The Cambridge Handbook of Consumer Privacy

Privacy and Security and Innovation and Economic Growth

Article Snapshot


Jules Polonetsky, Evan Selinger and Omer Tene


Evan Selinger, Jules Polonetsky, Omer Tene, eds., Cambridge University Press, 2018


New data collection technologies raise privacy issues for consumers. Educational technologies and “smart cars” present new issues. Every aspect of life will be logged and analyzed. We must revisit basic ideas about democracy, the distribution of power in society, and bias.

Policy Relevance

New data collection methods challenge ideas about democracy, power, and discrimination. Economists have a key role to play in shaping future privacy rules.

Main Points

  • Privacy includes concerns about invasive counterterrorism efforts, the safety of smart toys, the rights of individuals to change digital records, the criminal misuse of cryptocurrencies, and the question of how to make scientific data accessible without inviting discrimination.
  • Different researchers and policymakers offer diverse perspectives on privacy policy.
    • Activists on the left and right are allied on questions of civil rights, but free-market advocates disagree with supporters of privacy regulation.
    • Within the business community, some worry that regulation will impede innovation, but others see privacy regulations like limitations on ad tracking by other firms as a chance to capture advertising revenue for themselves.
  • Worldwide, diverse regulatory approaches include “carrots” and “sticks.”
    • In the United Kingdom, regulators offer guidance as to best practices and tools.
    • In the European Union, privacy regulators impose stiff fines and penalties.
    • In the United States, the Federal Trade Commission settles privacy disputes, resulting in the accumulation of rulings that create a “common law” of privacy.
  • New educational technologies collect sensitive data from children, and raise questions as to how the data should be used; may the developer of a “math app” offer high-performing students more advanced material? Or is this impermissible marketing to children?
  • Smart cars and autonomous vehicles raise difficult privacy issues.
    • Car data might be shared with law enforcement or create vulnerabilities that can be exploited by hackers.
    • Designers of vehicle data systems must make difficult moral choices, as to whether the vehicle should protect passengers or pedestrians.
  • Breakthroughs in AI have allowed people to identify and address hidden bias or relieve human suffering (such as human trafficking).
  • Even in an ideal world in which every company follows all privacy rules, consumers are likely to be unsettled by “creepy” technologies.
  • Key topics relating to the pervasiveness and usefulness of data tracking technologies include the data brokers, the value of big data, educational privacy, facial recognition, and smart cities.
  • Key topics Issues relating to ethical or legal reservations about tracking technologies include the study of consumers by business, discrimination by AI, “do not track” regimes, and uses of data beyond the understanding of consumers.
  • Key topics relating to privacy in an international context include the right to be forgotten, and the question of when the interests of a data controller outweigh those of the consumer.
  • Key topics relating to the future of regulation include the need for economic analysis to make privacy law more rigorous, the use of data to enhance security, and the role of cost-benefit analysis in assessing regulation.


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