Takeaways:
- Many businesses collect consumer data such as geolocation, online purchases, political leanings, personality traits and more, but most consumers don’t know how that data is used
- A new study by the UBC Sauder School of Business has found that when people are explicitly told their data is being monetized, they’re half as likely to share it
- The study is the first of its kind to examine the role that data monetization plays in people’s privacy choices
- As the public becomes savvier about how data markets work, companies may need to up their game in terms of what they offer in exchange for personal info
- The research could also have implications for regulators
When consumers offer up their personal information to businesses online, many have a vague understanding that their data could get sold or used in other ways. Still, most ignore that fact and sign up for everything from online newsletters to sale flyers to political campaigns.
But what would happen if consumers understood that their data would be monetized? According to a new study from the UBC Sauder School of Business, if companies came clean with consumers about how they profit from their data, it would dramatically reduce the likelihood people would share it.
The study, titled Secondary Market Monetization and Willingness to Share Personal Data, happened in three stages: first, subjects created psychometric data that was highly identifiable; then they chose whether or not to release their data to anonymous participants in exchange for money. Sometimes they received information about their data being monetized by the participant they share their data with, sometimes not. In the third part of the experiment, the subjects got to experience the effects of their choices.
In surveys, people regularly express concerns about their privacy, but every day, millions give up their locations, opinions, behaviors, traits and other personal data in exchange for tiny benefits — or no benefits at all. The new research, however, finds that people behave this way because they are inattentive about the consequences. But once they are made aware, they react strongly to the notion that their data is being monetized — so much so that they’re half as likely to share as those who aren’t aware their data is being sold.
“Over and over again we found that people are either choosing to not share their data at all, or if they do share their data, they're demanding higher prices,” says Dr. Joy Wu, UBC Sauder Assistant Professor and author of the study. “They feel they need to be compensated for that loss of privacy.”
Dr. Wu was surprised by how consistent the effect was, and how willing participants were to overlook the idea that their data might be sold until they were confronted directly with that fact.
“I thought at some point people would start being aware, and that would influence their behavior in the lab. But people were consistently shocked by the information about secondary monetization,” say Dr. Wu, who has extensively studied data privacy. “People suddenly value their privacy more when you give them that information.”
There are several possible reasons for the behaviour changes once people become aware of secondary monetization, the study author posits. People may feel they aren’t getting their fair share of the profits from monetizing their data; they may think it’s unethical for companies to profit from their information and so want greater compensation; or they feel ownership over their data and want to see dividends.
Other researchers have examined people’s preferences when it comes to personal data and privacy, but the study is the first of its kind to examine the role that data monetization plays in those choices.
Dr. Wu says her findings have significant implications. First, businesses need to understand that, as people become savvier about how data markets work, companies may need to up their game in terms of what they offer in exchange for collecting consumer data.
On a policy level, the research points to the importance of regulation. “How much control you should give the individual is directly related to whether or not they care about the secondary monetization of their data. If they care about it, they will support it, and it would be welfare improving to have those regulations,” says Dr. Wu.
In the end however, companies should understand that consumers don’t take kindly to their private data being sold for profit, concludes Dr. Wu. “The bottom line is, people don’t like it when others make money off their data,” she says. “It’s as simple as that.”
Interview language: English
