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Do data breach disclosure laws reduce identity theft?

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  • Sasha Romanosky
  • Rahul Telang
  • Alessandro Acquisti

Abstract

In the United States, identity theft resulted in corporate and consumer losses of $56 billion dollars in 2005, with up to 35 percent of known identity thefts caused by corporate data breaches. Many states have responded by adopting data breach disclosure laws that require firms to notify consumers if their personal information has been lost or stolen. Although the laws are expected to reduce identity theft, their effect has yet to be empirically measured. We use panel data from the U.S. Federal Trade Commission to estimate the impact of data breach disclosure laws on identity theft from 2002 to 2009. We find that adoption of data breach disclosure laws reduce identity theft caused by data breaches, on average, by 6.1 percent. © 2011 by the Association for Public Policy Analysis and Management.

Suggested Citation

  • Sasha Romanosky & Rahul Telang & Alessandro Acquisti, 2011. "Do data breach disclosure laws reduce identity theft?," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 30(2), pages 256-286, March.
    • Handle: RePEc:wly:jpamgt:v:30:y:2011:i:2:p:256-286
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    Cited by:

    1. Saim Kashmiri & Cameron Duncan Nicol & Liwu Hsu, 2017. "Birds of a feather: intra-industry spillover of the Target customer data breach and the shielding role of IT, marketing, and CSR," Journal of the Academy of Marketing Science, Springer, vol. 45(2), pages 208-228, March.
    2. Alessandro Acquisti, 2023. "The Economics of Privacy at a Crossroads," NBER Chapters, in: The Economics of Privacy, National Bureau of Economic Research, Inc.
    3. Hui, Kai-Lung & Zhou, Jiali, 2020. "The Economics of Hacking," MPRA Paper 102706, University Library of Munich, Germany.
    4. Nathan Blascak & Ying Lei Toh, 2022. "Prior Fraud Exposure and Precautionary Credit Market Behavior," Working Papers 22-36, Federal Reserve Bank of Philadelphia.
    5. Amalia R. Miller & Catherine Tucker, 2017. "Frontiers of Health Policy: Digital Data and Personalized Medicine," Innovation Policy and the Economy, University of Chicago Press, vol. 17(1), pages 49-75.
    6. Mikhed, Vyacheslav & Vogan, Michael, 2018. "How data breaches affect consumer credit," Journal of Banking & Finance, Elsevier, vol. 88(C), pages 192-207.
    7. Alessandro Acquisti & Curtis Taylor & Liad Wagman, 2016. "The Economics of Privacy," Journal of Economic Literature, American Economic Association, vol. 54(2), pages 442-492, June.
    8. Aniket Kesari, 2022. "Do data breach notification laws reduce medical identity theft? Evidence from consumer complaints data," Journal of Empirical Legal Studies, John Wiley & Sons, vol. 19(4), pages 1222-1252, December.
    9. Avi Goldfarb & Catherine E. Tucker, 2011. "Privacy Regulation and Online Advertising," Management Science, INFORMS, vol. 57(1), pages 57-71, January.
    10. Narendra Sharma & Ebere A. Oriaku & Ngozi Oriaku, 2020. "Cost and Effects of Data Breaches, Precautions, and Disclosure Laws," International Journal of Emerging Trends in Social Sciences, Scientific Publishing Institute, vol. 8(1), pages 33-41.
    11. Chul Ho Lee & Xianjun Geng & Srinivasan Raghunathan, 2016. "Mandatory Standards and Organizational Information Security," Information Systems Research, INFORMS, vol. 27(1), pages 70-86, March.
    12. Ginger Zhe Jin, 2018. "Artificial Intelligence and Consumer Privacy," NBER Chapters, in: The Economics of Artificial Intelligence: An Agenda, pages 439-462, National Bureau of Economic Research, Inc.
    13. Joshua A. Gerlick & Stephan M. Liozu, 2020. "Ethical and legal considerations of artificial intelligence and algorithmic decision-making in personalized pricing," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 19(2), pages 85-98, April.
    14. Jens Foerderer & Sebastian W. Schuetz, 2022. "Data Breach Announcements and Stock Market Reactions: A Matter of Timing?," Management Science, INFORMS, vol. 68(10), pages 7298-7322, October.
    15. Brenčič, Vera, 2014. "Search online: Evidence from acquisition of information on online job boards and resume banks," Journal of Economic Psychology, Elsevier, vol. 42(C), pages 112-125.
    16. Mothobi, Onkokame, 2022. "The impact of telecommunication regulatory policy on mobile retail price in Sub-Saharan African countries," Information Economics and Policy, Elsevier, vol. 58(C).
    17. Girish N. Punj, 2019. "Understanding individuals’ intentions to limit online personal information disclosures to protect their privacy: implications for organizations and public policy," Information Technology and Management, Springer, vol. 20(3), pages 139-151, September.
    18. Jesse Leigh Maniff & Richard J. Sullivan, 2016. "Data Breach Notification Laws," Economic Review, Federal Reserve Bank of Kansas City, issue Q I, pages 65-85.
    19. Vyacheslav Mikhed & Michael Vogan, 2017. "How Data Breaches Affect Consumer Credit," Working Papers 17-6, Federal Reserve Bank of Philadelphia.
    20. Ravi Bapna & Jui Ramaprasad & Galit Shmueli & Akhmed Umyarov, 2016. "One-Way Mirrors in Online Dating: A Randomized Field Experiment," Management Science, INFORMS, vol. 62(11), pages 3100-3122, November.
    21. Qian Tang & Andrew B. Whinston, 2020. "Do Reputational Sanctions Deter Negligence in Information Security Management? A Field Quasi‐Experiment," Production and Operations Management, Production and Operations Management Society, vol. 29(2), pages 410-427, February.

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