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How much consumers value on-line privacy? Welfare assessment of new data protection regulation (GDPR)

Maciej Sobolewski and Michał Paliński

No 2017-17, Working Papers from Faculty of Economic Sciences, University of Warsaw

Abstract: Our paper analyses upcoming personal data protection reform in the EU from the perspective of user preferences. Our aim is to estimate monetary valuation of the core instruments envisaged in the General Data Protection Regulation and assess potential welfare gain from this policy intervention. On methodological grounds, we utilize stated preference discrete choice experiment. Our final dataset consisted of 4390 choices made by 143 respondents. We used these data to estimate the mixed logit model. Our study for the first time analyses the broader spectrum of privacy control mechanisms and provides estimates of welfare gain from policy intervention in privacy domain. By taking this perspective we fill a gap in literature and provide insights into users’ preferences towards particular instruments, such as right to be forgotten, right to object profiling and personal data portability. The main finding from the analysis is that implementation of enhanced privacy control mechanisms will generate positive welfare effect. The size of estimated welfare gain from policy intervention of the same scope as GDPR amounts to 6.5 EUR per capita monthly. This result proves that there is a ‘demand’ for privacy reform driven by both concerns related to disclosing personal data as well as shortage of effective tools for privacy management.

Keywords: personal data management; e-privacy; General Data Protection Regulation; mixed logit (search for similar items in EconPapers)
JEL-codes: C25 D12 L51 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2017
New Economics Papers: this item is included in nep-ict
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