The Economics of Digital Privacy

Avi Goldfarb and Verina F. Que

No 30943, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: There has been increasing attention to privacy in the media and in regulatory discussions. This is a consequence of the increased usefulness of digital data. The literature has emphasized the benefits and costs of digital data flows to consumers and firms. The benefits arise in the form of data-driven innovation, higher quality products and services that match consumer needs, and increased profits. The costs relate to intrinsic and instrumental values of privacy. Under standard economic assumptions, this framing of a cost-benefit tradeoff might suggest little role for regulation beyond ensuring consumers are appropriately informed in a robust competitive environment. The empirical literature thus far has focused on this direct cost-benefit assessment, examining how privacy regulations have affected various market outcomes. However, an increasing body of theory work emphasizes externalities related to data flows. These externalities, both positive and negative, suggest benefits to the targeted regulation of digital privacy.

JEL-codes: L51 L86 (search for similar items in EconPapers)
Date: 2023-02
New Economics Papers: this item is included in nep-com, nep-ind, nep-pay and nep-reg
Note: IO PR
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Citations: View citations in EconPapers (5)

Published as Avi Goldfarb & Verina F. Que, 2023. "The Economics of Digital Privacy," Annual Review of Economics, vol 15(1).

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Journal Article: The Economics of Digital Privacy (2023)
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