Tag: privacy

How the CPI values our privacy– or doesn’t

wallet contents
image credit: ItalianPsycho via flickr (cc)

Measuring inflation isn’t an easy matter; I don’t think many of us can even agree on exactly what inflation is. But it’s somehow related to prices consumers pay, and the biggest operation measuring that, at least in the U S, is the Bureau of Labor Statistics’ Consumer Price Index. There are lots of issues with how they measure, and how they report, but one which I haven’t seen discussed regards “loyalty” cards and the value of privacy.

Many retailers in recent years have set up “clubs” of one sort of another to better track their customers. One of the noteworthy exceptions until last year was Walgreens, and there remain a few other respectable merchants, but nowdays one who chooses not to participate ends up giving up a fair amount of money (or convenience).  So does the Consumer Price Index recognize that privacy has a price?

The answer, at least conceptually, turns out to be straightforward.  It’s right here in Chapter 17 of the Handbook of Methods. As described on pages 31-32 of this pdf, if a discount is offered only to card users, is temporary (lasts no longer than a month or two), and at least 50% of the sales are at the discounted price, then the CPI recognizes the discounted price. (If the discount is for a longer period, then pro-rata weighting is used.)  In essence, if most people give up privacy for a discount, then the CPI doesn’t recognize this as a cost.

At least in the stores I visit, it seems that most folks are quite willing (or economically constrained) to take the discount; anyone who wants to make a purchase under the policies that were in place twenty years ago needs to pay a higher price, which is not recognized in the Consumer Price Index.

Just because they ask, doesn’t mean we have to give it to them

Governments here in Illinois (and probably everywhere else) like to “request” things, but that doesn’t mean we mundanes always need to grant these requests.  Two examples from recent experience:

detail from work of Chris Karr via flickr (cc)
detail from a photo by Chris Karr via flickr (cc)

Saving money: Illinois Secretary of State Certificate of Good Standing.  Our high-tech sophisticated Secretary of State makes it easy, relatively, to get the “certificate of good standing” that organizations may require, for example, to set up some kinds of financial accounts.  No problem, just go to Jesse White’s web site, do a search (which really works, in my experience), fill out the simple form and authorize a credit card charge of $16 ($5 transaction fee, $1 payment processor fee, and $10 expedited fee).  But suppose you aren’t in a great hurry and don’t need (or want to pay for) expediting.  Or suppose you lack a credit card but have a checking account (or can buy a money order). What to do?

Nowhere could I find the answer on Jesse’s web site.  Fortunately, cheapness wonk Adam Kerman of the Transit Riders’ Authority knew what to do:

Write a letter to request the Certificate of Good Standing. Make sure to include the corporate file number and your contact phone number. $5 fee Secretary of State Business Services 501 S. Second St., Rm. 330 Springfield, IL 62756

And that’s just what I did.  A week or so later, the certificate arrived.

Current RTA Executive Director

Saving Dignity: Regional Transportation Authority old person discount fare card. A good and privacy-minded friend of mine, having recently attained the age of 65, wanted to take advantage of the “reduced fares” available to old people (among others) on RTA-funded transit systems. First thing she found out was that it takes 3-4 weeks to get the required farecard, so she should have applied 21 days prior to her birthday.  Too late for that, but she readily found the necessary form, which turns out to serve two functions: (a) apply for reduced fares based on age or other criteria; (b) apply for free fares based on likelihood of voting Democratic documented low income.  Being successful enough not to qualify for (b), she still had to complete a form with a blank for “Social Security Number.”  What do to?

She wrote “NOT REQUIRED” in the SSN blank, and 23 days later received a reduced fare card in the mail.  Moral of this story: You can surrender somewhat less privacy than the authorities ask for, without giving up rights or privileges, at least in this case.