How Stronger Privacy Laws Convinced Consumers to Share More Data

2026-05-19 · Source: HBR CMS · Field: Business & Management — Marketing, Branding & Advertising, Corporate Strategy & Leadership, Legal & Regulatory · Depth: Intermediate, medium

Summary

Research by Harvard Business School's Ayelet Israeli and Eva Ascarza, coauthored with Ozge Demirci, reveals that stronger privacy regulations can increase consumer data sharing. Their August working paper, "In Privacy We Trust: The Effect of Privacy Regulations on Data Sharing Behavior," analyzed 16,000 U.S. customers using a customer engagement app. After 2023 privacy laws took effect in California and Virginia, app users in those states submitted 9% more purchase receipts, 1.5 additional receipts per month, logged 5% more unique store visits, and reported 4% more distinct retail categories. This counterintuitive finding suggests that increased transparency requirements and permission requests build consumer trust, making individuals more willing to share personal information. The pattern was further supported by U.S. Bureau of Labor Statistics' Consumer Expenditure Surveys and Google search data.

Key takeaway

For marketing professionals developing customer data strategies, you should rethink your approach to privacy regulations. Instead of viewing them as obstacles, recognize that transparency requirements and opt-out controls can build consumer trust. This increased trust can lead to greater data sharing, particularly from previously hesitant customers, and potentially reduce your reliance on costly financial incentives. Embrace well-communicated privacy measures to gain a competitive advantage and richer customer insights.

Key insights

Stronger privacy regulations build consumer trust, surprisingly leading to increased data sharing.

Principles

• Consumer trust directly correlates with data sharing.
• Privacy protections can be as effective as financial incentives.
• Transparency and control reduce perceived data sharing risks.

Method

Researchers compared data sharing behavior of 16,000 app users in California and Virginia against other states before and after 2023 privacy law implementation.

In practice

• Engage consumers initially reluctant to share data.
• Potentially decrease reliance on monetary incentives.
• Reconsider lobbying against privacy regulations.

Topics

• Digital Privacy
• Consumer Behavior
• Data Sharing
• Marketing Strategy
• Customer Trust
• Privacy Regulations

Best for: CTO, VP of Engineering/Data, Director of AI/ML, Marketing Professional, Consultant, Legal Professional

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Editorial summary, takeaway, and curation by AIssential. Original article published by HBR CMS.