Munich Personal RePEc Archive

Protecting privacy amid questions of economic efficiency and egalitarianism

Baffi, Enrico (2009): Protecting privacy amid questions of economic efficiency and egalitarianism.

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This paper aims to analyze theories developed both in favor and against privacy protection according to current practices in the West. In the paper, we will examine economic justifications for privacy protection as defined by American economists and jurists, as well as the advantages to be derived by a possible elimination of said protection. Moving beyond existing economic theories, this piece develops a new economic idea, wherein privacy protection is warranted when an individual becomes interested in another's habits for a specific reason: to root out different behaviors in that person by observing a behavior that is correlated with those behaviors. Imagine the scenario of a worker who is also a soccer player, who is not competitive on the job, and is a team player, when he plays soccer, with his co-workers. The two facts, one of loving his own soccer team, and second, of not being competitive in the workplace are expressions of the same human attitude, or of a certain aspect of his personality. The employer is interested in finding out if this worker plays soccer in order to identify a lack of competitiveness on the job, and perhaps to assign him more menial tasks. The employer wishes to know the worker's interest in soccer in order to deduce therefrom a second circumstance: non-competitiveness in the workplace. Thus if regulating others' conduct is not forbidden, the worker, in order not to be found out, will no longer play soccer; he will suffer a loss in terms of his personal welfare, while the employer, on the other hand, will gain nothing, having discovered nothing. From this comes a different justification for privacy protection. In the paper, however, we note that privacy protection is a tool for encouraging equality or, in pejorative terms, egalitarianism. Behind the privacy “screen,” indeed, everyone appears in shades of gray. Privacy protection makes individuals indistinguishable. In terms of inter-personal relationships, this means a “veil” of ignorance, with all its attendant costs. Therefore, it is possible that the economic justifications defined by those in favor of privacy protection should be put aside in favor of transparency among individuals.

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