[LINK] Professors Call Both Sides Wrong on Privacy

Geoff Ramadan gramadan at umd.com.au
Thu Oct 26 12:56:54 AEST 2006

The trouble is, that you cannot run a business (any business including 
Government business) with out information.


Geoffrey Ramadan, B.E.(Elec)
Chairman, Automatic Data Capture Australia (www.adca.com.au)
Managing Director, Unique Micro Design (www.umd.com.au)

Adam Todd wrote:
> See I have this issue about Fraud.
> You can't defraud if you have no information.  Because you can't create 
> a fraudulent entity without first getting information. (Or creating it 
> from nothing.)
> You can't beat fraud by removing privacy, because the mere fact that a 
> person can retain their privacy and oppose another using their identity 
> fraudulently proves the fraud.
> Giving our private information increases the chance of fraud multiple.  
> I know, I have a father who uses my name, date of birth and address as a 
> means of identifying himself as me.
> It's hard to prove I'm me, when he knows my details and identifies 
> himself as me first.  Who am I?  According to some, I'm not who I claim 
> to be.
> At 06:56 AM 26/10/2006, Bernard Robertson-Dunn wrote:
>> Professors Call Both Sides Wrong on Privacy
>> Sue Bushell
>> CIO
>> 24/10/2006 12:40:06
>> http://www.cio.com.au/index.php/id;1659801180;fp;4;fpid;21
>> Should households be granted the right to control their personal 
>> information and to refuse to give it out, as some privacy advocates 
>> insist? Or are those economists right who argue that privacy in any 
>> form is harmful since it restricts information flow and hence inhibits 
>> decision-making, increases transaction costs and encourages fraud?
>> Two professors at University of California, Berkeley's Haas School of 
>> Business have recently weighed in on this seemingly endless debate to 
>> argue their conclusion that neither approach is right.
>> In an article in the September issue of the journal Quantitative 
>> Marketing and Economics, Professors Benjamin Hermalin and Michael Katz 
>> note that privacy can be efficient in certain circumstances but that 
>> privacy property rights - personal control over one's personal 
>> information - are often worthless.
>> "Our analysis demonstrates that there are complicated tradeoffs missed 
>> by both sides of the debate," they write. "Certainly in the case of 
>> employment, changes in privacy policy can make some households winners 
>> and others losers."
>> The authors note that there has been a long history of contentious 
>> policy debates and governmental efforts to protect personal privacy, 
>> particularly the ability to maintain control over the dissemination of 
>> personally identifiable data: privacy as secrecy.
>> And they say recent technological developments in information 
>> collection and processing have heightened privacy concerns, with 
>> online bookstores knowing what you like to read, TiVo reporting 
>> personal viewing habits to the company's central database, and 
>> airlines keeping a record of where you travel. Meanwhile every year 
>> privacy bills are introduced in state legislatures and the US Congress 
>> in response to privacy concerns, yet there is little consensus on the 
>> appropriate approach.
>> "There are many calls for strong governmental intervention to restrict 
>> the use of personally identifiable data. However, there are also calls 
>> simply to establish appropriate property rights to information on the 
>> grounds that market forces will then lead to efficient privacy 
>> levels," they say.
>> The authors note that proponents of the Chicago School have labelled 
>> privacy harmful to efficiency because it stops information flows that 
>> would otherwise lead to improved levels of economic exchange. And they 
>> agree there are some situations in which allowing households to reveal 
>> personally identifiable information is beneficial because it allows 
>> firms to make tailored offers that facilitate transactions that 
>> otherwise might not have occurred.
>> Yet they insist that, contrary to the Chicago School argument, the 
>> flow of information from one trading partner to the other can reduce 
>> ex post trade efficiency when the increase in information does not 
>> lead to symmetrically or fully informed parties.
>> With so many people making extreme claims in discussions of privacy 
>> and related public policy, and with so little understanding of the 
>> underlying economics, it is important to identify the fundamental 
>> forces clearly, they conclude.
>> "Both sides of the e-commerce privacy debate have overstated their 
>> cases," they say.
>> While failing to come to any definitive conclusions about whether one 
>> can identify conditions under which public policy should or should not 
>> promote privacy, they authors conclude that the assignment of privacy 
>> rights to personally identifiable information may have no effect on 
>> agents' equilibrium welfare levels and need not lead to an efficient 
>> equilibrium privacy level.
>> "In some situations, the only effective policy would be explicitly to 
>> block the dissemination or use of such information. Public policy 
>> could block dissemination in several ways. One is to make it illegal 
>> to reveal personally identifiable data. Another is to destroy 
>> employment or prison records or other forms of tangible evidence, 
>> which would prevent households from credibly revealing the information 
>> even if they chose to do so. A related policy would be to refuse to 
>> enforce sanctions against people who lie about their protected 
>> characteristics," they conclude.
>> -- 
>> Regards
>> brd
>> Bernard Robertson-Dunn
>> Sydney Australia
>> brd at iimetro.com.au
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