Resource: Economics of Privacy

Behind a privacy intrusion there is often an economic trade-off. The reduction of the cost of storing and manipulating information has led organizations to capture increasing amounts of data about individual behavior. The hunger for customization and usability has led individuals to reveal more about themselves to other parties. New trade-offs have emerged in which privacy, economics, and technology are inextricably linked: individuals want to avoid the misuse of the information they pass along to others, but they also want to share enough information to achieve satisfactory interactions; organizations want to know more about the parties with which they interact, but they do not want to alienate them with policies deemed as intrusive.

Is there a combination of economic incentives and technological solutions to privacy issues that is acceptable for the individual and beneficial to society? Is there a sweet spot that satisfies the interests of all parties?

This from a resourceful website at Carnegie Mellon that tracks info related to the economics of privacy–a thought-provoking topic for personalized medicine, which will be driven by the collection and mining of huge stores of population-wide, detailed personal health information (see LifeGene).  Afford medical consumers a small number of protections and they will resist making their information available.  At the same time, the more restrictions created around the free transmission of personal health information, the more difficult and costly the task of generating useful knowledge.  As population studies become larger and larger, and they surely will, these issues will be of paramount importance. 

Thank you to Alessandro Acquisti for maintaining this resource.  I’ve added a link in the "law, policy, and ethics" section on the right, where the rest of the privacy related links reside.

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