The economics of privacy
Open accessAbstract
This article summarizes and draws connections among diverse streams of theoretical and empirical research on the economics of privacy. We focus on the economic value and consequences of protecting and disclosing personal information, and on consumers' understanding and decisions regarding the trade-offs associated with the privacy and the sharing of personal data. We highlight how the economic analysis of privacy evolved over time, as advancements in information technology raised increasingly nuanced and complex issues. We find and highlight three themes that connect diverse insights from the literature. First, characterizing a single unifying economic theory of privacy is hard, because privacy issues of economic relevance arise in widely diverse contexts. Second, there are theoretical and empirical situations where the protection of privacy can both enhance and detract from individual and societal welfare. Third, in digital economies, consumers' ability to make informed decisions about their privacy is severely hindered because consumers are often in a position of imperfect or asymmetric information regarding when their data is collected, for what purposes, and with what consequences. We conclude the article by highlighting some of the ongoing issues in the privacy debate of interest to economists. (JEL D82, D83, G20, I10, L13, M31, M37)
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Most mobile users are unaware of threats to their personal data or unable to understand the technical mechanisms behind data leakage.
“Most mobile users are unaware of these threats to their personal data or unable to understand the technical mechanisms behind data leakage (Acquisti et al., 2016).”
From Putting the privacy paradox to the test: Online privacy and security behaviors among users with technical knowledge, privacy awareness, and financial resources (2019) · cites this paper as Acquisti et al., 2016
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- Authors
- Acquisti, A., Taylor, C., & Wagman, L.
- Affiliations
- Carnegie Mellon University (US)
- Duke University (US)
- Illinois Institute of Technology (US)
- Venue
- Journal of Economic Literature
- Publisher
- American Economic Association
- Published
- 2016-06-01
- Volume
- 54
- Issue
- 2
- Pages
- 442-492
- ISSN
- 0022-0515 (ISSN-L)
- OpenAlex
- W3125675149
- Cited by
- 1,283
- References
- 20
- Citations by year
- 2026: 175 · 2025: 194 · 2024: 139 · 2023: 133 · 2022: 129 · 2021: 130 · 2020: 110 · 2019: 91 · 2018: 77 · 2017: 56 · 2016: 15 · 2015: 10 · 2014: 12 · 2013: 3 · 2012: 4
- FWCI
- 227.80
- Type
- journal article
- Language
- en
- Open access
- bronze
- doi.org
- Locations
- Journal of Economic Literature (publishedVersion)
- RePEc: Research Papers in Economics (submittedVersion)
- Topics
- Social Sciences › Sociology and Political Science › Privacy, Security, and Data Protection
- Physical Sciences › Computer Science › Artificial Intelligence › Privacy-Preserving Technologies in Data
- Social Sciences › Law › Digitalization, Law, and Regulation
- Keywords
- economics of privacy, personal information disclosure, data protection, information asymmetry, digital economy, information technology
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