Whenever a cookie banner appears on a website asking for consent to store your data, do you take the time to decide whether your information could be used in analytics or marketing? Or do you click “Accept” and move on with your day?
These moments of time add up, says research by Harvard Business School Associate Professor Chiara Farronato. Based on her analysis, a US worker earning an average wage would lose roughly $4 weekly in wasted time while debating whether to share data.
The working paper, published through the National Bureau of Economic Research, examines the impact of cookie banners on consumers’ welfare by assigning a dollar amount on the time we spend making privacy choices. As governments wrestle with privacy regulations and executives increasingly recognize the value of consumer data, Farronato’s study identifies which consent designs serve consumers best by balancing transparency with efficiency.
So how can companies design consent banners that respect user choice while minimizing the time and effort required to make privacy decisions? How can policymakers regulate online privacy to respect consumer preferences?
The influence of banner designs
Closing the consent box without choosing was the second most common decision behind accepting all cookies. However, over half of users believed they had rejected all trackers when, in fact, closing the banner in the US is often equivalent to consenting to share their data. The authors point out that this finding highlights the key role of default options.
Farronato, the Glenn and Mary Jane Creamer Associate Professor of Business Administration at HBS, coauthored the working paper “Designing Consent: Choice Architecture and Consumer Welfare in Data Sharing” with Tesary Lin and Andrey Fradkin, both faculty at Boston University’s Questrom School of Business.
What’s the optimal policy?
Regulations, like the European Union’s General Data Protection Regulation (GDPR), require websites to ask for consent for non-essential cookies. If the user closes a banner before selecting, typically all non-essential cookies will be rejected. In the US, most websites default to accepting all cookies when closing banners.
Researchers also analyzed policies regulating website consent banners and privacy settings at the browser level. They found that global privacy control systems via browser settings benefited all users most. Those who consent to all cookies through their browser see more gains, valued in dollars, than those who reject them.
In deciding to accept cookies, consumers in the study said they trust the site, value convenience and time (“It was just easier to do so”), or want better site functionality.
Regulating banners to avoid nudging consumers to share more than they would prefer can make a difference. Still, the research shows that the most significant change comes from outside the consent box: When people accept or reject cookies at the browser level instead of site by site, they are better off. A few seconds, or dollars a week, can add up to hundreds of dollars a year, multiplied by millions of internet users.
“Designs that deliberately obstruct choices reduce welfare and undermine meaningful choice. However, our analysis also indicates that design regulations alone are insufficient,” they wrote. “Browser-level consent mechanisms—already implemented by Mozilla and supported by the California Privacy Rights Act—could deliver much larger welfare gains while preserving user choice.”
