Brattle Consultants Coleman Bazelon and Giulia McHenry Author White Paper on the Economics of Privacy Violation

Brattle principal Coleman Bazelon and associate Giulia McHenry have recently authored a white paper that examines the harm associated with the violation of privacy from an economic standpoint. The paper, “Violating Your Privacy: An Economic Perspective” was published for the Telecommunications Policy Research Conference.

Drs. Bazelon and McHenry discuss how a clear understanding of the harm from violating privacy is needed. According to the authors, measuring that harm is relevant for two reasons. First, depending on the type of violation, there may be legal recourse for someone whose privacy has been violated. Second, in evaluating policies related to privacy, weighing of the costs and benefits is required. The authors point out, however, that there is a less-defined consensus as to what privacy means and what exactly constitutes a violation of it.

The paper aims to provide a benchmark against which to evaluate proposed privacy policies by clearly identifying the market failures associated with privacy. Central to this type of evaluation is the value, or cost, of privacy to individuals and firms. Drs. Bazelon and McHenry suggest that in the context of economics and privacy enforcement, efficiency suggests that an individual’s privacy should only be violated if the value to others of violating that privacy exceeded the value of the privacy to the individual. This conclusion provides the basis upon which to analyze privacy policy and estimate harms from privacy violations.

The paper can be accessed on SSRN.