Video: $2 Privacy and Bad Bargains

November 28, 2012

In a study of just how much people value their privacy, Carnegie Mellon University professor Alessandro Acquisti and other researchers went to a mall outside of Pittsburgh, Pa. They had shoppers fill out surveys – the surveys were irrelevant and not a party of the study, because the real study began when the surveys were over. That’s when Acquisti and his colleagues gave these shoppers gift cards.

To one group of shoppers the researchers gave a $10 gift card, to another group they gave a $12 gift card. The second card came with a catch: The activity of the $12 card would be tracked, and the purchase activity of the shoppers monitored (so they were told). The $10 card came with no such tracking.

Both groups of shoppers were then told about the other card and given the chance to get the other card instead: Shoppers with the $10 card could get the $12 card as long as they were comfortable having their shopping activity tracked, while those who were originally given the $12 card could forfeit $2 to get the less lucrative card with more privacy.

The slight majority (52 percent) of those with the $10 card chose not to switch while 48 percent of that group opted to give up their privacy for the $12 card. Meanwhile, nearly all (91 percent) of those shoppers who were originally given the $12 card kept it; only 9 percent took the $10 card even though it offered more privacy.

The selections that these shoppers made for this study suggests that when people are presented with a low-degree of privacy and must give something up to increase their privacy, they are not inclined to do so. On the other hand, when people are presented initially with a higher level of privacy they are less inclined to give up that privacy when offered a modest incentive to do so.

At a lecture this summer at Stanford University’s Center for Internet and Society, Acquisti, a leading authority on the impact of social networks and emerging technologies have on personal privacy, discussed the implications suggested by the Pittsburgh mall study. As people increasingly spend and share their lives online, their privacy is increasingly jeopardized not just by questionable privacy policies, but by emergent technologies like facial recognition that can be used by marketers, law enforcement agencies and governments alike to harvest data about users whether those users know it or not.

What you can do: Ignore retailers’ and web sites’ offers of discounts or free goods in return for some of your private information. The deal is always too good to be true.

To hear more from Acquisti’s Stanford lecture, watch the embedded video.