A measure of the implicit value of privacy risk

In those days where some people already call for Chinese-style control of personal activity to stop the spread of the coronavirus, I am happy to report that Alisa Frik and I finally managed to publish our paper about the value of privacy.

Frik, A. and Gaudeul, A. (2020), “A measure of the implicit value of privacy under risk”, Journal of Consumer Marketing, Vol. ahead-of-print No. ahead-of-print.

In that paper, also available here, we argue that the economic value of privacy must be measured in its proper context, that is, when there is a *risk* to privacy.

We argue that letting people choose between some money and playing lotteries with their private information is more informative and relevant than asking them to “buy” or “sell” their private information. Below is the type of decisions people made.

From people’s decisions, we derive estimates of how much they value privacy that are more reasonable and reliable than standard “Willingness to Pay” (WTP) and “Willingness to Accept” (WTA). Furthermore, our estimates are more directly useful for economists than attitudes to privacy derived from surveys.

The private information we got from people were answers to a survey on attitudes to a range of policy issues. If people lost the privacy lottery, then their answers were revealed to others. Not a big deal, but reviewers gave us a hard time… publishing privacy research is hell!

We confirmed in this paper that in one important respect, attitudes to the risk of privacy loss are similar to attitudes to the risk of monetary losses. Indeed, privacy risk seems to respect the independence axiom.

In our case, we show that knowing that you are already exposed to a privacy risk does not lead you to value privacy less. People do not lose interest in protecting their remaining privacy risk. Loss of control does not lead to abdication, unlike suggested by some.

This later finding is a “null” result, but it is an important one, and it would be great if it was replicated. If so, it would explain why people do not give up trying to maintain a private sphere even under constant State intrusion into their private lives.

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