The Right of Privacy

by Richard A. Poser

The Concept of privacy elusive and ill defined.

The article attempts an economic analysis of the dissemination and withholding of information in the personal rather than the business context.

The two main points are that personal privacy seems to be valued more highly than organizational privacy and that judges in tort cases have been sensitive to the economics of privacy.

(Tort law is the name given to a body of law that addresses, and provides remedies for, civil wrongs not arising out of contractual obligations)

Some people posses information they will incur costs to conceal and others are willing to incur costs to discover it.

In this sense two economic good are created “privacy” and “prying”. For Posner these are intermediate rather than final goods, in the sense that they offer instrumental rather than ultimate values.

In wealthier societies surveillance is costlier because people have living conditions which offer greater privacy and because the value of time is greater.

The economic rationale for granting legal protection to secrets is that it will encourage investment in the production of socially valuable information.

Related to personal facts and to communication, there is a case for assigning the property right to the individual in a secret that is a by product of socially productive activity, and a case for assigning the property right away from the individual where secrecy would mislead the people with whom he deals.

(who defines what is socially productive or misleading, Relevant example Collateralized Debt Obligations (CDOs), debts backed up by collateral (in today’s problem with housing). If the value of the underlying asset (houses) plummets, no longer equal to the paper debts themselves, then the “collateral” is largely fictitious)

Essential elements of a legal right to privacy:
1. protection of trade and business secrets
2. generally no protection to facts about people (although we might be able to prevent their discovery by unduly intrusive methods)
3. Limiting so far as possible eavesdropping and other forms of intrusive surveillance.

Contrary to this analysis, the legislative trend is toward giving individuals more and more privacy protection and giving business firms and other organizations, including government agencies, universities and hospitals, less. (He is in disbelief when he says this, you can feel his heart pounding) As he adds, for the economist this is mysterious.

In regard to not economic theories of privacy, discussing Warren and Brandeis, he says that their analysis is based on a series of unsupported and implausible empirical propositions.

Discussing Bloustein he says that Bloustein must find his dislike for greater conformity to socially accepted patterns of behaviour generated by lack of privacy, self-evident because he doesn’t attempt to explain his reasoning.

Charles Fried’s argument that privacy is indispensable to the fundamental values of love, friendship, and trust, to Posner are a joke, since to him love and friendship flourish in societies with little privacy (obviously the guy has never had good sex)

He does make one valid point however, when he says that if ignorance is the prerequisite of trust, equally knowledge, which privacy conceals, is the prerequisite of forgiveness. (Of course the comment is completely out of place and would be better suited to a philosophical manuscript by a Buddhist monk)

In regards to Tort Law, he mentions how Warren and Brandeis stimulated its development, but that the law has evolved very differently and more in line with economic thinking about privacy.

The broad features of this law are:
1. substantial protection of the confidentiality of business dealings.
2. public entitlement to obtain by prying most private facts about individuals.
3. strict limitation on intrusion to obtain those facts.

The tort invasion of privacy has four aspects:
1. appropriation – e.g. if advertiser uses someone’s name or photograph without his or her consent, the individual’s legal rights are infringed.
2. publicity – if the same picture appears in a news section there is no infringement.
3. false light – if the picture is embarrassing and portrays the person in a false light then there is infringement.
4. intrusion – eavesdropping, photographic surveillance of the interior of a home, ransacking private records to discover information about an individual and similar intrusive methods of penetrating the wall of privacy with which people surround themselves are tortious.

What he is observing is the opposite of what one would expect if efficiency considerations were motivating privacy legislation.