Ebook: Privacy and the Commercial Use of Personal Information

Hon. Orrin G. Hatch United States Senate Electronic commerce will be pivotal to the United States economy in the 21 SI Century. With the advent ofelectronic commerce, some consumers have become concerned about the disclosure, transfer, and sale of information which businesses have collected about them. These concerns purportedly are slowing the rate ofexpansion ofelectronic commerce, thereby putting at risk the future growth of the New Economy. To reduce this risk, a variety of schemes have been proposed under which the government would regulate online privacy. Congress currently is in the midst ofa vigorous debate as to whether the government should regulate on-line privacy standards, and, ifso, what form such regulation should take. This succinct yet powerful book by Paul Rubin and Thomas Lenard goes to the heart of these issues. It explains that there is no evidence of actual consumer harm or market failure that could justify burdensome government regulation of online privacy. It describes the tremendous advantages consumers currently receive from the free flow of information collected on­ line, advantages which could be eliminated if the government unnecessarily regulates and stops this flow of information. It argues that the free market provides businesses with compelling incentives to adopt their own measures - such as seal programs and novel technologies - to assuage consumer privacy concerns. This book presents compelling evidence to support these and many other points central to the continuing debate in the halls of Congress and elsewhere concerningonline privacy.

---

The current debate over privacy presents some of the most complex policy-making challenges we have seen in some time. While data on consumers have long been used for marketing purposes, the Internet has substantially increased the flow of personal information. This has produced great benefits, but it also has raised concerns on the part of individuals about what information is being collected, how it is being used and who has access to it. These concerns, in turn, have led to calls for new government regulation.
This study focuses on the market for personal information used for advertising and marketing purposes, which is the market affected by most of the regulatory and legislative proposals now under consideration. Unfortunately, there has been little careful analysis of these proposals and their likely consequences. This book attempts to fill this gap by addressing the following basic questions:

Are there `failures' in the market for personal information?

If market failures exist, how do they adversely affect consumers?

Can such failures be remedied by government regulation?

Would the benefits of government regulation exceed the costs? £/LIST£ The authors find that the commercial market for information appears to be working well and is responding to consumers' privacy concerns. They conclude that regulation imposed on a medium like the Internet that is changing so rapidly would have unpredictable and costly consequences.
This study is a product of The Progress & Freedom Foundation's project on Regulating Personal Information: Balancing Benefits and Costs. The Progress & Freedom Foundation studies the impact of the digital revolution and its implications for public policy. It conducts research in fields such as electronic commerce, telecommunications and the impact of the Internet on government, society and economic growth. It also studies issues such as the need to reform government regulation, especially in technology-intensive fields such as medical innovation, energy and environmental regulation.