Privacy Fallacies

"Since information helps markets work better, the cost of privacy is less efficient markets," writes Paul H. Rubin in the Wall Street Journal (8/30/10). That’s the first of Paul’s ten rebuttals to what he sees as "fallacies" about privacy. His point is that, contrary to what some may believe, our privacy is not free, given "a strong trade-off between privacy and information." Paul also says that the costs of privacy are not "borne by companies" because "consumers get tremendous benefits from the use of information."

He notes, for example, that Google’s various free services are "all ultimately funded by targeted advertising based on the use of information." Naturally, Paul also forwards the most common anti-privacy argument — that when ads are targeted, consumers "get better and more useful information more quickly." He further contends that the quality of those services would decline if Google didn’t have the information required to "better target searches," for example. "Shorter retained search histories mean less effective targeting, " he writes.

Refuting the argument that privacy invades our personal space, Paul points out that most information is used anonymously. He says that information-based price discrimination "makes it possible for firms to provide goods and services that would otherwise not be available, "and that less privacy creates greater safety, since information is used to combat identity theft." Opt-in doesn’t benefit consumers, says Paul, "since the use of information is generally benign and valuable." And he says consumers should not be irate over how their information is used, "because there is no harm from the way it is used."