The Tradeoff Falacy: How Marketers Are Misrepresenting American Consumers and Opening Them Up to Exploitation

Summary

Overview New Annenberg survey results indicate that marketers are misrepresenting a large majority of Americans by claiming that Americans give out information about themselves as a tradeoff for benefits they receive. To the contrary, the survey reveals most Americans do not believe that ‘data for discounts’ is a square deal. The findings also suggest, in contrast to other academics’ claims, that Americans’ willingness to provide personal information to marketers cannot be explained by the public’s poor knowledge of the ins and outs of digital commerce. In fact, people who know more about ways marketers can use their personal information are more likely rather than less likely to accept discounts in exchange for data when presented with a real-life scenario. Our findings, instead, support a new explanation: a majority of Americans are resigned to giving up their data—and that is why many appear to be engaging in tradeoffs. Resignation occurs when a person believes an undesirable outcome is inevitable and feels powerless to stop it. Rather than feeling able to make choices, Americans believe it is futile to manage what companies can learn about them. Our study reveals that more than half do not want to lose control over their information but also believe this loss of control has already happened. By misrepresenting the American people and championing the tradeoff argument, marketers give policymakers false justifications for allowing the collection and use of all kinds of consumer data often in ways that the public find objectionable. Moreover, the futility we found, combined with a broad public fear about what companies can do with the data, portends serious difficulties not just for individuals but also—over time—for the institution of consumer commerce. Marketers justify their data-collection practices with the notion of tradeoffs, depicting an informed public that understands the opportunities and costs of giving up its data and makes the positive decision to do so. A 2014 Yahoo report, for example, concluded that online Americans “demonstrate a willingness to share information, as more consumers begin to recognize the value and self-benefit of allowing advertisers to use their data in the right way.”1 This image of a powerful consumer has become a way to claim to policymakers and the media that Americans accept widespread tracking of their backgrounds, behaviors, and lifestyles across devices, even though surveys repeatedly show they object to these activities. Our study challenges the assertion that tradeoffs explains what most Americans are doing. With the help of Princeton Survey Research Associates International, we conducted a representative national cell phone and wireline phone survey of 1,506 Americans age 18 and older who use the internet or email “at least occasionally.” We presented them with everyday circumstances where marketers collect people’s data, phrasing the situations as tradeoffs— and learned that very many feel those tradeoffs are unfair.