Measuring Preferences for Privacy

Every day, businesses collect personal data from millions of people. But when customers choose to keep their information private, some companies make guesses about their hidden data, potentially leading to bad marketing strategies.

Tesary Lin, a student in Booth’s PhD Program, is proposing a new framework for studying consumers’ privacy choices—work for which she won the 2018 Alden G. Clayton Dissertation Proposal Competition. “It doesn’t make sense to conclude that only a certain type of person cares about privacy,” said Lin, whose award-winning dissertation is titled “Measuring Intrinsic and Instrumental Privacy Preferences.” Lin’s dissertation was one of only two winners out of nearly 100 submissions from doctoral students around the world.

In a novel field experiment, Lin recruited a diverse group of participants to take an online survey about smartwatches. But the experiment’s true purpose was to find out whether respondents would answer personal questions about their race, income, and children. Classical economics can explain consumers’ “instrumental motive”—their practical reason—for seeking privacy when sharing information would result in a measurable loss. For example, wealthy individuals might decline to share their income with retailers in order to avoid price targeting.

However, Lin’s experiment revealed that consumers also have an intrinsic motive for privacy—a personal taste that doesn’t fit easily into stylistic economic models. “People care about privacy due to the negative consequences of revealing their ‘type,’ and they also sometimes feel that privacy is an intrinsic right,” Lin said. “Most people wouldn’t want a surveillance camera in their home, even if they weren’t doing anything wrong.”

Lin’s research could inform businesses’ strategies for incentivizing consumers to share personal data. It also could help companies determine whether consumers’ privacy preferences have resulted in nonrepresentative samples, possibly skewing their market research. At a higher level, this framework can also help with the evaluation of privacy regulations, since different privacy motives imply different welfare consequences.

Before coming to Booth, Lin received a bachelor’s degree in economics from Nankai University in Tianjin, China, and a master’s degree in economics from Tsinghua University in Beijing. Her interests in economics and behavioral science motivated her to pursue a career in advanced marketing research.

Lin credits Oleg Urminsky, professor of marketing at Booth, for teaching her about the advantages and shortcomings of both disciplines in his research methods course. Urminsky later served on Lin’s dissertation committee with Pradeep K Chintagunta, Joseph T. and Bernice S. Lewis Distinguished Service Professor of Marketing; Sanjog Misra, Charles H. Kellstadt Professor of Marketing and Neubauer Family Faculty Fellow; and Bradley Shapiro, associate professor of marketing.

Winning the prestigious 2018 Alden G. Clayton Dissertation Proposal Competition will help Lin stand out among candidates seeking faculty positions at research universities. The competition, which is sponsored by the Marketing Science Institute, recognizes doctoral students in marketing who are working on research questions with important implications for marketing, policy, and society.

Lin hopes to continue studying the economic and societal implications of new technology after completing her PhD at Booth. Since coming to Booth, she’s enjoyed a high level of interdisciplinary collaboration and encouragement from her mentors and peers, many of whom share a connection to the James M. Kilts Center for Marketing community.

“I appreciate that I get a lot of support, not only from faculty members but from fellow students,” Lin said.  “They give very honest comments. They want you to be better.”