This article has been reviewed according to Science X's editorial process and policies. Editors have highlighted the following attributes while ensuring the content's credibility: A new Management Science study provides rare real-world evidence that people are willing to give up thousands of dollars to prevent sensitive information about their health and income from becoming public. The research, developed over five years by an international team, has now also laid the foundation for a European research project led by Ehud Guttel of the Hebrew University of Jerusalem.
The study was conducted by Hebrew University researchers Guttel, Ilan Kremer (also affiliated with the University of Warwick), Guy Lakan and Sarit Weisburd (also affiliated with CEPR), together with Liran Einav of Stanford University and NBER. The researchers examined a legal reform introduced in Israel that granted anonymity to plaintiffs in personal injury lawsuits. Before the reform, individuals who rejected an insurance settlement and pursued their claims in court faced the possibility that judgments would publicly disclose private details about their injuries, medical condition and earnings.
Using data from Israel's five largest insurance companies covering claims between 2011 and 2020, the researchers found that payments for personal injury claims increased by 12% to 17% after the privacy protections were introduced. As almost all of the claims were resolved through settlements, the findings suggest that insurers began offering higher amounts once claimants no longer faced the threat of public exposure. Before anonymity was guaranteed, claimants appear to have accepted lower settlements to keep sensitive medical and financial information out of searchable court records.
The researchers interpret the difference as an implicit "privacy cost" that individuals had previously been willing to bear. "Our findings show that privacy is not merely an abstract value," said Guttel. "When people believe that information about their health or financial circumstances could become publicly accessible, it can directly affect the decisions they make and the compensation they are willing to accept.
The study shows that privacy protections can meaningfully change the balance of power in legal negotiations." The effect was particularly pronounced among working-age adults, for whom the disclosure of injuries or income could affect future professional opportunities. Larger increases were also found in longer and more complex cases and in claims handled by highly ranked law firms, suggesting that privacy may carry greater value when the information involved is especially sensitive or the personal consequences are more severe. The study challenges the idea of a "privacy paradox," under which people express concern about privacy but appear unwilling to make financial sacrifices to protect it.
By examining actual decisions in a high-stakes legal setting, rather than relying on surveys or laboratory experiments, the research demonstrates that privacy can have substantial and measurable economic value. The work also became the starting point for a broader research agenda led by Guttel. Building on the questions raised by the study, he developed Incognito Justice, a research project examining the wider effects of anonymous court judgments on legal systems.
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