Data Privacy and Digital Demand

The authors combine survey and behavioral data to analyze consumers’ data-sharing choices in a realistic setting in which they exchange personal data for digital services. The authors find that respondents with stronger privacy concerns authorize more, rather than less, data sharing, confirming the data privacy paradox. Instead of attributing this paradox to the respondents’ unreliable survey responses, resignation from privacy, or behavioral biases, the authors uncover that privacy-concerned respondents have greater demands for digital services, which offset their privacy concerns. Their findings highlight a key tension for the data economy—privacy concerns and digital demands both grow with the deepening of digital services.