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The Economics of Privacy: A Primer Especially for Policymakers

August 6, 2021

  • Yosuke Uno*1
  • Akira Sonoda*2
  • Masaki Bessho*3


This paper presents a survey of a field called the economics of privacy. Reflecting growing concerns worldwide about the handling of personal data on the Internet, the economics of privacy is developing rapidly, coinciding with recent efforts by privacy regulators to tighten regulations. The literature argues that it is difficult for market mechanisms to resolve problems such as how to determine the socially optimal level of privacy protection and how to avoid excessive privacy loss driven by negative data externalities. These insights should be useful for policymakers facing the question of how to deal with personal data issues and to ensure that people's privacy is protected.

JEL classification
D62, D82, D83, K20, M31, M37

We thank Yasutora Watanabe, Kazushige Kamiyama, Yutaka Soejima, Akio Okuno, Takeshi Yamada, Junichiro Hatogai, Masashi Hojo, Masashi Une, Kazutoshi Kan, Noriyuki Shiraki, and Hiroyuki Takano for useful comments. All remaining errors are ours. This paper does not necessarily reflect the views of the Bank of Japan.

  1. *1Payment and Settlement Systems Department (currently at Financial System and Bank Examination Department), Bank of Japan
    E-mail :
  2. *2Bank of Japan
  3. *3Payment and Settlement Systems Department, Bank of Japan
    E-mail :


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