An upside to data collection
Kai Ryssdal: There’s almost nothing you can do in this digital economy — from using a smartphone to getting cash out of an ATM — that doesn’t leave some kind of digital footprint. Companies use that data, as we know, to make money — which for some people rankles on two counts. One, the privacy part of it. Two, it’s our data. And more often than not, the businesses that collect it have no interest whatsoever in sharing it with us.
University of Chicago economist Richard Thaler says they ought to. Richard Thaler, good to have you with us.
Richard Thaler: Thanks Kai.
Ryssdal: So your basic idea is you want to have companies give all of this data that they gather on us back to us so we can use it. Do I have that right?
Thaler: That’s exactly right.
Ryssdal: All right, so what are we going to do with it?
Thaler: Well it depends on the domain. Let’s start with, say, calling plan for our smartphone.
Ryssdal: All right.
Thaler: Let’s suppose you are about to buy a new one and you’re shopping around and you’d like to know what the best plan is for you. If you go on to the website of your carrier, there will be some information there about your past usage, but not in a way that easily translates into the questions you’d have to answer to shop. What I’m proposing in this context — your cell-phone provider would be required to give you an electronic summary of all of the ways you’ve used the phone, say for the last couple of years. Now it’s not the idea that you’d ever look at that file. Instead, with one click you’d go to some website and they would take that data and with one click, say, oh I see, the way you use your phone and the way you pay your bills, we suggest if you stick with this provider you go with plan C, but you might want to think of this other provider that seems like it might be better for you.
Ryssdal: My guess would be that my cell-phone carrier would — just on principle, just because it will say this data is ours and we have it — they would be reluctant to share it with us, let alone some third party that could help me optimize the data.
Thaler: Well, I think that’s right. Which is the reason why regulators should require them to do it. And there is a bill that has been presented by the unlikely team of John McCain and John Kerry that is mostly concerned with privacy issues and those are certainly important. But there’s a section of the bill that could be easily expanded to include this. So my mantra is: It’s my data, give it back.
Ryssdal: Yeah, which makes a lot of sense. But there seems to me — in the last week or so we’ve had all this news about the iPhone collecting your data and keeping track of where you are, and the Supreme Court had a case this morning on data mining. It does seem that there is a very large shrug that comes from consuming America that a lot of people just go, eh, this is kind of the way it is. And, you know, Apple sells 7.5 million iPhones every year.
Thaler: Well that may be an appropriate shrug. It depends on what these companies are doing with this data. All I’m suggesting is that there’s kind of an upside of this data collection that isn’t being utilized and it’s because the firms that are collecting the data want to keep it for themselves and that may be understandable. It’s particularly understandable if releasing the data would empower all of us to be better shoppers.
Ryssdal: It stands to reason, doesn’t it, that a company that is more forthcoming with our data — that gives it back to us — would, in theory, attract greater market share. Consumers would be more likely to gravitate toward that company.
Thaler: Well they would unless the company is attracting the consumers precisely through obfuscation. So I view this as a way of rewarding companies that are attracting customers through higher quality or lower prices rather than through skullduggery.
Ryssdal: Richard Thaler is a professor of economics at the Booth School of Business at the University of Chicago. Thanks very much for your time.
Thaler: My pleasure.
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