By Nico Ebert (ZHAW)<\/p>\n\n\n\n
The original version of this post was published in German on <\/em> Privacy Bits<\/em><\/a> and English on <\/em>vetri.global<\/em><\/a><\/p>\n\n\n\n In a lecture for the Fair Data Forum, I dealt with the question \u201cWhat value does data protection have for individuals and what are they willing to pay for it?\u201d<\/p>\n\n\n\n As always, there is not one \u201cindividual\u201d, as everyone has different data protection preferences and thus, attributes different value to having personal data safeguarded. Therefore, in order to classify individuals, there are different \u201ctypologies\u201d. For example, Westin distinguishes between data protection fundamentalists, data protection pragmatists and completely unconcerned individuals. In 2002, Sheehan (2002) selected 889 persons in the USA and classified them with a questionnaire. Conclusion: 16% of the respondents were completely unconcerned about data protection, 81% were classified as pragmatists, and 3% as fundamentalists.<\/p>\n\n\n\n\n\n\n\n Numerous experiments were carried\nout to find out which types of people are willing to pay for data privacy and\nwhich ones are willing to share their data freely with third parties. In these\nexperiments, the \u201cwillingness to accept\u201d or the \u201cwillingness to pay\u201d\nwere analyzed. Willingness to accept describes the reward that must be offered to\nan individual, so that she\/he is willing to share personal data (usually monetary\ncompensation or services). The willingness to pay examines how much the\nindividual is willing to pay for data protection (compensation for data\nprotection).<\/p>\n\n\n\n In 2017, an experiment with 3000\nstudents from a US university concluded that a pizza was a sufficient incentive\nfor them to share e-mail addresses of three fellow students. Conversely, the\nstudents were rarely willing to accept a small additional expense for better\ndata protection. <\/p>\n\n\n\n A different result was produced by an experiment published by Tsai et al. in 2011, where the willingness to pay was investigated. In the experiment, 272 participants were recruited from the population. The individuals received a sum of money to be used to shop in a laboratory setting. By using a search engine provided by the University, participants were asked to select a suitable provider for a) batteries (a good with little privacy concerns) and b) sex toys (a good with stronger privacy concerns) and to purchase an item. The search engine displayed the available products and their prices in the form of a list. However, some participants were additionally presented with a data protection rating of the seller (e.g. 4\/4 stars or 1\/4 stars). Conclusion: many participants chose a seller with a better rating and were willing to pay more for products with a high data protection rating. These results could be replicated in two further studies.<\/p>\n\n\n\n A third experiment was published\nin 2013, in which the willingness to pay was examined. In an American women\u2019s\nclothing store, 349 women were randomly interviewed for a survey on spending\nbehavior. As a reward, the participants were offered a voucher which they could\nuse to shop. Two types of voucher were offered: an anonymous USD 10 voucher (A)\nand a USD 12 voucher (B), where the purchases were not anonymous, i.e. could be\ntraced by third parties. Groups of participants were presented the two vouchers\nin different orders (A first or B first). The experiment showed that the\nwillingness to pay (i.e. to accept the USD 2 reduction from B to A for an increase\nin privacy) strongly depends on the sequence in which the two options are presented,\nsuggesting the existence of a strong endowment effect.<\/p>\n\n\n\n The main finding from the three studies is that willingness to pay depends on various factors. Summarized, it depends very much on a) who is addressed but also b) how the individual is addressed. Individuals which are more sensitive about their data are probably willing to pay more than insensitive individuals. However, many individuals will not have a clear data protection preference that holds true in all situations. Under certain circumstances, influencing factors are whether a) the added value of data protection is communicated in an understandable way (e.g. via simple ratings or a \u201cnon-traceable\u201d USD 10 voucher) or b) whether data protection is the standard option. If data protection is the default setting, individuals may forgo compensation, which they would receive for abandoning data protection.<\/p>\n\n\n\n Athey, S., Catalini, C., &\nTucker, C. (2017). The digital privacy paradox: small money, small costs, small\ntalk (No. w23488). National Bureau of Economic Research. <\/p>\n\n\n\n Acquisti, A., Taylor, C., &\nWagman, L. (2016). The economics of privacy. Journal of Economic Literature,\n54(2), 442-92. <\/p>\n\n\n\n Acquisti, A., John, L. K., &\nLoewenstein, G. (2013). What is privacy worth?. The Journal of Legal Studies,\n42(2), 249-274. <\/p>\n\n\n\n Beresford, Alastair R., Dorothea K\u00fcbler, and\nS\u00f6ren Preibusch. 2012. Unwillingness to Pay for Privacy: A Field\nExperiment. Economics Letters 117:25\u201327. <\/p>\n\n\n\n Jentzsch, Nicola, S\u00f6ren Preibusch, and Andreas Harasser. 2012. Study \non Monetising Privacy: An Economic Model for Pricing Personal \nInformation. Report for the European Network and Information Security \nAgency. Heraklion: European Network and Information Security Agency. <\/p>\n\n\n\n Kumaraguru, P., & Cranor, L. F. (2005). Privacy indexes: a survey\n of Westin\u2019s studies (pp. 368-394). Carnegie Mellon University, School \nof Computer Science, Institute for Software Research International.<\/p>\n\n\n\n Sheehan, K. B. (2002). Toward a typology of Internet users and online privacy concerns. The Information Society, 18(1), 21-32.<\/p>\n\n\n\n Tsai, J. Y., Egelman, S., Cranor, L., & Acquisti, A. (2011). The effect of online privacy information on purchasing behavior: An experimental study. Information Systems Research, 22(2), 254-268. <\/a> <\/p>\nThe three data privacy types<\/h2>\n\n\n\n
Willingness to pay vs willingness to accept<\/h2>\n\n\n\n
What the studies say<\/h2>\n\n\n\n
Main findings<\/h2>\n\n\n\n
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