Do Citizens Demand More Privacy as Society becomes More Unequal?

• In Event: Segregation, Corruption, and Hidden Wealth

Abstract

Economic inequality is one of the most pressing issues of our time. Indeed, it can be argued that we are living in a new "Guilded Age." Moreover, economic inequality leads to a host of negative externalities such as poor health outcomes, unequal democratic representations and low or unequal educational attainment. As society becomes more unequal it is not inconceivable that wealthy people will look to conceal their wealth more often. This inevitably increases wealth inequality by distorting the amount of wealth very rich people actually have thus lowering the upper bound of the income distribution and reducing the amount of resources that go towards lifting incomes at the lower ends of the income distribution. Though privacy and inequality have occupied two separate streams of research, we believe they are inherently linked. There are at least three reasons why inequality is tied to concerns for privacy: 1) to reduce one's liabilities to the state and social obligations; 2) to avoid social comparisons; and 3) protection.

In this study we investigate this puzzle: Are notions of privacy inherently tied to the degree of inequality? Do individuals value privacy because they wish to shirk social comparisons, and does inequality exacerbate such concerns? Employing a laboratory experiment we exogenously manipulate income inequality and observe what the consequences are on behaviour in terms of public good contributions, but (most importantly) in terms of preferences for privacy.

Author

• John W. D'Attoma, University of Exeter