Posner on privacy

We discussed Posner’s economic analysis of the right to privacy. This comes in two parts.

1. An economic analysis of privacy: an examination of how privacy rights either favor or hinder social wealth.
2. A review of the decisions of judges to see if they conform with the economic analysis when deciding privacy cases.

We only discussed the first part. The second part is like the Warren and Brandeis article: it reviews judicial decisions and claims that these decisions fit a pattern, even though the judges who wrote the decisions were not aware of this fact. It’s interesting, but I decided we would not have time to do it properly.

What is an economic analysis?

As Posner describes it, the economic analysis of law is:

“the hypothesis that the common law is best explained as if the judges were trying to maximize economic welfare. … common law adjudication brings the economic system closer to the results that would be produced by effective competition — a free market operating without significant externality, monopoly, or information problems.” (Posner 1981, 4–5)

In the case of privacy, he claims, judicial decisions reflect the economic analysis of privacy that he gave in the section we discussed.

According to Posner, the primary economic case for giving legal, enforceable rights to keep information private concerns information that is costly to acquire. If this information could not be kept secret from others, no one would have an incentive to go to the trouble of finding it: others could just sell the fruits of their labor. Everyone is better off with the system of property rights. Those who can get the information are willing to do so and those who would pay to buy it from them can do so as well.

Personal information, by contrast, is usually used to deceive others. To put it another way, it is used to get people to buy things they do not want. So, for example, job applicants seek to get employers to make hiring decisions that the employer would not otherwise want to make by hiding criminal records and other facts about themselves.

That said, this point about the privacy of personal information does not apply to information that has no social cost and for which the barriers to negotiating a market exchange (“transaction costs”) are low. For example, there is no social cost to my keeping the information about what I look like in the shower private: I cannot use that information to make you worse off in an exchange. And if you really want the information, you can easily find me and make me an offer. I probably won’t accept it, but that just means we can’t agree on a price. It does not mean that my having a privacy right prevents desirable kinds of negotiation and exchange.

Finally, there is an economic case for protecting communication. Without it, it is harder to get candid information and opinions from others.

The value of privacy

I think Posner’s article is valuable as a reminder of the fact that privacy can be used to manipulate others. I think he is also right to say that quite a lot of what is written in favor of privacy is pretty shallow. Even Warren and Brandeis, whose article I greatly admire, only really spent a paragraph or two explaining the value of privacy. And they had a tendency to indulge in some overheated prose like this:

“The intensity and complexity of life, attendant upon advancing civilization, have rendered necessary some retreat from the world, and man, under the refining influence of culture, has become more sensitive to publicity, so that solitude and privacy have become more essential to the individual; but modern enterprise and invention have, through invasions upon his privacy, subjected him to mental pain and distress, far greater than could be inflicted by mere bodily injury.” (Warren and Brandeis 1890, 196)

For Thomson, our interest in privacy is the same as our interest in the rights from which the right to privacy is derived. So it’s hard to say anything general about why privacy is desirable on her view.

For Scanlon, our interest in privacy is an interest in having a space where we do not have to think about being observed. Posner has some sharp remarks about that sort of idea. We did not have time to discuss them, but I think they would be worth considering (see Posner 1978, 407–8).

Our discussion

We had the sharpest discussion of Posner I can recall. Well done!

For example, Leah and Leo thought that the commercial interests Posner discussed had little to do with privacy. Businesses do not care about the publication of information that they have. They care about whether another business makes a competing product or not. So, for instance, they describe what they know in patents that the whole world can see. The point of doing that, of course, is to prevent other businesses from selling products; it is not to prevent them from gaining the information.

Izzy said that Posner’s proposal is that individuals have the same interest in privacy as businesses do, that is, it helps them to gain an advantage in their exchanges with others. That seems right to me. I suppose there is one difference, though: individuals are selling themselves while businesses sell products. Your company can know how to make the thing that my business sells but, so long as your company can’t make and sell it, my company does not care. But with individuals, once you know the information, the damage is done; there is no additional product that can be blocked. Hmm, must think about this more.

We were also very unhappy with the analysis of the right to control the publication of naked images (Posner 1978, 400). Posner had said that it was not inappropriate, on economic grounds, that the individual holds the right to control publication of these images: there is no social cost to doing so and the transaction costs of negotiating with the individual right holder are low. But, as Leo and Mollie pointed out, the same considerations apply to a picture of the back of my head. Yet the case for a privacy right over nude pictures is much stronger than the case for a privacy right over pictures of the back of my head. That difference completely eludes the economic analysis: it has nothing to say about why the cases might be different.

More generally, Gabe and Lane were unhappy with the whole idea that what rights you have might depend on an economic analysis. Does my right to free speech rest on the fact that my having this right produces more wealth than would be produced if I did not have it? Isn’t it a little weird to say that whether I have the right to control some bit of information about me depends on its value to someone else and the transaction costs of negotiating with me about whether to sell it (compare Posner 1978, 398–99)?

I suspect they were thinking of a right to privacy as something that is ultimately or intrinsically valuable. Posner, on the other hand, was looking at privacy as an intermediate or instrumental value (see Posner 1978, 394). Strictly speaking, they aren’t disagreeing with one another. Posner’s article is only about the instrumental uses of privacy and so does not clash with any proposition about its ultimate value. But I think that Lane and Gabe can legitimately say that he is leaving out an important part of the story; it is the most important part, in their opinion.

Key concepts

1. Posner’s claims about the costs of privacy rights.
2. When Posner thinks privacy rights would be economically efficient and when they would not.
3. Is economic analysis a valid tool for understanding rights at all, including the right to privacy?