Information Frictions and Heterogeneity in Valuations of Personal Data

We investigate how consumer valuations of personal data are affected by real world information interventions. Proposals to compensate users for the information they disclose to online services have been advanced in both research and policy circles. These proposals may be hampered by information frictions that limit consumers’ ability to assess the value of their own data. We use an incentive-compatible mechanism to capture consumers’ willingness to share their social media data for monetary compensation and estimate distributions of valuations before and after an information treatment. We find evidence of significant dispersion and heterogeneity in valuations before the information intervention, with women, Black, and low income individuals reporting systematically lower valuations than other groups. In both samples, the provision of information leads to a reduction in dispersion in data valuations. The reduction takes the form of increasing valuations by low-valuation individuals.

We interpret these results through a theoretical framework that combines beliefs, instrumental, and intrinsic motivations for valuing data. The findings suggest that strategies aimed at increasing information availability in markets for personal data may affect consumer welfare gains from data markets.