Despite what you might have thought, economics does care about your personal information.
It’s difficult to write about privacy without seeming like you’re fear-mongering. One often elicits the comeback “What do you have to hide?” from skeptics. But I sometimes imagine that back when society didn’t recognize the freedom of speech and people were arguing in favour of it, they must have encountered similar objections: “Why should we hear you?” or just “Shut up!” or some other dismissal of the worth of a single voice. I imagine it was easier to cut off and silence anyone who was hinting at a view you didn’t like. So let it be clear: often, privacy isn’t about some clearly defined and visible threat but involves questions of uncertainty and risk instead.
There are some things about privacy that we need to get out of the way. It doesn’t really aim at hiding or concealing for the sake of hiding and concealing. In fact, on most occasions, privacy isn’t about concealment at all. Most now understand privacy as a question of control over personal information: who should get to know about me, what they should get to know, and what they should be allowed to do with what they’ve found out. That’s a very broad concept and one is likely to object that there are a lot of things we know about particular individuals that aren’t really “private” e.g. their place of work, their visit to a zoo, their face, their mom’s face etc. Before we can see what economics has to say about all this, we need to understand why folks would value personal information at all. A measurement of utility, let’s say. I’ve underlined some answers for the next time someone asks you “What do you have to hide?”:
- Folks need to be able to do and say funky things without wondering whether somebody saw them. The funky things we have been doing over the ages has resulted in a lot of discoveries about who we are and what we think we should be like. Pretty much all the freedoms we have were snatched from governments by some “crazies” talking about doing naughty or illegal things. Of course, those things were only naughty or illegal back then. Governments may want to find out where these “crazies” live, especially if they’re breaking the law. But it doesn’t have to go that far: if you know you’re being watched, there are always things that you won’t do or say just so you won’t look bad. To decide whether some “naughty” things aren’t actually “nice”, surely it has to be tried out or talked about somewhere?
- Folks need to enjoy some respect where they deserve it. Yeah, you can sue for defamation if someone says something false and hurtful about you but what if they say something that’s completely true? You might think that a person shouldn’t be allowed to hide the truth but that depends on what you think about the relevance of information in deciding about a person. True things get excluded from courts of law all the time because they are irrelevant. If possible, our standing in society shouldn’t be determined by irrelevant things. Why was Monica Lewinsky judged for her hanky-panky with POTUS? Anyone who knew her properly understood that she wasn’t just a ho, but strangers were freely allowed to think so. We want the public to decide what’s relevant and what’s not but surely that applies more to Mr. Clinton than to poor Monica?
- Folks need to be certain things without being hated on. There are a lot of reasons because of which people get hated on even though they don’t deserve to be. If people can easily be identified and categorized according to their race, religion, caste, ethnicity, sexual orientation, political affiliation, income level etc., then groups of people can also be discriminated against, for example by not offering services to some particular group or charging them differently or torching their houses. Haters gonna hate but let’s not make it easy for them, yeah?
- Folks need to have sex with each other. Just kidding. Well yeah, there is the sex bit but there’s a whole range of other intimate relationships that can’t flower if we’re observed. Relations with friends, family, lovers, partners or spouses develop through mutual disclosure of intimate information to each other. In fact, our relationships with other people are each separately defined by what we know about each other. People can create useful boundaries in their lives and differentiate their personalities according to what these contexts need. You could tell your doctor or psychologist things you wouldn’t tell your loved ones. You could visit a gay bar but not talk about it at work. You and your online friend also want to freely discuss the latest season of a cartoon you’re too old to watch.
- Folks need to hold on to their identities and bank accounts. Passwords, codes, account numbers and all that jazz. Heard of identity theft? It’s not just the access codes and numbers though: a lot of information about a person can be used to identify online activities and track down devices or addresses. Hacking, phishing, spamming, trolling and all the rest of our nightmares from the web become easier to encounter without the privacy of such information.
