What’s Privacy Worth?

Legislative no-man’s land

A seemingly endless number of bills covering privacy of consumer information(more than 35) have been filed in the US, none of which have passed, and all of which are still sitting in committee referrals in the Senate or House of representatives in the United States. Some examples of the lands-of-no-return for these filed bills include:

  • Subcommittee on Border, Maritime, and Global Counterterrorism
  • Committee on Commerce, Science, and Transportation
  • Subcommittee on Crime, Terrorism, and Homeland Security
  • Committee on Education and Labor
  • Committee on Energy and Commerce
  • Committee on Finance
  • Committee on Financial Services
  • Committee on Foreign Relations
  • Committee on Governmental Affairs
  • Committee on Health, Education, Labor, and Pensions
  • Committee on the Judiciary
  • Subcommittee on National Parks, Forests and Public Lands
  • Committee on Oversight and Government Reform
  • Subcommittee on Transportation Security and Infrastructure Protection
  • Committee on Ways and Means,
  • Subcommittee on Workforce Protections, the Committee on Homeland Security

For a more complete list of the legislation and status, see the coverage at EPIC: http://epic.org/privacy/bill_track.html

EU refinements

Meanwhile the EU Commission adopted legislative proposals to reform and strengthen fundamental rights to data protection and unify the EU’s data protection laws and enforcement rules on Jan 25 2012.  See “Proposal on the Protection of Individuals with regard to the processing of personal data and on the free movement of such data

And, see “the protection of individuals with regard to the processing of personal data by competent authorities for the purposes of prevention, investigation, detection or prosecution of criminal offences or the execution of criminal penalties, and the free movement of such data

Presidential politiks

Not to be outdone by the congress, a recent privacy blueprint and Consumer Privacy Bill of Rights was recently released by the administration of President Barack Obama.

Other than lobbying, will anything change?

Unlikely; the calculus of commercial and government interests – some of which overlap, others of which don’t – and the presidential election-year cycle in the US would indicate that much of what goes on in DC regarding “privacy” is going to stay inside the beltway.

What do citizen-consumers want?

Lost in the endless committee debates, jockeying between commercial interests and real-politicks are the citizens of the world, most of whom are being ignored by businesses and governments alike. Don’t believe it?

The resounding answer from constituents is, “yes” as your own anecdotal evidence from water cooler talk, PTA meetings, and neighborhood discussions on the issue of privacy seems to indicate. And, more evidence for this comes from Australia where the University of Queensland recently completed its latest survey of 1,106 adults recently.

The Personal Information Project being run by Mark Andrejevic at the University of Queensland (http://cccs.uq.edu.au/personal-information-project) found that more than 90 percent of adults want more say in how their personal information is used or not used by companies operating over the Internet, including laws governing their right to privacy, notifications when data is being collected, a do not track option, the right to see what information is stored on a website, and the ability to delete personal data if requested.

See the findings of the Personal Information Project at the University of Queensland for more information: http://cccs.uq.edu.au/personal-information-project

What’s Privacy Worth in the Market?

In recent coverage by the NY Times in “What would you pay for privacy?” (see http://bits.blogs.nytimes.com/2012/03/19/what-would-you-pay-for-privacy/ ) the article cites recent research conducted by ENISA to determine economic choices people would make regarding their personal information.

The original study is well worth reading if you are with a business or are in a legislative capacity. You can find it here:  http://www.enisa.europa.eu/activities/identity-and-trust/library/deliverables/monetising-privacy

  •  Some of the interesting findings from this study include:  most of the respondents (about 93%) are very interested in whether a firm protects their information or not (basically the same rates found in the Australian study)
  • A majority of purchases are made at privacy-friendly firms when there are no differences in prices (not surprising, and the study data backs the finding). As a result, privacy-friendly firms are able to snatch a higher share of the market
  • However, when there is price differentiation, consumers show a tendency to choose cheaper services and goods (also not surprising, and the study data backs the finding).

The findings of this study should stimulate interesting discussions about yields, market penetration rates, demographics, and economic game choices among most commercial businesses, and therefore change the landscape of how we think about privacy.

Recommendations of the ENISA study:

  • If there are little to no differences in the prices offered for homogeneous goods, privacy-friendly firms will obtain a competitive advantage.
  • Regulatory frameworks should allow for sufficient flexibility for businesses to offer different menus regarding prices and personal data requirements
  • Standardized and simplified data collection requirements, data protection and privacy policies should be made more visible to consumers in order to enable comparison of terms
  • Regulation should encourage the portability and transfer of standardized personalized consumer profiles upon the consent of consumers and in accordance with personal data protection legislation to reduce switching costs for consumers and increase price competition among firms

The study authored by ENISA “Study on monetising privacy: An economic model for pricing personal information“, is one of the better, more recent economics-grounded studies of privacy and the choices that consumers make.

An older study entitled “What is privacy worth? – which is also worth looking at – can be found at: http://www.heinz.cmu.edu/~acquisti/papers/acquisti-privacy-worth.pdf

And, for cynics who are only focused on the cost-risk and cost-benefit tradeoffs of litigation, another small piece of evidence might be of interest from Thompson-Reuters here:  http://graphics.thomsonreuters.com/11/05/PrivacySettlements.pdf

It’s worth the time to download and read these reports to determine how your company can best implement and leverage consumer-friendly privacy policies and practices that will create more business, more revenue and larger profits – while being mindful of competitive displacement.


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