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How Much Is Data Privacy Worth? A Preliminary Investigation

Author

Listed:
  • A. G. Winegar

    (Harvard Business School
    Harvard Kennedy School)

  • C. R. Sunstein

    (Harvard University)

Abstract

Do consumers value data privacy? How much? In a survey of 2,416 Americans, we find that the median consumer is willing to pay just $5 per month to maintain data privacy (along specified dimensions), but would demand $80 to allow access to personal data. This is a “superendowment effect,” much higher than the 1:2 ratio often found between willingness to pay and willingness to accept. In addition, people demand significantly more money to allow access to personal data when primed that such data includes health-related data than when primed that such data includes demographic data. We analyze reasons for these disparities and offer some notations on their implications for theory and practice. A general theme is that because of a lack of information and behavioural biases, both willingness to pay and willingness to accept measures are highly unreliable guides to the welfare effects of retaining or giving up data privacy. Gertrude Stein’s comment about Oakland, California may hold for consumer valuations of data privacy: “There is no there there.” For guidance, policymakers should give little or no attention to either of those conventional measures of economic value, at least when steps are not taken to overcome deficits in information and behavioural biases.

Suggested Citation

  • A. G. Winegar & C. R. Sunstein, 2019. "How Much Is Data Privacy Worth? A Preliminary Investigation," Journal of Consumer Policy, Springer, vol. 42(3), pages 425-440, September.
    • Handle: RePEc:kap:jcopol:v:42:y:2019:i:3:d:10.1007_s10603-019-09419-y
    DOI: 10.1007/s10603-019-09419-y
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    References listed on IDEAS

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    2. Nam, Sangjun & Kwon, Youngsun, 2022. "Quantifying different psychological costs of user behavioral info for overcoming the 'take-it-or-leave-it' condition," 31st European Regional ITS Conference, Gothenburg 2022: Reining in Digital Platforms? Challenging monopolies, promoting competition and developing regulatory regimes 265662, International Telecommunications Society (ITS).
    3. H. Li & A. Nill, 2020. "Online Behavioral Targeting: Are Knowledgeable Consumers Willing to Sell Their Privacy?," Journal of Consumer Policy, Springer, vol. 43(4), pages 723-745, December.
    4. Reisch, Lucia A. & Sunstein, Cass R. & Kaiser, Micha, 2021. "What do people want to know? Information avoidance and food policy implications," Food Policy, Elsevier, vol. 102(C).
    5. Anna D’Annunzio & Elena Menichelli, 2022. "A market for digital privacy: consumers’ willingness to trade personal data and money," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 49(3), pages 571-598, September.
    6. Suárez, David & García-Mariñoso, Begoña, 2021. "Does ad blocking have an effect on online shopping?," Telecommunications Policy, Elsevier, vol. 45(3).

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