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How much consumers value on-line privacy? Welfare assessment of new data protection regulation (GDPR)

Author

Listed:
  • Maciej Sobolewski

    () (Joint Research Center, European Commission; Digital Economy Lab & Faculty of Economic Sciences, University of Warsaw)

  • Michał Paliński

    () (Digital Economy Lab & Faculty of Economic Sciences, University of Warsaw)

Abstract

Our paper analyses upcoming personal data protection reform in the EU from the perspective of user preferences. Our aim is to estimate monetary valuation of the core instruments envisaged in the General Data Protection Regulation and assess potential welfare gain from this policy intervention. On methodological grounds, we utilize stated preference discrete choice experiment. Our final dataset consisted of 4390 choices made by 143 respondents. We used these data to estimate the mixed logit model. Our study for the first time analyses the broader spectrum of privacy control mechanisms and provides estimates of welfare gain from policy intervention in privacy domain. By taking this perspective we fill a gap in literature and provide insights into users’ preferences towards particular instruments, such as right to be forgotten, right to object profiling and personal data portability. The main finding from the analysis is that implementation of enhanced privacy control mechanisms will generate positive welfare effect. The size of estimated welfare gain from policy intervention of the same scope as GDPR amounts to 6.5 EUR per capita monthly. This result proves that there is a ‘demand’ for privacy reform driven by both concerns related to disclosing personal data as well as shortage of effective tools for privacy management.

Suggested Citation

  • Maciej Sobolewski & Michał Paliński, 2017. "How much consumers value on-line privacy? Welfare assessment of new data protection regulation (GDPR)," Working Papers 2017-17, Faculty of Economic Sciences, University of Warsaw.
  • Handle: RePEc:war:wpaper:2017-17
    as

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    File URL: https://www.wne.uw.edu.pl/index.php/download_file/3728/
    File Function: First version, 2017
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    personal data management; e-privacy; General Data Protection Regulation; mixed logit;

    JEL classification:

    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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