It's hard to believe today, but, once upon a time, nobody cared what you had for breakfast, or where you had it.
Scullery maids, serfs and kings sat down to their hunks of bread and cheese with little concern for the regard of others.
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Today, brekkie is a must-Instagram or tweet event #hotcakes #nutrition.
This nugget of information, previously redundant, has today become a valuable commodity you can trade.
![Illustraton: Simon Letch](/web/20160812061741im_/http://www.smh.com.au/content/dam/images/g/q/q/9/a/f/image.related.articleLeadwide.620x349.gqq05b.png/1470961929842.jpg)
Supermarkets want to know which ingredients you consumed, and where, so they can sell you more. Competitor restaurants want to know where you dined, and when, so they can steal your custom. Crucially, both want to know exactly who you are, so they can predict when other people like you might potentially like to consume their goods and services, and target their advertising accordingly.
Information, after all, is power.
The Bureau of Statistics doesn't want to know what you had for breakfast, but the information gathering exercise of the Census is much the same. Only this time, it's the government that wants to know who you are, where you live and how you get to work so it can better target services and resources.
It's easy to the benefits to companies and governments in getting you to get over your privacy concerns and confess all.
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The benefits to consumers are sometimes harder to see. There are obvious risks, of course, in posting your location and activities online, particularly if they are seen by people who don't like you very much.
But there are benefits too. Your personal information feeds into a better informed market for exchanges. You might pay full price for this breakfast, but perhaps you'll benefit from a future discount targeted at consumers like you. Perhaps more restaurants will open up in your area to target consumers like you.
It's easy to focus on the potential downsides of revealing more of your information online, but the digital era has opened up a world of new possibilities for mutually agreeable exchanges.
And privacy is the currency of this new economy. When you leave a review on Trip Advisor, Amazon, or Airbnb, it leaves you vulnerable to retaliation from that service provider.
But you also contribute valuable information to the market which helps others to consume better. You benefit, in turn, when others do the same.
The digital economy and fast global transportation has opened up previously undreamed of possibilities for consumption. A Persian rug? Delivered to your door. Those shoes in your exact size? Coming right up.
Deeper markets increase possibilities for consumption, while deeper information about participants in that market â particularly bad sellers and bad buyers â helps increase the quality of that consumption. Information helps you avoid doing dud deals.
Employers want to know they are hiring someone who lives up to their talk. Consumers want to know they are buying from a reputable dealer. The possibility for bad reviews encourages both buyers and sellers to act more scrupulously, lifting standards and trust across the market. This only encourages more exchanges of mutual benefit.
There are obvious downsides, of course, to giving up some of your privacy â particularly for those with something to hide, like a criminal record or childhood convictions. There are public interest arguments as to why we might want to protect some individuals by keeping some information out of the market place.
And there is a wider downside to companies knowing too much about your preferences. When companies know a lot about what you have paid for things in the past, or what people like you have paid, they have a better ability to price discriminate against you. Price discrimination is charging different customers a different price for the same good. Sellers want to be able to charge the maximum each customer is willing to pay.
Apple, for instance, cottoned on early that Australians are willing to pay quite a lot for online purchases of music and movies. We're still paying the price for that.
Generally, in bargaining scenarios, it's better if your bargaining partner doesn't know what you would be willing to pay, otherwise known as your "reservation price". You want them to believe it is much lower, so that you can get the same enjoyment for a lower price.
In this new era of big data, companies have a better idea of what consumers' reservation prices are, helping them to maximise profits. Of course, in open market, sellers who charge too much will soon face new competition. Although the ability of some companies to sustain monopolies or duopolies in the online space has confounded many economists' expectations, mostly due to winner-takes-all network effects â everyone wants to be on the biggest network.
But before we go donning that tin foil hat and retreating from the online space, it's important to remember the benefits of freer exchange of information. That school friend you've reconnected with on Facebook. That awesome little place you stayed at in south Melbourne through Airbnb. That Uber driver who charged half the price of a taxi.
Negotiating this new online landscape will require care and diligence from policy makers to protect the vulnerable. It will require strong competition laws to ensure new players don't just start erecting barriers to entry like the old.
But overall, the freer flow of information leads to better decision making and better allocation of resources. We're all richer for it.
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