Good idea to look at this from an economic perspective. I recently had a discussion with some friends/colleagues about whether people actually think or decide rationally most of the time. In fact, irrationality is more pervasive than what economists like to admit. Here, it's arguable which decision is rational or irrational, at least for the individual. For social welfare, assuming that America continues to value privacy, it's easy. At the individual level, I don't think we can classify the decision as rational or not just based on how informed the individual is. It's more based on individual preferences and what rates high on their utility scale - the gift cards and perks, plus feeling more interconnected, or privacy of themselves and their friends? Whether those soft preferences are quantifiable and how we can do so are important.

-- ThomasHou - 27 Feb 2012

(1) For those who take Google up on this deal, is this an economically rational decision? On the one hand, it sure looks like one: a participating user decides that he or she values a $5 Amazon gift card (or whatever the payment is) more than data privacy and enters into an economic transaction reflecting this valuation. Alternatively, it's possible that a person could think Google already has such broad access to our information that the marginal amount of privacy lost by downloading the extension or installing the black box is inconsequential. In other words, a person may reason "as long as my privacy is being violated and I'm willing to go along for the ride, I should get what I can out of this relationship."

(2) On the other hand, it's possible that people agreeing to this don't fully understand the scope of information they're handing over or the potentially adverse consequences of doing so. If a user is uninformed, then this transaction can't properly be called rational. For instance, if a person trades $100k worth of gold for something with a market value of less than $100k just because he isn't aware of gold's value, that transaction probably isn't economically rational anywhere outside that person's mind. Something similar could be going on here, with Google essentially preying on the ignorant. But, even if this is the case, maybe we shouldn't care. First, someone using Google when viable, more privacy-friendly alternatives exist, may be said to implicitly consent to the evisceration of his or her privacy rights. If so, then it shouldn't rub us the wrong way if a Google user opts to go a little further in the "wrong" direction. Second, because it's pretty easy to learn about the consequences of eroding data privacy and Google's role therein, perhaps feeling bad for the uninformed is a waste of time. In other words, lazy people get what they deserve.

(3) Even if we don't care about the individual forfeiting his privacy entirely, there are second-order consequences to his doing so. As a person opens up his data entirely, Google presumably gains wider, deeper access to information about other people in the participating user's life and/or social network. So, for every 1 person that takes the $5 gift card, Google may be able to gather heretofore unavailable information on 100 other people (I'm just guessing at the numbers here, but you get the point). And, it's likely that this wider net will encompass people who would not consent to turning their info over to Google for a gift card. Indeed, it may include people who vigorously safeguard their online privacy. As such, the most disturbing consequences of Google's new plan likely extend beyond the individual giving away his privacy to the innocent bystanders swept up in Google's net as a result thereof.

-- MatthewLadner - 14 Feb 2012

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