Economic Analysis of Privacy

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In this article the author is trying to analyze privacy from the stand point of economics but in a tentative manner. This article considers several other aspects of privacy like seclusion, extending the analysis to defamation. He is looking into the original meaning of term privacy as ‘nonpublic in the sense of uninvolved in matters of state. It is moreover same as that of words like ‘privation’ and ‘deprivation’. The word deprived is to be uninvolved in public affairs. And the word seclusion is defined as a reduction in the number of social interactions. An equivalent term is a person being retired. What people want more of today when they decry privacy is something quite different, they want more concealment of information that others might use to their disadvantage which is called federal privacy act. There are some arbitrary limitations placed on the domain of privacy to change people’s views. There are some economics of privacy

a) Seclusion: Most solitude is involuntary and mental illness is associated with solitude. Considering different aspects, the term ‘private person’ is considered as approbation rather than opprobrium. The author wants to examine an important instance where privacy is desired for reasons neither reclusive nor manipulative.

b) Innovation: As well-known there is a problem in obtaining the right amount of information in a free-market system. Author compares between the statutory and common law copyright. Statutory copyright gives the author or publisher a property right in his work, no one may copy without his authorization. Common law copyright used the method of secrecy that is as long as the author did not publish his manuscript the law would protect him against unauthorized dissemination by others. So, secrecy is an important social instrument for encouraging the production of information.

c) Concealment of Personal Facts: The author is interested in explicating-privacy as the concealment of discreditable facts oneself-is closely related to reputation, it is a method of enhancing reputation. He explained a commercial analogy help us to bring out this point. For many years the Federal Trade Commission required importers of certain products, especially made in japan to label the product with country of origin. The reason was a widespread belief whose rationality the commission was not prepared to confirm or deny that certain foreign (especially Japanese) goods were inferior.

Concealment sometimes serves, paradoxically, the function of promoting rather than impeding the flow of accurate information. Concealment sometimes serves a legitimate self-help function.

d) Communications: Author has explained the need of privacy in communications by considering an example of A in conversation with B disparages C, and C overhearing the conversation. He made a related point that eavesdropping is not a very efficient way of finding facts. And if danger of eavesdropping is known, conversations will be modified and will result in more cumbersome and less effective.

e) The Legal Protection of privacy, with special reference to confidential relationships: It was identified that there are several areas where secrecy appears to promote social welfare. Discussion here starts supposing A in conversation with B slanders C,B repeats the slander to C, and C sues A for defamation. Does A have the right to sue B to recover any damages paid out to C, on the ground of breach of confidence? The answer is no unless there is any legal contract. At common law, information imparted in confidence in conversations between spouse, between client and lawyer, and certain govt officials is given extraordinary protection.

f) Physical privacy: Physical privacy comes into place when one speaks of a ‘private apartment’ or of lacking ‘privacy’ when one has to share something. Unlike poorest, urbanization powerfully facilitates privacy by enabling individuals to obtain anonymity. This growth in privacy involves a shift in both demand and supply.

g) Curiosity and prying: As there is a demand in privacy, so there is demand for pestering, for prying and for invading privacy in other ways. A separate function of prying, unrelated to self-protection against deceptive trans actors, is educational. For example, Gossip columns and movie magazines flourish more in the United States than in Europe where there is less physical privacy than in United States.

Much of the evidence that the privacy cases are broadly consistent with the economic theory of privacy is indirect. There is also some direct evidence for the economic model of privacy, contained in comparative and in psychological studies.

In most primitive societies privacy is virtually nonexistent. people live in small villages lack private rooms and have little opportunity for concealment of any sort. As a bit of evidence of the economic model-that modern people speak more formally the larger the audience. Another implication of economic analysis of privacy is that mendacity will be less reprobated in a primitive than in an advanced society. The absence of privacy in primitive societies has yet another implication: that primitive societies will be stagnant, noninnovative and unprogressive.

Like the comparative studies, the psychological studies reveal greater circumspection where the costs of candor are higher. Experimental studies are shown for example, that a man approached by a stranger will tend to speak less freely to him than a woman approached by a stranger. The same study showed that a man will generally speak about himself with greater candor to a female than to a male stranger.

The psychological studies relating to privacy also tend to refute the notion, which is inconsistent with the economic model, that privacy is a psychological necessity. Many state and federal statutes relating to privacy have been enacted in recent years. He wants to take a closer look at the statutes designed to protect privacy from invasions by nongovernmental entities. These statutes differ based on the state. There is also a federal Fair Credit Reporting Act, which bars creditors from inquiring about, or denying credit on basis of, bankruptcies of the prospective borrower that occurred more than 7 years earlier.

To be thought unchaste would drastically reduce a women’s opportunities. To be though to have leprosy, syphilis, or plague-the diseases classified as loathsome for purposes of the tort-would greatly reduce one’s opportunities for interactions of all sorts. Other slanders might also do serious harm to a person’s ability to have advantageous dealings with others-and were actionable, but only upon proof of actual economic loss.

Cite this paper

Economic Analysis of Privacy. (2021, Oct 30). Retrieved from https://samploon.com/economic-analysis-of-privacy/

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