Return on Data

48 Pages Posted: 8 Apr 2019 Last revised: 22 Apr 2019

Date Written: March 30, 2019

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 which consumers receive. This article suggests that privacy concerns should not be viewed in isolation, but as part of ROD. Just as companies can quantify return on investment (ROI) to optimize investment decisions, consumers should be able to assess ROD in order to better spend and invest personal data. Making data-for-services transactions more transparent will enable consumers to evaluate the merits of these deals, negotiate their terms and make more informed decisions. Pivoting from the privacy paradigm to ROD will both incentivize data-driven service providers to offer consumers higher ROD, as well as create opportunities for new market entrants.

Keywords: Personal Data, Privacy Law, Nudge, Behavioral Economics, Consumer Protection, Data Protection, GDPR, Radical Markets, Data as Labor

JEL Classification: D18, D91, K11, K12, K24, L86, M13, M37

Suggested Citation

Kolt, Noam, Return on Data (March 30, 2019). Yale Law & Policy Review, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3362880

Noam Kolt (Contact Author)

Independent Researcher ( email )

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