Debunking the Commercial Profilers' Claims: A Skeptical Analysis of the Benefits of Personal Information Flows

Author(s): Chris Jay Hoofnagle
Year: 2004

Abstract: In comments to the Federal Trade Commission, the authors propose a model for evaluating the costs to personal privacy imposed by uses of personal information. Under this proposal, the costs of information flows would be measured against Fair Information Practices, principles that set out the rights and responsibilities of data subjects and data collectors. The authors argue that many economic assumptions regarding the benefits of information flows have not come to fruition, especially in the financial services arena. The authors challenge five specious claims of the information industry: that information flows reduce prices, that customers want personalization, that profiling reduces the number of solicitations that individuals receive; that personal information allows companies to extend consumers more choices, and that information flows reduce fraud.

Keywords: Information economics, privacy, profiling