What Are People Willing to Pay for Privacy?

So I was thinking about the question of the value of privacy, and it occurred to me that there may be an interesting natural experiment we can observe, and that is national security clearances in the US. For this post, I’ll assume that security clearances work for their primary purpose, which is to keep foreign intelligence agents out of sensitive jobs. But articles like this indicate that it’s worth a $5-15,000 salary premium.

Part of the premium is getting a clearance for an employee is slow and expensive, as this Govcentral article says, “…it can take noncleared employees between six months and two years to receive a new clearance — an unacceptable time frame for many organizations that have significant contracts to deliver in the near term. In addition, the clearance process often is very expensive.”

But even with that issue, has the number of jobs requiring a clearance gone up that quickly as to create that degree of salary imbalance? At some point, the number of cleared people should catch up with the surge in government employment. At that point, the difference between a cleared and uncleared employee is down to (1) the cost of getting a clearance and (2) the market impact of having your life examined and judged by strangers.

Is that $1,000 a year for being unable to select the strangers?

Thoughts?

6 thoughts on “What Are People Willing to Pay for Privacy?

  1. I think there are costs associated with maintaining clearance; I don’t really know the details, but I think you might have to report contacts with foreigners, foreign travel, etc.

  2. Also very few section of the government share clearances even though they are supposed to. If you have a DOD one it may not be acceptable at the FBI etc. So you have to wait all over again for another clearance to ask your friends annoying questions.

  3. I’m not convinced that this could be a good measure of the value of privacy. I don’t think that the clearance process is perceived as privacy-related, although it actually is, indeed. I suspect that many other factors (e.g., the position, salary, career, etc.) dominate privacy concerns, therefore you’re not going to identify privacy-violation-adverse or -neutral or -seeker people and their relative valuation of privacy. I guess you’re most likely identify those looking for governmental or sensitive positions that are willing to accept the burden of the clearance process to get the job, regardless of privacy issues.

  4. One of the costs of clearances is that because of the time lag to obtain a clearance, the quality of employees goes down, as few people will wait two years for a clearance so they can take the job. So realistically, the employer only gets to hire people who already have clearances, like ex-military. (That is not to suggest that ex-military are stupid, only that the employer has very limited options).

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