The Cash Value of Our Digital Privacy

Unless you’ve been living under a proverbial rock where there’s no internet, news, or other people, you’re quite familiar with this narrative by now: Privacy online is important, and we’re losing it, and that's bad. Ever since Edward Snowden exposed the NSA's shockingly invasive digital snooping, the privacy issue’s become so pervasive an entire industry is surfacing to protect this basic human right. It all raises the question: Exactly how valuable is our privacy? Say, in cold hard cash?

For all the effort put into protecting it, few have managed to quantify privacy's intrinsic worth, so two economists from the University of Colorado Boulder recently decided to give it a whirl. They surveyed 1,726 smartphone owners in seven US cities and found that the average user was willing to pay $5 extra per app to cover their digital tracks.

The questions focused on five kinds of sensitive information that the average app scoops up in exchange for services rendered. Participants said they would pay $2.28 to hide their browsing history, $4.05 for contact lists, $1.19 for personal location, $1.75 for the phone's ID number, and $3.58 to veil the contents of a text message. In other words, people are more protective over what they say and who they say it to than their own personal location and activities.

No matter how you slice it, $5 a pop seems awfully high. And certainly, it's much easier to say theoretically that you’d pay more for privacy than to actually put your money where your mouth is. The thing is, whether consumers would realistically trade cash for confidentiality hangs on how valuable people view the features the app provides, and that’s usually measured in a concept that's equally abstract and hard to quantify. Convenience, which translates into perhaps the most precious resource of all: our time.

Therein lies the rub. Would folks still opt for the more-expensive privacy premium if it means your map application can't calculate directions from your current location? Or pull up the local weather with one click? Or autofill email addresses so you don't have to look them up each time? If people value time more than privacy, does that skew the dollar amount the economists found users were willing to bargain with?

The real measure of the ubiquitous and ambiguous privacy-for-services digital handshake may depend on how easy and convenient these transactions are to make. After all it makes no sense to “pay” in time for something that's valuable primarily because it saves time. Hence the promise of micropayments and emerging technologies like digital wallets or virtual currency.

If users have to take out the credit card or log into an account to make a one-time additional payment of $1.19 for every new app, that’s probably enough to make most people say fuck it, just go ahead and track me. But what if a single click could automatically transfer a few dollars or cents extra to stave off prying eyes each you visit a website or download an app? That might be a more realistic proposition.

@meghanneal