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In Defense of Data: Information and the Costs of Privacy

Technology Policy Institute Working Paper

Emory Law and Economics Research Paper No. 9-44

56 Pages Posted: 17 Jul 2009  

Thomas M. Lenard

Technology Policy Institute

Paul H. Rubin

Emory University - Department of Economics

Date Written: May 18, 2009

Abstract

The commercial use of information on the Internet has produced substantial benefits for consumers. But, as the use of information online has increased, so have concerns about privacy. In this paper we argue that acting on those concerns would be counterproductive. Far from a 'free lunch,' more privacy implies less information available for producing benefits for consumers, including targeted advertising and the valuable web services it supports, e.g. search engines, email, and social networks. Concerns about privacy may also be misguided. Most data collected about individuals is anonymous, and reducing legitimate uses of online information is not likely to reduce identity theft. Firms appear to be responsive to consumers’ privacy preferences, which also points to a properly functioning market. Our analysis suggests that proposals to restrict the amount of information available would not yield net benefits for consumers.

Keywords: privacy, Internet, personal information, online advertising, behavioral advertising, search engines, identity theft, opt-in, opt-out

JEL Classification: K23, L51, L86, M31

Suggested Citation

Lenard, Thomas M. and Rubin, Paul H., In Defense of Data: Information and the Costs of Privacy (May 18, 2009). Technology Policy Institute Working Paper; Emory Law and Economics Research Paper No. 9-44. Available at SSRN: https://ssrn.com/abstract=1407731 or http://dx.doi.org/10.2139/ssrn.1407731

Thomas Lenard (Contact Author)

Technology Policy Institute ( email )

1401 Eye St. NW
Suite 505
Washington, DC 20005
United States
(202) 828 4405 (Phone)

Paul Rubin

Emory University - Department of Economics ( email )

1602 Fishburne Drive
Atlanta, GA 30322
United States
404-931-0493 (Phone)
630-604-9609 (Fax)

HOME PAGE: http://www.economics.emory.edu/Rubi.htm

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