Four issues and four implications about markets for personal data
Establishing new markets where things can be priced and traded creates incentives for people and companies to work out how much something is worth to them and to trade and innovate accordingly. It is hoped that allowing us a greater ability to control access to our personal data, in exchange for services and money, could encourage similar benefits.
Part of this may involve the growth of Personal Information Management Services (PIMS). PIMS are an overarching term for intermediary services which help individuals manage their data, and companies’ access to it. It has, for example, been suggested that companies could pay fees to PIMS providers to access the data that users have chosen to make available, fees which consumers would share in. Data that PIMS might cover includes browsing data, transactions data and health data, among others.
In principle, allowing greater transparency and control in the use of personal data should facilitate new forms of economic activity. There are, though, a few reasons to suspect that an image of individuals playing a very active role managing their own data will not be how this pans out. The limitations of this suggest some of the ways this area could evolve in future.
There is evidence that consumers, even when presented with choices that would benefit them economically, may not be willing to engage. Just because people have opportunities to trade, it does not mean they will do so. The UK’s energy regulator Ofgem has, for example, estimated that the average savings from switching from the incumbent electricity and gas suppliers’ to the best available tariff is roughly £100 per year. Yet the majority of users do not switch, and the price gap has remained roughly constant since 2008. Energy tariffs can have complications, but energy is ultimately a simple product; the electricity and gas sold by a company is physically indistinguishable from another.
In contrast to electricity, data is a very heterogeneous commodity. One person’s data is not the same as another’s and it is not immediately clear what it should be worth. In addition, those who best understand the commercial value of data are not the individuals who generate it, but the companies that already have a lot of it, and devote extensive resources to analysing it. The limited degree to which people currently study the complicated terms and conditions associated with their data shows some of the challenges in engaging them. Albeit that greater standardisation encouraged by a more developed market for personal data will hopefully streamline these.
An individual’s personal data in isolation provides information about what they have done previously, but it is not necessarily that informative about new things they might like or that might happen to them (data on other people helps work that out). As a result, personal data is worth more when combined with data from many other people. From this it also follows that it is the analytical processing of the data that creates a lot of the data’s value, rather than the individual’s data itself, and the value of the individual data is probably limited.
In addition, in the context of advertising, a lot of adverts’ value typically comes from being able to show adverts to a large number of people, and there is some empirical evidence that suggests the value of being able to target adverts is comparatively low.
A secondary, or perhaps more accurately, second-hand, market for personal data already exists - although most people whose data is traded on it are unaware of this. Data brokers collect publicly available information about us and then resell that information to companies. It has been estimated that the main purposes for this are to inform marketing (e.g. to target advertising and inform customer segmentation) and to allow companies to assess risk (e.g. credit, insurance and fraud risk). There can be a wide range of potential sources of this data from public records, data from browser cookies, information on social media activity available via Applications Programming Interfaces (APIs). There is also evidence that certain mobile apps extract extensive personal information about us. The existence of a lot of accessible information about us already, and the ease with which it can be copied, puts constraints on the economic value of the data that PIMS allow us to control.
This is not to argue against the principle of individuals having greater transparency and control over their data, or to disagree that there are benefits from creating new incentives in this area. It also does not do justice to the rich variety of different kinds of data, and to the distinct purposes it can be used for. It does, though, suggest that people's motivations and choices are likely to be subject to some constraints.
This implies a few ways that the increasingly sophisticated management of our personal data may go:
Some readers of the above may consider it a call for specific regulation of the emerging PIMS sector. It is not. There should, overall, be greater attention to data protection issues, given the more central role that data is playing in our lives, but we should also be open to the possibility of new business models, particularly given the lack of transparency in current ones. Indeed, one of the key reasons for allowing experimentation is to uncover new things that can’t be learnt from existing arrangements. The economy of the future should not be completely constrained by the economics of the present.
Thanks go to Katja Bego for helpful comments on this post.
 Ctrl-Shift (2014), Personal Information Management Systems: An analysis of an emerging economy, Nesta.
 Ctrl-Shift (2015), ‘The data driven economy: Toward sustainable growth’.
 Federal Trade Commission (2014), ‘Data Brokers A Call for Transparency and Accountability’.
 Federal Trade Commission Op. cit. IV Type of products
 Liccardi, I., Pato, J. and Weitzner, D. (2013) ‘Improving Mobile App Selection through Transparency and Better Permissions Analysis’, Journal of Privacy and Confidentiality: Vol. 5: Issue 2, Article 1.
 CMA (2015), ‘The commercial use of consumer data’, p83.