## He is acting like a Starfleet officer (or human being)  ##
> FAJO: Well, it doesn't matter. It isn't true anyway. My father was
> quite wealthy, actually. He was a thief. Data, why don't you put on
> these lovely new clothes and sit on the chair. 
> 
> DATA: I must decline. 
> 
> FAJO: You are going to be much more of a challenge than I had first
> thought. (goes to replicator) Finoplak, one hundred denkirs. (A vial
> of liquid appears) Now, Data, in the meantime, here is something for
> your logic circuits to analyse.  (Fajo thrown the liquid onto Data's
> uniform, which begins to smoke and dissolve) 
> 
> FAJO: Oh, don't worry. The solvent won't harm your, your skin. But in
> seconds it will completely dissolve that uniform. **Personally, I'd be
> delighted to see you go around naked. I assume you have no modesty.
> But, then, I guess that decency is the rule of your Starfleet
> training.** In any case, Data, why don't you make a decision about which
> alternative you dislike the least. Make a decision by dinnertime
> tonight. I have invited a guest to meet you, and I expect you to be as
> entertaining with him as you have been with me.

Of course, this is merely Fajo's (perhaps rather biased) assessment of Data's personality. But it agrees with yours. Data  has no *modesty*, in the sense that he is not embarassed to be naked. But he does have *decency*, in the sense that he prefers to conform to the social norms surrounding nudity. 

As a Starfleet officer, presumably he is supposed to remain dressed at all times. As a human being in polite company, he is supposed remain dressed. Either way, whatever his personal preferences, he will accommodate human norms and remain dressed.

## He really does feel "embarassed" to be naked ##

Something else to consider: **the entire episode is about Fajo treating Data like an object, not a conscious being.** Perhaps we are supposed to see Fajo as wrong here, and Data as being sufficiently "human," or at least sufficiently similar to the humans he hangs out with, to prefer, of his own accord, being dressed to being naked. 

Indeed, the episode "Inheritance" (S07E10) suggests that this may be the case. 

> JULIANA: That was nothing to the problems we encountered. Never mind.
> I don't want to embarrass you. 
> 
> DATA: I am incapable of embarrassment. Please continue. 
> 
> JULIANA: Well, the one thing we couldn't anticipate was that you
> didn't seem to mind about being naked. Some of the colonists objected
> to having an anatomically correct android running around without any
> clothes on. We asked you to dress, but you didn't feel it was
> necessary because you didn't suffer from the elements. **We actually had
> to write a modesty sub-routine to get you to keep your clothes on.**