In this era of data mining, large analytics and machine learning, it can seem that the ever-growing gathering and analyzation of people's data are the key to economic prosperity. At times, it may also feel that concerns over privacy are, at best, misguided and, at worst, may negatively impact our humankind's ability to learn from data to solve societal problems.
However, actual research on the economics and behavioral economics of privacy casts doubts over those conventional wisdoms and paints a much more nuanced picture of the role of data and privacy as engine of growth of our economies. Those are the thoughts of Alessandro Acquisti, an economist and professor in Carnegie Mellon University's Heinz College of Information Systems and Public Policy. He studies the trade-offs associated with the usage and protection of consumer data. Acquisti also looks at the way people make decisions about protecting or sharing data.
For instance, in a series of experiments, Acquisti and his colleagues found that giving individuals more control over their personal information, which are common in "notice and consent" approaches to privacy, makes people take more risks with their personal information. They divulge more sensitive information to strangers.
In another set of studies, they found that providing notices to people about what will happen to their data after they share it is effective in influencing behavior, but only when the attention of the individual remains on the notice. As soon as the attention is diverted to other things, such as asking the person to join a mailing list, individuals become not sensitive to information about what will happen to their data.
Acquisti says these and other results call into question the notion that individual privacy is a problem of individual responsibility. In policy circles, he says scholars have started referring to this type of dynamics with the term "responsibilization" - the notion that consumers, or individuals, are "forced" to become responsible to handle a problem that they have not created and that they have no control upon.
Instead, Acquisti insists, privacy protection is a societal problem that requires a societal solution.
He will deliver these messages and more this week when he presents in Dalian, China, at the World Economic Forum's Annual Meeting of New Champions.
Carnegie Mellon Marketing & Communications recently asked Aquisti more about privacy and the future.
What do you think could be some of the societal solutions?
If (and I stress if) we think that privacy is an important value for our societies, then regulation, in my view, will be required to protect it. Notwithstanding the natural drive for privacy, the market will not move naturally towards more protective stances over data without regulation. That's because the economic incentives of large firms that collect and analyze data are currently so strong.
Do you think that the horse is out of the barn already? Can the privacy of data no longer be managed?
No, I don't think so. First, research on privacy enhancing technologies keeps improving. We now know that it is possible (at a cost, of course) to protect data while still making use of it for sophisticated analytics. And second, the need for privacy seems to be a natural drive of individuals — as much as the need to socialize and interact. This suggests that, even though the current economic drive to collect and analyze data is so powerful, the door for a future where privacy and analytics co-exist remains open.
What are you hoping the audience in China takes away from your presentation?
That privacy does matter because privacy management has significant individual and societal consequences. I also want people to know that approaches to privacy management that rely predominantly on individual responsibility are deemed to fail. The research evidence on informational and behavioral hurdles that people need to overcome to manage their privacy can no longer be ignored. Findings supporting this notion come not just from my own research group and my CMU peers, but also from many other researchers around the world who work in this space.
