Tuesday, June 11, 2019

econlife - A Dilemma: How Much to Pay for Our Privacy Protection by Elaine Schwartz

There is a doll whose name is Cayla. She has a pink skirt, a denim jacket, and a bluetooth connection. Like many toys, she can have a conversation with us.

While these dolls are all Caylas, their manufacturer says you can program in a new name:

But you won’t be the only one who knows her name.

Whatever we say to Cayla can be stored on a central server and then sold to anyone or any intelligence agency. The German government banned her because she violated their privacy laws.

For us also, Cayla is more than a toy. She takes us to the cost of protecting our privacy.


Privacy History

We could say that we were concerned about privacy from people during the 19th century, from government in the 20th century, and now, from the corporation. Before the mid-19th century, privacy was not even a concern. The reason could have been that we had limited photography, no telegraph, no telephone.

The following Google Ngram search shows the word was not used very much in books until the 1960s:

Contemporary Privacy

A Google search, Amazon’s Siri, and a Facebook like all add to a data supply chain that lets corporations collect and sell data about our behavior. So too do our Smart phones, Smart cars, Smart dishwashers.

However, when told how much we share, our response to privacy protection is tepid. In a recent survey, 80% of the participants said they would want to protect themselves from their everyday technology but only 26% said they would pay for that protection. Asked if they would pay to see fewer online ads, 50% of the survey’s participants said no.

Our Bottom Line: The Cost of Privacy Protection

To understand why many of us are minimally concerned with privacy protection,  it might help to see its cost (economically defined as sacrifice) from two perspectives.

Collectively, the cost of losing our privacy is immense. Through our elections, our businesses, our personal and professional relationships, we can corrupt our basic institutions.

As individuals though, when we lose our privacy, life becomes easier. Our appliances work better, we remain in touch with our world, and toys are more fun.

So “bad” things happen as a society when we lose privacy but “good” things happen personally. You can see why we won’t pay to preserve our privacy. One by one, we cannot even fix the problem.

And perhaps that is why Germany banned Cayla. The only way we can and will pay for our privacy is together.

My sources and more: Thanks to a Crazy/Genius podcast on privacy for a good walk yesterday morning. Because of Crazy/Genius, I learned about Cayla the talking doll from the NY Times. As for the survey, it was reported by MarketWatch. And finally, you might enjoy (as did I) pondering what Justice Brandeis said about privacy.

Our featured image is from Pixabay.

Ideal for the classroom, econlife.com reflects Elaine Schwartz’s work as a teacher and a writer. As a teacher at the Kent Place School in Summit, NJ, she’s been an Endowed Chair in Economics and chaired the history department. She’s developed curricula, was a featured teacher in the Annenberg/CPB video project “The Economics Classroom,” and has written several books including Econ 101 ½ (Avon Books/Harper Collins). You can get econlife on a daily basis! Head to econlife.