. Only after months of stressful waiting do they find out what the college will actually cost. In many cases, students who have spent six months or more dreaming of a certain college find out that it’s out of their price range and must decide whether to give up on the dream or put themselves into debt to pursue it.

As with the health care industry, you would hope that people in the business of educating young people might have some interest in the best interests of their students. The way private colleges price themselves shows that they don’t.

It’s borderline criminal that two of the most important and consequential purchases that many people make are so shrouded in mystery. The process leads to confusion, anger, and, sometimes, crippling debt. And it’s especially scandalous that these industries ought to have aims that are at least a little bit altruistic.

For markets to work, we need clear information. Too many markets are broken by opaque pricing, including some of our nations’ most important ones.

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