A recent New York Times story sent a shot of privacy concern across the auto industry. But the piece—neutrally reported by ace privacy reporter Kashmir Hill—shows that things are on the right road, once you take a step back from the immediate controversy. The controversy is part of the process—a market process by which we collectively configure goods and services.
The headline is a good summary. Automakers Are Sharing Consumers’ Driving Behavior With Insurance Companies. Some drivers are understandably angry because insurance companies are using the data to adjust the rates they are charged or quoted. “Adjust” here means “raise, by a lot.” You’d be angry, too!
Right and wrong are a little less clear. So is how things should turn out. The ultimate answer will be worked out through reporting like Hill’s and the actions of myriad others. Simply put, all our car-buying choices and how we use our car’s services will shape the future of automotive data collection and use.
Most of the major actors in the process appear or are represented in Hill’s story. They are the reporter herself (and anyone who piqued her interest), the angry consumers, the platforms where consumers gather, the academics, the regulators, and the lawyers. Then there are the insurance companies, data brokers, and car companies that have arranged to use driver data to help set insurance rates. It’s a debate being aired before you, the privacy-interested car consumer, to help you decide how to act.
You might be immediately outraged at the somewhat surreptitious way that information about drivers is making it to data brokers and then insurance companies without the fullest of disclosures. I agree that the failure to achieve a meeting of minds makes the process wrongful. It’s a hit to privacy in both the control and fairness senses. There could be a good class action lawsuit to mollify or make whole the drivers who were truly dispossessed of their information by insufficient notice, denied an opportunity to prevent or adjust to this activity.
If you take a longer view, which I also do, you might be eager to see bad drivers pay more. They should curtail their dangerous driving or be priced out of it. Either way, highway injuries and fatalities will fall. I’d like that a lot, and I think most consumers would, too.
Location data is not relevant to insurance rate-setting, and the story suggests that it is not being shared. It’s probably a line that the car data-insurance nexus should not cross. We know that government seizure of location data crosses constitutional lines. But location data may be useful and beneficial in other contexts, and could reappear in the headlines of a future story.
People vary in their acceptance of the fact that it’s the greedy self-interest of insurers, data brokers, and car companies that bring about greater safety. Two hundred fifty years on, Adam Smith’s point about self-interest is not received wisdom. Many people need progress to come from benevolence.
Even if you are shocked and disgusted by the practices described here, the process initiated by this story is instructive. We’re obligated to learn about how our devices and our data relate to our lives. Cars are computers, and that has large ramifications.
But keep in mind the process at a higher level of abstraction. Through this story and other society-wide trial-and-error events, people will learn and internalize that this goes on. Companies will handle it better, if always imperfectly.
Many in Washington, D.C., want to take charge and write rules. But if those rules were too privacy-protective, they would prove that feeling all-knowing is a fatal conceit. The tradeoff between privacy and safety is one Congress cannot capture all at once and for all time. Consumers should set the rules and express their values through their actions in the imperfect market process of which this story and the wave of privacy concern are parts.
We know how information works in familiar environments. Short pants reveal our legs. People can see us eating when we dine in restaurants. Today’s rising generation and those to come will know better how cars and their digital functions, once settled, affect safety, privacy, and other interests.
Everything is not okay with how driver data is entering the stream of commerce, but the societal learning process is going well, thanks to reporting like Hill’s. The controversy is part of the process. It’s helping us make progress.
Jim Harper is a nonresident senior fellow at the American Enterprise Institute (AEI), where he focuses on privacy issues, and select legal and constitutional law issues.
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