Proposed Privacy Legislation

Paul H. Rubin —  16 March 2011

The Obama Administration is advocating a privacy bill.  One provision will limit the use of data to the purpose for which it was collected unless a consumer gives permission for additional uses; another will give consumers increased rights to access information about themselves.

Both of these provisions may actually reduce safety of data online.  One additional purpose for which data can be used is to verify identity in cases where there is some doubt.  Many of us have had the experience of having a merchant call a credit card company and ask a series of questions to verify our identity.  This bill would apparently make that process more difficult.  This would lead either to increased inconvenience or increased risk.  This provision is enforced in Europe and there is some evidence that identity theft is more common there.

There is also a danger of allowing increased access to information.  A thief who obtains some information about a consumer may be able to use this to spoof   the system and obtain access to much more information, which will facilitate more harmful forms of theft.

The more fundamental issue is that there is no cost benefit analysis showing that any regulation is justified, as I showed in my previous post on this issue.

Paul H. Rubin

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PAUL H. RUBIN is Samuel Candler Dobbs Professor of Economics at Emory University in Atlanta and formerly editor in chief of Managerial and Decision Economics. He blogs at Truth on the Market. He was President of the Southern Economic Association in 2013. He is a Fellow of the Public Choice Society and is associated with the Technology Policy Institute, the American Enterprise Institute, and the Independent Institute. Dr. Rubin has been a Senior Economist at President Reagan's Council of Economic Advisers, Chief Economist at the U.S. Consumer Product Safety Commission, Director of Advertising Economics at the Federal Trade Commission, and vice-president of Glassman-Oliver Economic Consultants, Inc., a litigation consulting firm in Washington. He has taught economics at the University of Georgia, City University of New York, VPI, and George Washington University Law School. Dr. Rubin has written or edited eleven books, and published over two hundred and fifty articles and chapters on economics, law, regulation, and evolution in journals including the American Economic Review, Journal of Political Economy, Quarterly Journal of Economics, Journal of Legal Studies, and the Journal of Law and Economics, and he frequently contributes to the Wall Street Journal and other leading newspapers. His work has been cited in the professional literature over 8000 times. Books include Managing Business Transactions, Free Press, 1990, Tort Reform by Contract, AEI, 1993, Privacy and the Commercial Use of Personal Information, Kluwer, 2001, (with Thomas Lenard), Darwinian Politics: The Evolutionary Origin of Freedom, Rutgers University Press, 2002, and Economics, Law and Individual Rights, Routledge, 2008 (edited, with Hugo Mialon). He has consulted widely on litigation related matters and has been an adviser to the Congressional Budget Office on tort reform. He has addressed numerous business, professional, policy, government and academic audiences. Dr. Rubin received his B.A. from the University of Cincinnati in 1963 and his Ph.D. from Purdue University in 1970.

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