Posner's Response to Comments on Privacy Posting

There were as usual a number of very fine comments, some of which require me to extend my analysis in various ways.

For example, one comment points out that people don't merely conceal discreditable information about themselves; it is more accurate to say that they make a selective presentation of the facts about themselves to other people, and this selective presentation may be more informative about the person than an unscreened flood of information about him. (The sociologist Erving Goffman wrote about this in a great book called* The Presentation of Self in Everyday Life*--it is an essentially theatrical conception of human social interactions: we create a self or selves to manage our interactions with other people. I formulate his analysis in economic terms in Chapter 25 of my book* Overcoming Law *(1995).) This is related to but extends my point that requiring an SEC-regulated prospectus-like disclosure of all material information about a person would flood society with trivial information. It would not only be distracting, it would actually reduce our knowledge of people by preventing them from signaling through their self-presentation how their intentions, motivations, and purposes should be understood.

A point also made in the comments that is related but that I do not fully agree with is that people should be able to conceal information about themelves that would trigger ignorant or irrational prejudices on the part of other people. I think that in general people should be allowed to make their own judgments about other people--should be able, thus, to decide for themselves what is material information. But psychologists do correctly point out the operation of what they call the "availability heuristic," which is the tendency of the mind to be seized by features of a situation that are particularly arresting though not necessarily important from a rational standpoint. So knowing that a person was HIV-positive or had had a sex-change operation or had (in one commenter's analysis, "anal warts"--an arresting condition that I had never heard of before, and would prefer not to have heard of) might overwhelm one's attention to all the other facts about the person that might be more important in relation to the particular transaction that one was contemplating having with the person, such as retaining him or her as one's accountant. The problem with this insight is that it does not enable a sharp line to be drawn between concealment designed to take advantage of other people and concealment designed to prevent other people from reacting irrationally to one's offer of a transaction.

Another point I have reservations about is whether reducing the privacy of medical records would cause people to shun doctors and if so whether this would be altogether a bad thing. People will not, merely to protect privacy, avoid seeking treatment for serious illness; and as for trivial illness, there is only a slight privacy stake and anyway it might be all to the good if people were less quick to seek medical treatment, including cosmetic surgery, for conditions that either are not serious or that are not medical conditions, in the sense of illness, at all. A further problem with concealment of medical records is that it disrupts the efficient operation of insurance markets. Low-risk people get pooled with high-risk because the high-risk people conceal their riskiness. The result is an arbitrary redistribution of wealth from the former to the latter.

One comment reminded me--as a public official, I should not have needed this reminder--that a frequent and proper motive for concealment of information about oneself is simply self-protection: you don't want criminals to know the details of your financial situation, where you bank, your address and phone number, your credit card number, etc. That is, it is entirely proper to try to conceal information about yourself from people you don't want to transact with, unless you are the outlaw and the people you're trying to avoid are the law.

One interesting comment points out the distorted understanding that can arise from the fact that the rich have more privacy than the poor; privacy is what economists call a "superior good," meaning that one consumes relatively more of it as one's income rises. If the poor have less privacy, so that more is known about their misbehavior, a false impression may be created that they misbehave more than the rich, whereas the amount of misbehavior may be the same and the only difference may be that the rich conceal it better. Against this, however, is the fact that there is much more curiosity about the private lives of the rich--which may be one reason why privacy is a superior good. The rich spend more to protect privacy, but the media, to gratify public interest in the lives of the rich, spend more on penetrating the privacy shield. So maybe we know as much about the private lives of the rich as we do about the poor, or even more.

Let me pursue the "superior good" point a little further. Because privacy is a superior good, the amount has grown as society has become wealthier. Americans have far more privacy today than they did a hundred years ago. This results in greater happiness on the one hand, but (qualifying the increase in happiness) greater opportunities for fraud in personal and commercial relations, and indeed for terrorism, which requires a high degree of secrecy in preparations, on the other hand. Because of the serious downsides of privacy, the growth of privacy incites a responsive growth of methods of surveillance, now greatly facilitated by digitization, which in turn incites a countermovement for encryption and other methods of restoring privacy in the face of digitization. So there is a kind of privacy arms race.