What is Privacy Worth?

Privacy and Security, Networks, the Internet, and Cloud Computing and Internet

Article Snapshot


Alessandro Acquisti, Leslie K. John and George Loewenstein


Twenty First Workshop on Information Systems and Economics, December 14-15, 2009.


This article suggests that consumers are unable to put a consistent dollar value on what their privacy is worth.

Policy Relevance

Knowing the dollar value that consumers place on their privacy can help policy makers to better allocate the correct amount of funds towards privacy protection. However, the innate inconsistency in how consumers value their privacy complicates resource allocation.

Main Points

  • With privacy an ever more important consideration on the average consumer’s mind, policy makers are forced to decide how much privacy is worth.
  • Other studies have attempted to put a fixed value on what consumers consider their privacy to be worth.  However, these estimates have only focused on the average value, and, because of this, have failed to accurately represent consumers’ inconsistency in valuing privacy.
  • Here, it was hypothesized that consumers won’t accept payments for disclosure of private information, but are unwilling to pay for privacy protection, even when the cost and amount of privacy protected are identical.
  • Two sets of experiments were conducted in order to test this hypothesis.

    • In both experiments, subjects were offered the choice between two gift cards, one for $10, which came with privacy protections, or one for $12 or $14 without those protections.
    • Subjects in both studies had a preference for the more valuable card with less protection, though the specific results are more complicated.
  • These studies suggest that the way consumers value their privacy is not as simple as was previously thought and suggest four conclusions.
  • First, the value a consumer will place on their privacy is not static or consistent, but rather varies with the circumstances, often in an irrational way.
  • Second, because privacy values are inconsistent, exact evaluations of privacy value via economic study is largely unhelpful.
  • Third, the data suggests that consumers are less able to rationally navigate privacy issues than was previously thought. The privacy choices consumers make on a daily basis are often in direct contrast with their stated privacy goals.
  • Lastly, as policy makers face implementation of new privacy measures, they should not rely on consumers to opt-in to any of these programs, and should create laws that protect consumers without consumer involvement.

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