Breaking the Privacy Paradox: The Value of Privacy and Associated Duty of Firms

Kirsten Martin

doi:10.1017/beq.2019.24

Abstract

ABSTRACT:The oft-cited privacy paradox is the perceived disconnect between individuals’ stated privacy expectations, as captured in surveys, and consumer market behavior in going online: individuals purport to value privacy yet still disclose information to firms. The goal of this paper is to empirically examine the conceptualization of privacy postdisclosure assumed in the privacy paradox. Contrary to the privacy paradox, the results here suggest consumers retain strong privacy expectations even after disclosing information. Privacy violations are valued akin to security violations in creating distrust in firms and in consumer (un)willingness to engage with firms. This paper broadens the scope of corporate responsibility to suggest firms have a positive obligation to identify reasonable expectations of privacy of consumers. In addition, research perpetuating the privacy paradox, through the mistaken framing of disclosure as proof of anti-privacy behavior, gives license to firms to act contrary to the interests of consumers.

Highlights

The oft-cited privacy paradox is the perceived disconnect between individuals’ stated privacy expectations, as captured in surveys, and consumer market behavior in going online: individuals purport to value privacy yet still disclose information to firms
Current online marketing techniques utilize a robust picture of the consumer, and an information ecosystem comprised of data aggregators, data brokers, trackers, websites, and ad networks collects and stores online consumer information to facilitate targeted marketing
The privacy paradox is important for business ethics because the narrative of the privacy paradox defines the scope of corporate responsibility as quite narrow: firms have little to no responsibility to identify or respect privacy expectations, if consumers are framed as relinquishing privacy while online

Summary

Introduction

The oft-cited privacy paradox is the perceived disconnect between individuals’ stated privacy expectations, as captured in surveys, and consumer market behavior in going online: individuals purport to value privacy yet still disclose information to firms. Tactics integral to online marketing, such as consumer tracking and data aggregation, are found to be consumer concerns by popular and academic surveys (Leon et al 2015; Martin 2015; Martin and Shilton 2016; Turow, King, Hoofnagle, Bleakley, and Hennessy 2009; Ur, Leon, Cranor, Shay, and Wang 2012).. Tactics integral to online marketing, such as consumer tracking and data aggregation, are found to be consumer concerns by popular and academic surveys (Leon et al 2015; Martin 2015; Martin and Shilton 2016; Turow, King, Hoofnagle, Bleakley, and Hennessy 2009; Ur, Leon, Cranor, Shay, and Wang 2012).1 This tension—between consumers’ stated privacy preferences, as measured in surveys, and their actual behavior, as measured by consumers’ continued online activity—is referred to as the privacy paradox by academics and practitioners. The term ‘paradox’ is defined as “seemingly absurd or self-contradicting statement or proposition that, when investigated or explained, may prove to be well founded or true.” Framed in this manner, the oft-cited privacy paradox requires additional empirical testing, since current market behavior may not capture consumers’ approval of the fact that a firm conforms to ethical norms

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