The value we put on our personal is not so much based on what we think its monetary value is. We assign value far more based on how exposed we are by the data, who is buying it, and what they will do with it. In essence, the most important factor which decides the subjective value of our data is trust! Here is why.
In our first post we established that personal data has an enormous value in the internet and marketing ecosystems, around $70 to $100 per internet user per year on average. Despite it’s intrinsic value, we still give it away in return for trinkets such as reward points or miles, or for services like Facebook, Foursquare or Google. The organizations on the receiving end of that deal then turn a profit by monetizing that data in some way. In general, most people would be interested in exchanging their data for cash. However that is conditioned on the transparency as to what is done with the data, and by whom. So now we ask the question, what is the monetary value which people attach to their own personal data?
There is no established market for individuals to actually sell their own data. Most of the information on this topic which is readily available comes from exploratory research and not from business experience. One of the methods used to establish a subjective estimation of value for personal data in research uses the “willingness-to-protect” estimation method. Subjects are asked to imagine a specific product such as a new smartphone. They are told there are two versions, one which is free but collects and “leaks” their personal data, and one which is a paid product but does not collect any data. The users are then informed of the price of the paid version, and asked to select either the data-collecting free version or the payed variant. By varying the hypothetical cost of the payed version, and the type of data collected, it is possible to generate statistics for the subjective value of different types of data.
Using the willingness-to-protect technique shows that we put our data into 3 different value categories. Data which can be used to steal your identity or impersonate you is valuable, at around $150 – $250 a month. Data which documents your behavior in some way, such as your location, your browser history or your medical records is in the medium value category, worth $40 – $60 a month to protect. Information which is already available on the internet, either because we put it there or because we assume others already have collected it (profile information, demographics, purchase history, etc.) are only worth $3 – $6 a month to protect. This seems clear: our estimation of the value of our data is hinged on how much damage we think it can do to us.
But this is not the whole picture. Our valuation of our own data also depends heavily on how well we understand the uses for that data. For example, people put a low value on their electricity bill and energy consumption information. This is because they do not see it as a threat to their security, or understand the amount of insight it provides into their behavior. In reality, fine-grained power consumption information can be used to observe behavior of people in their own homes with astonishing accuracy. So, our valuation of our own data is also based on our understanding of the informational insight it represents. However, we seem to have a poor understanding of how much information is actually in there!
The willingness-to-protect approach to evaluating subjective value assigned to personal information does not show the whole picture. The question still remains, if we would pay $X to protect our data, does that mean we would also sell it for $X? It turns out that depending on the type of personal data in question, the amount for which people would sell their data is 4 – 5 times what they would pay to protect it.
One way to find out what price individuals really put on their personal data is to trick them into thinking they are actually selling it. Individuals put prices of around 10 GBP ($15) a month for their location. Location information was in the middle pricing segment of behavioral information, so $40 – $60 to protect, and a single digit multiplier factor for selling this information as opposed to protecting it. So why is this value so far below what we would expect the price to be based on the other studies?
One reason is that in that case the users trusted the people they where giving their data to: the scientists running the study. Under the same circumstances, when people are told that there is commercial interest in the data they increase the price that they want for it. When people believe that data will be given to unknown entities or used for unknown purposes, their price increases. This increase about a factor of two, putting that value then square in the middle of the “protect” bracket for that category of information but still far under what would seem to be the expected selling point (factor of 4 – 5). Why is that? Who knows…but these principles ( that value scales with understanding, concern and transparency of privacy) hold true across different countries and cultures, but the values (the $ values assigned to data) varies widely, even within Europe. Perhaps the varying locations for the different studies affect the scale of what is of which value to whom.
Here is the wrap-up.
How we value our data depends on how we understand its informational content, and how damaging it can be to us. Information which can be used to steal our identity is expensive, information which documents our behavior is in the middle, and demographics and profile information already available on the net is fairly cheap. However, if we can’t see all of the players in the personal data game, don’t understand their motives, or don’t agree with their goals, that price skyrockets. What is the solution?
If you want to access our data, you need to win our trust through transparency!