Huan Tang // London School of Economics and Political Science, United Kingdom
The Value of PrivacyResearch Seminars
Evidence from Online Borrowers
This paper studies the value of privacy, for individuals, using data from large-scale field experiments that vary disclosure requirements for loan applicants and loan terms on an online peer-to-peer lending platform in China. The author finds that loan applicants attach positive value to personal data: Lower disclosure requirements significantly increase the rate at which applications are completed. She quantifies the monetary value of personal data—and the welfare effect of various disclosure policies—by developing a structural model that links individuals’ disclosure, borrowing, and repayment decisions. Using detailed application-level data, she estimates that social network ID and employer contact are valued at 230 RMB (i.e., $33, or 70% of the average daily salary in China); for successful borrowers, this accounts for 8% of the average net present value of a loan. Requiring answers to these application questions reduces borrower welfare by 13% and costs the platform $0.50 in expected revenue per applicant.