Balancing Costs and Benefits of New Privacy Mandates


Growing concerns about privacy have prompted policy makers to give more attention to buttressing existing statutory privacy protections. In this article, I lay out the case for taking a balanced approach to new legislation: one that weighs the benefits of the free flow of information against possible threats to privacy in certain circumstances. Using this balancing framework, I suggest that narrowly targeted legislation aimed at enhancing protections of sensitive medical and financial information is appropriate. In addition, there is a case for a limited across-the-board requirement that merchants– whether on or off line–notify consumers of their information policies and afford them an opportunity to opt out of having personally identifiable data forwarded to third parties for marketing purposes.


We are said to live in an “information age.” If so, it is not necessarily because more “information” is collected, analyzed, used or generated today than in earlier times– although that certainly is true. Instead, it is because computers, fiber optic cables and the Internet in particular enable information to be transferred much more quickly from one location to another and to be found with more far more ease than before.

The advances in information technology have been widely hailed as ushering forth a virtual revolution in the way people relate to one another and conduct business. But the information age also has unleashed a vigorous debate in this country and abroad over who can gain access to and use certain types of information–personal data about one’s finances, medical history, shopping habits, and the like–and under what circumstances. Two widely respected surveys recently documented the strong public interest in privacy: one reported that 82 percent of Americans are concerned that they have “lost all control” over how their personal information is used by companies with whom they conduct business, while the other indicated that 81 percent of Internet users have concerns about potential threats to their personal privacy while on-line.