The Economics of Privacy at a Crossroads

The economics of privacy has grown into a successful field of research. As the means of collecting and using individuals’ data have expanded, so has the breadth of topics investigated.
In this chapter, I argue that the very success of the economics of privacy has laid the foundation for a potentially adverse effect on the public debate around privacy. Economic arguments have become central to the debate around privacy. Those arguments are valuable tools that capture multiform implications of evolving privacy boundaries. If economic arguments crowd out noneconomic considerations, an overly narrow conception of privacy will impoverish the depth of the debate around privacy. The economics of privacy could undermine its own relevance by failing to account for the complexity and nuance of modern privacy problems.
By contrast, the economics of privacy could expand its horizons and relevance both by considering economic dimensions and research questions that have so far received limited attention, and by accounting for the broader scholarship on privacy coming from other disciplines. As a complement to the contributions of other fields, rather than a substitute for them, the economics of privacy may keep thriving and remain a useful tool for debate and policymaking.