Junior Faculty Fellow Uses Economics to Understand Digital Privacy

BY GINA MANTICA

Tesary Lin uses economics to better understand social problems. Lin’s interdisciplinary research draws not only on theories from economics and marketing, but also on insights from other disciplines, such as computer science and law.

After she completed bachelor’s and master’s degrees in economics, Lin’s advisor suggested that she apply to business programs where she could leverage her knowledge to enable change. During her PhD in quantitative marketing at the University of Chicago, she applied her economic lens to social problems. “One attractive feature of economics as a framework is that it allows us to apply a parsimonious theory to explain social science phenomena,” says Lin. Now as a Junior Faculty Fellow at the Hariri Institute and Assistant Professor of Marketing at Questrom School of Business, Lin leverages her economics background to investigate questions of digital privacy in marketing, and a lot of her ideas are inspired by data security and privacy practices.

Lin is interested in understanding consumers’ privacy preferences. She published a paper in Marketing Science recently, suggesting that consumers value their privacy differently, but understanding what generates the difference is crucial for predicting privacy decisions across contexts. Part of the differences come from consumers anticipating different economic outcomes from sharing their data. For example, a reckless driver can perceive the prospect of sharing his driving behavior data with the company to be harmful, whereas a prudent driver can perceive the same decision to be beneficial. On the other hand, there are socioeconomic differences in consumers’ intrinsic privacy preferences. These differences can result in scenarios where the consumers who could benefit more from sharing their data choose to protect their privacy instead.

Studying consumers’ privacy preferences can be tricky because they depend so much on the context that data is shared in, so Lin uses a combination of experiments and mathematical models to conduct her research. Rather than using a survey, Lin conducts online tests where she offers consumers money to share their data with a company that wants to use it. “If I just ask you how much you value your privacy, you are not going to report something truthful because you are not putting yourself in the shoes of someone who has to share their data,” explains Lin. By altering the amount of money offered and the data requested systematically, Lin generates experiment data and builds a model that characterizes how privacy preferences change based on context-dependent differences in data sharing.

Lin’s model provides her with a systematic way to inform how digital privacy affects both consumers and companies. Consumers can assess how much they value their privacy in different contexts, and companies can better understand if there are any biases in the data they collect from consumers. “If you are a company collecting data for marketing research, you can determine the consumers who don’t want to share their data and the nature of the data you get,” says Lin. Lin’s application of economics to social sciences can inform companies’ marketing strategies and improve consumers’ understanding of their own digital privacy values.

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