Return on Data: Personalizing Consumer Guidance in Data Exchanges

Abstract

Consumers routinely supply personal data to technology companies in exchange for services. Yet, the relationship between the utility (U) consumers gain and the data (D) they supply — “return on data” (ROD) — remains largely unexplored. Expressed as a ratio, ROD = U / D. While lawmakers strongly advocate protecting consumer privacy, they tend to overlook ROD. Are the benefits of the services enjoyed by consumers, such as social networking and predictive search, commensurate with the value of the data extracted from them? How can consumers compare competing data-for-services deals? Currently, the legal frameworks regulating these transactions, including privacy law, aim primarily to protect personal data. They treat data protection as a standalone issue, distinct from the benefits consumers receive. This article, drawing on the emerging field of personalized law, suggests that privacy concerns should not be viewed in isolation, but as part of ROD. Just as businesses can quantify return on investment (ROI) to optimize investment decisions, individual consumers should be able to assess ROD in order to make informed decisions on how to spend and invest personal data. Making ROD transparent will enable consumers to navigate the range of data-for-services deals on offer, evaluate their merits, and negotiate their terms. Pivoting from the privacy paradigm to ROD will also incentivize technology companies to offer consumers higher ROD, as well as create opportunities for new market entrants.

Keywords: Privacy Law, Personal Data, Consumer Protection, Personalized Law, Behavioral Economics, GDPR, CCPA

JEL Classification: D18, D91, K12, K24, L86, M37