Online Shoppers Will Pay Extra To Protect
Privacy, Carnegie Mellon Study Shows
PITTSBURGH—People are willing to pay extra to buy items from online retailers when they can easily ascertain how retailers' policies will protect their privacy, a new Carnegie Mellon University study shows.
Findings from the study, the first to suggest that people will pay a premium to protect their privacy when shopping online, will be presented Friday, June 8, at the Workshop on the Economics of Information Security, an international meeting hosted by Carnegie Mellon that begins Thursday, June 7. In addition to Cranor, the research team included Alessandro Acquisti, assistant professor of information technology and public policy, and graduate students Janice Tsai and Serge Egelman.
Many people express concerns that unscrupulous online merchants might misuse credit information, target spam to their email addresses or otherwise violate their privacy. But a number of previous studies have found that many people still fail to act to protect their privacy online. Some have shown that people willingly give up private information in return for lower prices or even the mere chance of a monetary reward.
"Our suspicion was that people care about their privacy, but that it's often difficult for them to get information about a Web site's privacy policies," said Cranor, an associate research professor of computer science and of engineering and public policy. A Web site's policies may not be readily accessible, can be hard to interpret and sometimes are nonexistent, Cranor said. "People can't act on information that they don't have or can't understand," she added.
In the new study, Cranor and her colleagues recruited 72 people to make online purchases. Some used Privacy Finder while others did not. They were given $45 and asked to buy two items—a package of batteries and a vibrating sex toy—each of which cost about $15. Participants were allowed to keep the items and any surplus money, so they had a financial incentive to buy from the cheapest online retailers. Those who used Privacy Finder made purchases from sites with "high privacy" ratings for 50 percent of the battery purchases and 33 percent of the sex toy purchases.
Cranor said they had expected people to be more sensitive about privacy in purchases of the sex toy, but the findings proved inconclusive on that point. Additional research is necessary to resolve that issue and to better determine how much of a premium purchasers are willing to pay. This study focused on whether people would pay a premium, not on how much they would pay.
Copies of the Privacy Finder paper are available at http://weis2007.econinfosec.org/papers/57.pdf.
(Above is Lorrie Cranor, lead author of the study.)