Framing a Figure

“Why join the navy if you can be a pirate?” said Steve Jobs.

The belief that technology has bestowed upon us many a great method of easing certain tasks is almost indubitably true. As computers grew smaller and faster, enhanced data storage capabilities heralded the dawn of a new age; one in which each and every part of an individual’s identity could be stored digitally. Today, it is commonplace: social security numbers, PAN card numbers, as well as bank account details are all to be found online, making their documentation and access significantly simpler.

Similarly, illicit means of gaining access to these details has also become significantly easier — probably more than ever. Thus, the idea of identity theft was conceived. Identity theft is essentially gaining illegal access to another individual’s sensitive information and then using those details to extract money. More intangible consequences such as spreading misinformation and damaging one’s reputation are also possibilities. It is, of course, a troubling thought. Not only are we all vulnerable, we are all also targets. But, all this is on the individual scale, so what is the bigger picture in this tapestry? What are the consequences, more specifically, economic consequences of identity theft?

According to the Naples Herald, identity theft incurred personal losses that had a global economic impact of over $36 billion. The UK alone suffers a loss of £1.7 million. Thus, it is clear that, statistically, whatever impact that identity theft does have on economies worldwide is large. Large enough, at least, for it to deserve a fair amount of attention.

According to United States statistics, the average victim of identity theft spends around 38 hours trying to resolve issues brought up by theft of personal details and approximately $1,500 to close issues of new account fraud and identity theft abuse in every instance. This is, moreover, not counting the losses that victim incur because of emptied bank accounts or fraudulent online purchases. In addition, it has been observed that 90% of reported cases are targeted at regular employees in businesses. 50% of small businesses in the United States have also fallen victim to the same.

Moving on, if we put these figures into economic perspective, what this loss of money and name does is that it drastically reduces the amount that can be used for expenses for a number of individuals (depending on how many people are affected by identity theft). Now, since these individuals by and large belong to the working class and the money being stolen is by and large transferred into criminal hands, there are two possible outcomes: the cost of labor that these individuals provide will either shoot up to make up for these losses, or the human capital these individuals carry is wasted i.e. their skillset, education etc.

Since poverty is, of course, a cycle, it makes it extremely difficult for any victim with an unresolved identity theft case to make up for his or her loss, which means that the quality of lifestyle will lessen and so will further investment into that human capital; thus the spike in costs of labor. Furthermore, when the cost of factors of production such as labor rise, the price of a product rises, in turn.

Therefore, identity theft indirectly causes an indirect shift in the prices of products overall, though there is the argument that since money is being transferred from one hand to another — albeit illicitly — the economy is relatively unaffected since demand on the part of the victim will decrease while that of the perpetrator will increase. However, while demand remains unaffected thus, it is imperative to consider the aspect of human capital, which receives less and less investment by the individual with every penny lost due to identity fraud.

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