Privacy as a public good: A case for electronic cash

R.J. Garratt, M.R.C. van Oordt

Research output: Contribution to JournalArticleAcademicpeer-review

Abstract

Privacy is a feature inherent to the use of cash. With steadily increasing market shares of digital payment platforms, privacy in payments may no longer be attainable in the future. We explore the potential welfare impacts of reductions in privacy in payments. In our framework, firms may use data collected through payments to price discriminate future consumers. A public good aspect arises because individuals do not internalize the full cost of failing to protect their privacy and reduce social welfare by suboptimally choosing not to protect their privacy in payments. We discuss potential remedies, including the issuance of electronic cash.
Original languageEnglish
Pages (from-to)2157-2180
JournalJournal of Political Economy
Volume129
Issue number7
DOIs
Publication statusPublished - 1 Jul 2021

Keywords

  • Money
  • Privacy
  • Externality
  • Payment economics
  • Cash
  • CBDC
  • Digital currency

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