- Folks need to decide who they are for themselves. Imagine this: Facebook, Google, Instagram, Siri, Youtube and that shitty dating app you use get together and decide to screw with your life (only you know why they’d do that, you monster). Over the course of a year they put stuff into your feed that convinces you that you must watch French movies instead of your Salman Khan favourites. Not that bad? They then convince you that you need to buy a new kind of device, that you need to stop hanging out with Left-wing friends, that you need to be concerned about Russia, that you need to get a girlfriend right now, that you’ll always be a loser… you aren’t a loser, right? Why would you let Siri tell you that, you masochist? A lot of our systems (like our economies and democracies) work spontaneously because each of us freely signals what he or she wants (by choosing to buy something or vote for someone). Fixed matches are no fun to watch. And it’s seriously lame to be playing in one. What if the match decided who you are in society?
If you’re catching the drift, you’ll notice that these problems are a hell of a lot worse with the internet around. All you need for information to pass from one person to another is access and the internet is all about access. Now about the economics of it: how do you deal with these informational problems? Allocative efficiency can improve if you allow price discrimination and market segmentation. The identification and measurement of relationships in society is the reason why Big Data is so bloody Big that it’s called the Next Big Thing. Let’s say a skin disease breaks out but those who’re suffering with it are keeping a bit mum about it because it’s embarrassing. But ho! What’s this? They’ve all been Googling home remedies for it. Now wait till the Health Ministry has a talk with their search engine. The day is saved and the patients didn’t even know they were the villains in the story. These things shouldn’t be stopped.
But our list shows that there are reasons why we value personal information. There’s no way of marking out only some particular information as ‘private’ because different kinds of information can be used against you in different situations. Sometimes, only you know when some particular disclosure or use of information will harm you. Lately, we get asked for our permission a lot before our information is taken from us. We don’t always have “ownership” over information about ourselves, but we do have some interest in how it gets used. When information related to a person is passed on or traded by others, these transactions don’t usually consider how that person might still be affected by the use of her information. In economic terms, we’re dealing with ‘externalities’ or costs that aren’t being accounted for in price-setting. We agree to a lot of our information being taken by various organizations. They then do things to it. Terrible, nasty things. Or, you know, just regular things like indexing and cross-referencing. Our continued interest in the information arises from the fact that the information can still be traced back to us and used to treat us in a particular way. Often, only we ourselves can know how these activities can harm us. Often, only these organizations know how these activities can benefit us.
The market for personal information fails because it doesn’t allow for optimal evaluation, pricing and decision-making since we don’t account for this mismatch in information. The mismatch is called an ‘information asymmetry’. Disclosure of information is how such problems are solved but individuals can’t be asked to disclose sensitive, private information to the organizations that want their data. That’s exactly what they don’t want to do here. Instead, organizations need to tell people clearly what’s going to happen with their personal information and then let these individualsdecide whether to pass the information on.
Economics has started to understand a lot more about privacy over time. Much of it is from behavioural studies. An ‘anchoring’ heuristic can force us to value our personal information according to initial impressions without letting us change our evaluation over time. A ‘simulation’ heuristic can force us to evaluate threats like identity theft lightly because we can’t mentally picture it. A ‘representativeness’ heuristic can make us think that a neat website will treat our privacy more carefully. These problems of how we view informational transactions will never go away and vigilance of a very different and unique kind is needed to better understand and address threats to privacy. If economics doesn’t take account of the unique value of personal information in determining the systems we value, it fails considerably in explaining human nature the way it hopes to. And it’s important for economics to weigh in lately because many just aren’t convinced anymore by talk of Kantian personality rights.
So go ahead and hide, my friend! You’ll often be caught where you’re truly wrong. But shame walks hand in hand with self-realisation and that in itself is nothing to be ashamed of.
DISCLAIMER: The views represented in this article are the personal views of the author and do not, whatsoever, reflect the views of the magazine
If you like our content and would like to help us sustain our standard, make a donation and help us in a big way!