Study finds most people willing to pay to reduce identity theft

How much would the public be willing to pay for a government-sponsored identity theft prevention program?

The answer: about $87 per year. That’s the finding from a four-state survey conducted by Florida State University criminologists, who report that two-thirds of their respondents expressed a willingness to pay for a hypothetical program promising to reduce identity theft by 75 percent. Even when offered an option that promised only a 25 percent reduction in the crime, 40 percent of the respondents were willing to pay.

When it comes to public policy considerations the survey results are noteworthy, according to the researchers, because the nearly 2,300 respondents comprised a representative sample of residents in four politically and demographically different states: Illinois, Pennsylvania, Louisiana and Washington.

“Our survey of households reveals that most individuals will agree to a small tax increase to support government-sponsored identity theft prevention efforts,” said the study’s leader, Nicole Leeper Piquero, an associate professor in the Florida State University College of Criminology and Criminal Justice.

A modest fee may look like a bargain to most taxpayers in light of the average per-individual victimization tab for identity theft, estimated at between $2,800 and $5,100. The Federal Trade Commission reported approximately 8.3 million identity theft incidents in 2006. Aggregate annual losses range from $22.9 billion to more than $42 billion. Direct losses over the past decade total hundreds of billions of dollars.

“Identity theft, also known as ‘identity fraud,’ has affected between 5 and 25 percent of U.S. households,” Piquero said. “Because of our increasing reliance on technology, and given the resourcefulness of hard-to-catch identity thieves, it seems likely that most if not all of us will at some point be victims of this crime or know others that have been.”

The survey, conducted by Piquero and her spouse, Florida State criminologist Alex R. Piquero, was based on two hypothetical models of government-sponsored, identity theft prevention programs. The more ambitious model proposed to reduce the occurrence of identity theft from a level of 40 out of 1,000 adults (based on 2004 U.S. statistics) to 10 out of 1,000 per year — a reduction of 75 percent. The less ambitious model would reduce the annual identity theft level by 25 percent — from 40 to 30 out of 1,000 adults. The “40-10” model was presented to half the respondents; the rest were asked to consider the “40-30” proposal.

After considering the particular model offered to them, respondents were asked if they would be willing to pay $100 per year if every household also was charged that amount to help reduce identity theft. Those who answered “yes” were asked if they’d be willing to pay $200 for the same program. Those who said “no” to $100 were asked if they’d pay $50. Respondents were also asked several follow-up questions related to taxes, Internet use, previous identity fraud victimization, and any precautionary measures they’d already adopted.

The Piqueros and their co-author, Mark A. Cohen of Vanderbilt University, describe the survey results in a paper (“How Much is the Public Willing to Pay to be Protected from Identity Theft?“) now published in the Justice Quarterly, an official journal of the Academy of Criminal Justice Sciences.

“Most people don’t realize the annual cost of identity theft approximates or exceeds that of many other more ‘traditional’ crimes such as robbery or motor vehicle theft,” Alex Piquero said.

“Given the cost estimates associated with identity theft, a benefit-cost analysis might be useful to policymakers faced with making tough choices among an array of programs in a period of limited resources,” he said.

The Journal of Criminal Justice Education ranks Nicole Piquero among the most distinguished female criminologists in the nation and Alex Piquero tops overall for scholarly contributions to the field. With numerous other Florida State criminologists also listed among the top 25 scholars in their discipline, the journal has ranked Florida State University’s College of Criminology and Criminal Justice No. 1 nationally for scholarly productivity among all Ph.D.-granting criminology programs.

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