What Price Privacy? - and why identity theft is about neither identity nor theft

It is commonplace to note that in surveys people claim to place a high value on privacy while they paradoxically throw away their privacy in exchange for a free hamburger or a two dollar discount on groceries. The usual conclusion is that people do not really value their privacy as they claim to or that they are irrational about the risks they are taking. Similarly it is generally claimed that people will not pay for privacy; the failure of various ventures focused on selling privacy is offered as evidence of this. In this chapter we will debunk these myths. Another myth we will debunk is that identity theft is a privacy problem. In fact it is an authentication problem and a problem of misplaced liability and cost. When these are allocated to those who create them, the problem does not exist. Finally we consider the oft asked question of how much privacy should be given up for security. We find this to be the wrong question. Security of institutions may decrease and infrastructure costs may be increased by a reduction in privacy.