Is Data Exploitation Proof that Markets Don’t Work?

Boy taking a test

My husband and I have an ongoing disagreement over our grocery store’s loyalty program. Personally, I don’t like selling my buying habits in exchange for coupons for things we buy regularly. He thinks it’s a worthy trade. Ultimately, I see nothing nefarious in grocery and craft stores using customers for market research and paying us with deals. I just need a large personal space, and that feels too close.

There are, however, many situations where data-gathering programs don’t provide a trade for the information they glean. Typically, they don’t have to, because they have a captive audience. Academic tests, for example, are often longer than they have to be because a certain number of questions, known only to the testing company, don’t count into a student’s score because they’re trial questions. When my husband took the GRE—a grad school exam like the SAT—an entire 30-minute section was a dummy section. But he didn’t know which, so he had to do his best on them all and sweat an extra 30 minutes in the 4.5-hour test. Thus, he had to pay the testing company both to take the test and to be their guinea pig for more tests.

It’s worse for schoolchildren, though, who have to fill out similar dummy sections, because they typically can’t choose whether or not they want to take a certain test to demonstrate their competence in exchange for a possibility of better education options. They must take the test and be testing guinea pigs, with no compensation or, often, even knowledge of the full situation.

     If anything, data exploitation occurs because there is no free market, not as a result of one.

Similarly captive situations exist with our government’s civilian surveillance programs, which work, in part, because consumers didn’t know that big names like Google and Facebook were handing our information over. (Bruce Schneier is perhaps my favorite person writing on this topic, partly because he explains the cyberworld in layman’s terms.) Good information is essential for free markets to work, and so is freedom. In education, there’s not a lot of freedom. And in data-tracking, there was previously a lack of accurate information.

That’s at the root, I think, of inaccurate complaints that a free market in data exploits consumers for the benefit of the big information companies. That’s a central complaint of, for example, this massive comments discussion about data privacy on a left-leaning education blog I follow. A common complaint is that companies want to “privatize” education so they can make money off kids’ data. But giving companies exclusive access to private information (that families are forced to give if they want their kids educated in public schools) is not a free market. It’s not much of a market at all. It’s a monopoly, or at least a monopsony.

It’s not a free market when consumers don’t realize they are the product, or have an opportunity, like me and my husband, to choose whether or not to trade their personal information for something we value, like grocery coupons. When the government gets involved and strong-arms companies into giving information, that’s not a free market either. If anything, data exploitation occurs because there is no free market, not as a result of one.

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