Property Rights & Efficiency: The Economics of Privacy as Secrecy,” Quantitative Marketing and Economics, forthcoming

There is a long history of governmental efforts to protect personal privacy and strong debates about the merits of such policies. A central element of privacy is the ability to control the dissemination of personally identifiable data to private parties. Posner, Stigler, and others have argued that privacy comes at the expense of allocative efficiency. Others have argued that privacy issues are readily resolved by proper allocation of property rights to control information. Our central findings challenge both views. We find: (a) privacy can be efficient even when there is no “taste ” for privacy per se, and (b) to be effective, a privacy policy may need to ban information transmission rather than simply assign individuals control rights to their personally identifiable data