The European Union and California have enacted strict data privacy laws, and Congress and the Federal Trade Commission are considering new legislative and regulatory options. In each case, government has or will attempt to balance privacy preferences of consumers with overall benefits of the use of data. But what are those preferences?
That’s the question two economists, Scott Wallsten of the Technology Policy Institute and Jeffrey Prince of Indiana University’s Kelley School of Business, answer for policymakers in their new study, How Much is Privacy Worth Around the World and Across Platforms.
“Quantifying the value of privacy is necessary for conducting any analysis of proposed privacy policies, both public and private, as these values are necessary for estimating policy benefits,” they write. “Because any such regulations will come with costs, it is important to be reasonably certain proposed rules do not cost more than consumer and constituents would themselves want imposed.”
The study measures individuals’ valuation of a range of relevant aspects of privacy (finances, biometrics, location, contact networks, texts and browsing) across countries (the U.S., Mexico, Brazil, Colombia, Argentina and Germany) and platforms (financial institution, smartphone, wireless carrier and Facebook account). The study uses discrete choice survey methods to measure tradeoffs and enable comparisons.
“The prevalence and value of data in virtually all sectors has grown tremendously, with some even declaring it the world’s most valuable resource,” write Wallsten and Prince. “However, along with this growth in volume and value has come increased importance in getting policy right—balancing privacy preferences with benefits that derive from the use of data.”
Among the study’s findings:
- In nearly all countries, consumers placed the highest value on keeping financial and biometric information like fingerprints private. They placed relatively low values on keeping location data private.
- Consistencies in relative rankings of the value of online privacy across six countries suggests that policies should offer similar relative privacy protections if facing similar costs for protection.
- Consumers in different countries value privacy differently (e.g. Germany places the highest value on privacy, followed by the U.S. and some Latin American countries), so some rules might be more likely to pass a cost benefit test in certain countries than in others.