Maybe it was just a matter of time, but the pendulum may be swinging more toward plaintiffs in privacy law, as the plaintiffs bar has had some victories on the standing issue in data privacy suits (see, e.g., my July 22 post on the 7th Circuit’s decision in Neiman Marcus).
Now come the economists telling us that, just like everything else, they can put a value on privacy. In a thought-provoking article by economists at NERA, Garrett Glasgow and Sarah Butler, the authors compare the intrinsic value of privacy to the intrinsic value of an unadulterated environment. (Get the download for the Law360 article here.) The nascent theory is based on environmental disaster cases: “In those cases plaintiffs (usually state and federal agencies) have sought and won damages based on ‘existence value’ or ‘passive use value.’ This is the value that individuals place on the knowledge that a natural resource exists in a pristine state, even if they never directly make use of that resource.”
As Glasgow and Butler explain: “In the privacy setting, an individual’s “existence value” comes from the knowledge that their personal data is secure and untouched by unauthorized third parties, and damages arise when the individual discovers this is no longer true, even if there is no direct financial harm from the data sharing or data breach.”
Glasgow and Butler admit methodological issues in determining the value of privacy, not the least of which is that the value is subjectively determined. But there’s another problem: in many if not most data breach cases, a person’s privacy is not actually violated. More often than not, a laptop will be stolen, for instance, for the value of the laptop. And the information on it simply is not of interest to the thief. As opposed to the environmental context, there often has been no harm in the privacy context. There’s only the fear of it. And that fear simply is not compensable under the law.