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Innovation Fact of the Week: Social Scientists Find Consumers Unwilling to Pay for Added Privacy

Privacy

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Consumer advocacy groups argue that increasing privacy regulations would greatly benefit consumers. They are mistaken. Increased data-related privacy regulations risk countries ICT adoption rates and overall welfare standards by ignoring the reality of what consumers value.

In a social experiment conducted in Berlin, participants were given the option to purchase a DVD from one of two stores. Both stores required the purchaser to provide some personal information. However, the second store required less private information but increased the cost of the DVD by one euro.

The results show that consumers value their private data minimally. Almost all participants chose not to pay that one extra euro to protect more of their data. Even when the experiment was repeated with identical prices from both stores, consumers were indifferent as to which store they bought the DVD from.

Read last week’s Innovation Fact of the Week.

Photo Credit: mlange_b via Flickr

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About the author

John Wu is an economic research assistant at ITIF His research interests include green technologies, labor economics, and time use. He graduated from the College of Wooster with a bachelor of arts in economics and sociology, with a minor in environmental studies.