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Journal of Consumer Policy

, Volume 42, Issue 3, pp 425–440 | Cite as

How Much Is Data Privacy Worth? A Preliminary Investigation

  • A. G. WinegarEmail author
  • C. R. Sunstein
Short Communication

Abstract

Do consumers value data privacy? How much? In a survey of 2,416 Americans, we find that the median consumer is willing to pay just $5 per month to maintain data privacy (along specified dimensions), but would demand $80 to allow access to personal data. This is a “superendowment effect,” much higher than the 1:2 ratio often found between willingness to pay and willingness to accept. In addition, people demand significantly more money to allow access to personal data when primed that such data includes health-related data than when primed that such data includes demographic data. We analyze reasons for these disparities and offer some notations on their implications for theory and practice. A general theme is that because of a lack of information and behavioural biases, both willingness to pay and willingness to accept measures are highly unreliable guides to the welfare effects of retaining or giving up data privacy. Gertrude Stein’s comment about Oakland, California may hold for consumer valuations of data privacy: “There is no there there.” For guidance, policymakers should give little or no attention to either of those conventional measures of economic value, at least when steps are not taken to overcome deficits in information and behavioural biases.

Keywords

Data privacy Endowment effect Willingness to pay Willingness to accept Behavioural biases 

Notes

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Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2019

Authors and Affiliations

  1. 1.Harvard Business SchoolBostonUSA
  2. 2.Harvard Kennedy SchoolCambridgeUSA
  3. 3.Robert Walmsley University ProfessorHarvard UniversityCambridgeUSA

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