New study reveals the high financial value of privacy in legal proceedings

A new study reveals that people are willing to sacrifice thousands of dollars to protect their privacy. By analyzing a legal reform that allowed personal injury plaintiffs to remain anonymous in court, the researchers found that insurance settlements increased by 12–17% once the risk of public exposure of sensitive health and financial information was removed. The findings provide rare real-world evidence that privacy has substantial economic value.

 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 5 years by an international team, has now also laid the foundation for a major European research project led by Prof. Ehud Guttel of the Hebrew University of Jerusalem.

The study was conducted by Hebrew University researchers Prof. Ehud Guttel, Prof. Ilan Kremer (also affiliated with the University of Warwick), Guy Lakan, and Prof. Sarit Weisburd (also affiliated with CEPR), together with Prof. 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 Prof. 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 Prof. 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.

The project has received €3.5 million in funding under the European Union’s Horizon Europe program and will bring together nine academic and civil society partners from across Europe, including the University of Bonn (Germany), École Polytechnique (France) and Oxford University (UK). Coordinated by the Hebrew University under Prof. Guttel’s leadership, it will investigate how anonymization affects judicial writing, citation practices, media coverage, public trust and the legitimacy of court decisions.

While the original study focused on how anonymity changes financial negotiations in personal injury claims, Incognito Justice will examine the wider transformation taking place as courts seek to balance the traditional principle of open justice with growing concerns about privacy in an era of easily searchable online judgments.