How Much is Your Instagram Data Worth? Economic Perspective of Privacy in the Social Media Context

Numerous smartphone and web applications rely on personal information to analyze user behavior, primarily for targeted advertising and the enhancement of personalized features. However, these applications often provide users with limited choices: either accept their privacy policies or refrain from using the services altogether. Consequently, the prevailing norm is to “pay” for these applications and web services by providing personal data. Given that privacy policies are typically lengthy and difficult to comprehend, most users accept the terms and conditions without fully grasping the potential consequences, even reading the very complex and long privacy policies and terms of use. Sometimes users are left with no other choice than accepting the terms of use, if they rely on a specific service or want to communicate with friends and colleagues, even though they understand the potentially harmful consequences and do not agree with the terms of use. As a result, many users remain unaware of being continuously tracked by multiple applications installed on their smartphones or unwillingly agreeing to privacy policies without an alternative choice of payment other than personal information. An alternative is to establish payment options to pay for the services with money instead of with data. However, to evaluate how much people are willing to pay (WTP) for the protection of their data and which prices to offer for certain services is an under-explored question. This research aims to shed light on users’ WTP for data protection for a specific data-sharing scenario, namely for sharing data with Instagram. Overall, 68 participants took part in a survey evaluating the individual levels of WTP for data privacy when using Instagram. The results show a positive correlation between participants with higher privacy concerns also those willing to pay more for the protection of their data. Interestingly younger participants reported significantly higher privacy concerns but reported lower amounts of money they would spend on protecting their data. Moreover, female participants and the gender type other reported significantly higher WTP values in comparison to male participants.