Tagged: price discrimination

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Privacy: For the Rich or for the Poor?

Some consider the right to privacy a fundamental right for the rich, or even the rich and famous. It may be no coincidence that the landmark privacy cases in Europe feature names like Naomi Campbell, Michael Douglas, and Princess Caroline of Monaco. After all, if you lived eight-to-a-room in a shantytown in India, you would have little privacy and a lot of other problems to worry about. When viewed this way, privacy seems to be a matter of luxury; a right of spoiled teenagers living in six bedroom houses (“Mom, don’t open the door without knocking”).

 

To refute this view, scholars typically point out that throughout history, totalitarian regimes targeted the right to privacy even before they did free speech. Without privacy, individuals are cowed by authority, conform to societal norms, and self-censor dissenting speech – or even thoughts. As Michel Foucault observed in his interpretation of Jeremy Bentham’s panopticon, the gaze has disciplinary power.

 

But I’d like to discuss an entirely different counter-argument to the privacy-for-the-rich approach. This view was recently presented at the Privacy Law Scholar Conference in a great paper by Laura Moy and Amanda Conley, both 2011 NYU law graduates. In their paper, Paying the Wealthy for Being Wealthy: The Hidden Costs of Behavioral Marketing (I love a good title!), which is not yet available online, Moy and Conley argue that retailers harvest personal information to make the poor subsidize luxury goods for the rich.

 

This might seem audacious at first, but think of it this way: through various loyalty schemes, retailers collect data about consumers’ shopping habits. Naturally, retailers are most interested in data about “high value shoppers.” This is intuitively clear, given that that’s where the big money, low price sensitivity and broad margins are. It’s also backed by empirical evidence, which Moy and Conley reference. Retailers prefer to tend to those who buy saffron and Kobe Beef rather than to those who purchase salt and turkey. To woo the high value shoppers, they offer attractive discounts and promotions – use your loyalty card to buy Beluga caviar; get a free bottle of Champagne. Yet obviously the retailers can’t take a loss for their marketing efforts. Who then pays the price of the rich shoppers’ luxury goods? You guessed it, the rest of us – with price hikes on products like bread and butter.

 

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