Does Privacy Matter? Evidence from a Legal Reform

We investigate the impact of a unique reform that granted anonymity to plaintiffs in court rulings for personal injury claims. Our analysis measures changes in payments for personal injury versus property damage claims (which were not affected by the reform) for car accident cases handled by the major insurance firms in Israel between 2011-2020. Using a difference-in-differences framework, we find that the reform led to a 17% increase in payments for personal injury claims. We interpret this estimate as the cost claimants were prepared to bear prior to the reform, through accepting lower settlements, to avoid the privacy loss incurred by a court ruling. This result underscores the economic value individuals place on privacy, revealing that concerns about public exposure can significantly influence decision-making and negotiation outcomes. Our findings demonstrate the importance of privacy considerations in customer interactions where sensitive information is often involved.