A typical urban consumer plays a rather passive role in the value chain that transforms their data into huge monetary benefits. Here are some reasons that show why Indian Internet users will be more willing for a fair trade-off
The typical urban consumer, whose raw personal data is driving this digital data economy
Image: Debajyoti Chakraborty/NurPhoto via Getty Images
Macro-economic inequality in the digitally booming GDP-rich India is glaring (India is a top-five GDP nation globally), where millionaires control a significant portion (approximately 54 percent) of the nation's GDP, leaving the per-capita GDP in the country too low for it to be lowly ranked. India is ranked around 145th in the world on nominal per-capita GDP. A considerable portion of the 'non-millionaire' population live in smart urban cities and have access to the various varieties of smartphone apps (for on average 3-4 hours a day) and IoT devices (such as smartwatches, Fitbit) that aggregate a plethora of an individual's lifestyle data in real-time and economically transact on them in the opaque value chain. Examples of widespread personal data (PD) include basic personal information like age and sex, expressions/emojis from social posts and messages, financial transactions data, photos, web surfing data, interaction data with a smart fridge, smart thermostat or other IoT devices, calendar events, sport activity data from Fitbit, location data, and travel data.
However, the typical urban consumer, whose raw personal data is driving this digital data economy (or the fourth industrial revolution), plays a rather passive role as they are often (unfairly and inequitably) left out of the value chain that transforms their data into huge monetary benefits using powerful AI and psychological tools. To cite an example, market data suggests that more than 95 percent of Meta’s (erstwhile Facebook) revenue comes from advertising that solely relies on consumers' personal data. This business model can only be successful if the adverts are successful too. Recent studies in the western world show a diverse range of the monetary impact of personal data on the earnings of ecommerce firms and society individuals. Frequently collected personal data by ecommerce firms such as age, sex, browsing activity, geolocation, and so on. The average (mobile-savvy) individual is worth at least $1000 annually. Such an amount, if paid to online social application (OSA) users (after PPP conversion) as a cash payment for their personal data, can significantly reduce the GDP-induced macro-economic inequality in any particular economy around the globe. Its effect is most likely to be felt on economies with high inequality. For example, for the smartphone penetrating, GDP-rich, but highly unequal Indian economy, an economically calibrated PPP-converted value of $1000 is likely to reduce the average economic inequality by one-third.
Surprisingly, despite privacy concerns related to personal data sale, pilot randomised trial experiments conducted by us on approximately 22500 individuals in urban India showed that individuals are willing to trade their data for incentives in a transparent data economy (a result appearing in the prestigious INFORMS Winter Simulation Conference 2021). Here, the notion of ‘transparency’ implies that individuals should be effectively informed or educated of the personal data that is being collected by OSAs along with the privacy risks that might accompany such data collection activities. The observation from the pilot field experiments is quite rational of India—a low-medium economy country (LMIC), despite privacy being a right currently upheld by the Indian constitution—an exception being situations (e.g., fake news spread for social and communal harm) where upholding privacy for every individual might go against bringing anti-social elements to justice (Section 79 of IT Act). The important question one might then be interested in getting an answer to is: What aspects of human behaviour drive this ‘rational’ trend?
As an answer, multiple behavioural-economic reasons are working in tandem here, apart from the evident reason that online services are a necessity today that society cannot simply give up. We explore a few salient reasons in this opinion piece.
[This article has been published with permission from IIM Calcutta. www.iimcal.ac.in Views expressed are personal.]