Smart Guide to 2012: Billion-dollar price of privacy

Read more: "Smart Guide 2012: 10 ideas you'll want to understand"

If the rumours are to be believed, our personal data is worth around $100 billion. Facebook is expected to launch on the stock market in 2012 with an initial public offering that would value the social network at that price - and it is all thanks to you.

At that valuation each of Facebook's 800 million or so users is worth around $125. But why should it only be Facebook that can sell your personal details and "likes" to advertisers? Can't you broker a cut of their profits for yourself?

Unfortunately not. Your data is only worth something when it is part of a larger group. Knowing that you personally prefer ketchup to mustard is worthless to a firm, but the same information gathered from millions of people is highly valuable to McDonalds, for example.

Of course, if you decide to sell your private data off your own bat you need to know its value. One way to find out is differential privacy, a mathematical framework that equates the value of information to the harm caused by disclosing it. So the harm could be an increased chance of receiving marketing calls, being denied health insurance or just your friends thinking less of you.

But differential privacy only works when you know how your data will be handled, something social networks aren't transparent about. And so long as Facebook users are happy to give away their data for free, we will never be able to turn the true worth of our personal details into cold, hard cash.

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