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Marketplace Morning Report

Consumers are willing to pay more to protect their privacy online

Steve Henn Jul 14, 2011
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Jeremy Hobson: Congress will be looking into Internet privacy today. It’s become a big issue as online sites like Facebook and Google have made a business out of mining user data for ad revenue.

But Marketplace’s Steve Henn reports on a new study that finds consumers are willing to pay more for online products if they know their privacy is being protected.


Steve Henn: Most academic studies in the past found that people really are not willing to pay more money to protect their privacy online. But this one was different. Lorrie Cranor at Carnegie Mellon was one of the authors.

Lorrie Cranor: Well, we set it up so that so that people did a search with a search engine that looked very much like a Google search engine, and when they got their search results, we annotated the search results with a privacy meter. So you could see at a glance which sites had high privacy, medium privacy and low privacy.

Henn: And you could also see at a glance what the prices were.

Cranor: Yes.

Turns out, when it’s that easy, folks were willing to pay more at a website that protects privacy. And it doesn’t matter what they were shopping for.

Cranor: We did a follow-up study where we actually had people shop for a set of batteries and then also something much more privacy-sensitive. And we found for the privacy-sensitive item, they were actually willing to pay a little bit more.

Henn: That item is so privacy-sensitive I get the feeling you are reluctant to actually say what it was.

Cranor: I can tell you.

But I can’t broadcast it.

In Silicon Valley, I’m Steve Henn for Marketplace.

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