Cost becomes an early concern in applying privacy safeguards to any computerized record-keeping system. To determine privacy cost impact one requires a concrete and rigorous approach that permits repeated analysis of carefully documented assumptions. Such a methodology appears in the work reported in the book The Cost of Privacy by Dr. Robert C. Goldstein. This report represents the application of that methodology to the technical requirements flowing from the Privacy Act of 1974 (PL 93-579).

The methodology presented reduces the legislation to 17 compliance steps. Each compliance step then decomposes into one or more specific actions required of the record-keeper. The actions, in turn, translate into the expenditure of different resources. The resources, in dollars, are computed by a set of algorithms collectively called a privacy model and implemented as a computer program.

The privacy model contains algorithms reflecting resource expenditures for 56 distinct actions. Written as a FORTRAN program, the model produces several printouts that show the user the consequences of the input data. In addition to a total cost for conversion and an annual operating cost, the model provides sub-total costs for each compliance step. The model's potential uses include the comparison of costs associated with alternative safeguards, the selection of an optimal set of cost-effective safeguards, and the analysis of those factors having the greatest impact on costs.