How Much is the Public Willing to Pay to be Protected from Identity Theft?

• NCJ Number: 235198
• Journal: Justice Quarterly Volume: 28 Issue: 3 Dated: June 2011 Pages: 437-459
• Author(s): Nicole Leeper Piquero; Mark A. Cohen; Alex R. Piquero
• Date Published: June 2011
• Length: 23 pages
• Publication Format: Article
• Publication Type: Report (Study/Research)
• Language: English
• Country: United States of America

Annotation

This paper examines the research data of identity theft from four States.

Abstract

Identity theft has become one of the most ubiquitous crimes in the USA with estimates of the number of households being victimized annually ranging between 5 percent and 25 percent, resulting in direct losses totaling hundreds of billions of dollars over the past few years. Government efforts to combat identity theft have included legislation criminalizing and increasing penalties as well as regulatory efforts designed to protect individual identifying information held by financial and other business organizations. At the same time, individuals are taking their own preventive actions and purchasing private protection such as credit monitoring and identity theft insurance services. The authors use data from a large sample of residents from four States (Illinois, Louisiana, Pennsylvania, and Washington) in order to assess the public's willingness to pay (WTP) for a Government program designed to reduce identify theft under two separate conditions, one promising a 25 percent reduction in identity theft and the other promising a 75 percent reduction in identity theft. Results indicate that: (1) between 40 percent and 66 percent of the public is willing to pay an additional tax for identity theft prevention, more so when the promise of a reduction is highest (75 percent compared to 25 percent) with an average WTP of $87, and (2) WTP is highest among individuals who carry many credit cards, who subscribe to an identity theft protection service, and who take active steps in preventing fraud by shredding bills and paying with cash, but is lowest among individuals who believe that taxes are too high. Converted into a "per crime" cost and combined with the portion of identity theft costs that are borne directly by business, the authors estimate the average cost per identity theft to range from approximately $2,800 to $5,100. (Published Abstract)