Past Releases and Reports
About Privacilla
Privacy Fundamentals
Privacy and Government
Privacy and Business
Online Privacy
Financial Privacy
Medical Privacy
Have you incentive to differ with Privacilla?
Your Source for Privacy Policy from a Free-market, Pro-technology Perspective

Click to return to the Privacy Fundamentals outline

Home > Privacy Fundamentals > Differences Between Government and the Private Sector > Different Incentives

Different Incentives

Businesses and governments are alike in that they thrive on the use of information. Information about people has value to both. They differ in important ways, however, ways that change how they use the information they have collected.

To businesses, information is a scarce resource that must be paid for one way or another. Businesses may lose customers if they ask for too much information. Governments do not have to pay for information the way businesses do. For a trivial incremental cost, governments may require the submission of information on tax forms, on applications for licenses and benefits, and in numerous other ways. This means that governments do not have market incentives to limit their data collection. They will tend to collect more information than necessary to carry out their functions.

Unlike businesses, governments do not lose the value of their information if they abuse it. A business that gives away or sells information has reduced the value of the information it still holds. A government, on the other hand, may share all the information is has without reducing its ability to carry out its mission. A business loses customers and the ability to continue collecting information if it uses information in a way that is offensive. It may be sued or suffer bad public relations, for example, which is bad for business. A government may make offensive uses of information without reducing its ability to function, or its ability to collect more information.

So, where a business must make tactful and intelligent use of scarce information, a government has few similar incentives. This has dramatic consequences for how the two operate when it comes to protecting privacy.


Comments? (Subject: GovPrivIncentives)

[updated 10/1/00]

©2000-2003 All content subject to the Privacilla Public License.