What Would You Pay for Privacy?

Not long ago, I sent a dozen friends an electronic invitation to a party. The invitation site offered me several choices, all entirely free: a range of attractive designs for events of various sorts, how many guests each of my guests could invite, whether the guest list would be public to other guests, and so on.

There was one thing I would have to pay for, if I wanted it — and that was to keep the invitation free of advertisements.

It was a perfect microcosm of the bargain we make with the Web every day. Send me ads based on what you know about me (bachelorette party vs. child’s birthday party) or take my money to keep my screen free of ads.
That bargain was the topic of a fascinating study that asked how much we are willing to pay to keep our personal data to ourselves.

The researchers, at the German Institute for Economic Research and the University of Cambridge, turned up somewhat paradoxical results. While the vast majority of their guinea pigs – all in Germany, by the way, where concerns about personal data are perceived to be acute – cared about the collection of certain personal data by an online company, not many were willing to pay to protect it.

The researchers invited 443 participants into a lab in Berlin. They could buy movie tickets from one of two online companies. Both companies asked for names, dates of birth, and e-mail addresses, since the tickets were delivered electronically. One company also asked for a mobile phone number – and that company charged 50 euro cents less for the tickets, or about 65 cents at current exchange rates.

Fewer than one in three participants (29 percent) agreed to pay the extra money keep their cellphone number out of the hands of the online movie ticket company. Only 9 percent agreed to pay a premium to avoid getting marketing e-mails.

But if there was no price difference, more than 80 percent chose the company that collected less personal information. The research report, called “Study on monetizing privacy: An economic model for pricing personal information,” was released by the European Network and Information Security Agency in late February.

A similar experiment done in the field by the same researchers turned up similar results.

How much people care about the use of their personal data online is a matter of polarized debate, with one side arguing that privacy is dead and the other calling for legal protections to secure privacy. Empirical research on the subject is still in its infancy. Most studies ask for personal opinion, rather than measure the digital choices people make, and even there, the results usually find a gap between what people say and what they do about their privacy online.

The latest survey from the Pew Research Center’s Internet and American Life Project also turned up this paradox. Nine out of 10 people surveyed on the telephone last month said they were satisfied with the performance of search engines. And yet 68 percent said they were “not O.K.” with targeted advertising because they did not like their “online behavior tracked and analyzed.”

My own online party invitation turned out to be a case study of the choices we make with our everyday digital ephemera. It took less than an hour to create a delightful digital card and plug in my friends’ e-mail addresses. Faced with the choice of paying an extra $10 to keep my invitation advertisement-free, I dithered. It would be easy and inexpensive, I thought, to follow Wikipedia’s lead on this (the online encyclopedia is stubbornly ad-free). But then I thought about that little risk that accompanies the ease of digital consumption: Would my credit card information be safe with this online greeting card company? The worrywart in me won out. I did not pay the extra $10. I chose to lob advertisements at my friends.