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IMF researchers: digital footprint yields better credit assessment

blogs.imf.org

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Re: IMF researchers: digital footprint yields better credit assessment

#71

Post by aneemzic »

thegrimmest wrote: post #49
aneemzic wrote: post #40

Earlier quoted context omitted.

No. Credit worthiness should be because of an individuals past actions and not some attribute they may have been born with. Why should a tall individual who's never missed a payment have some invisible penalization applied because some other tall people are worse at re-paying loans. Don't you see the issue here? You're penalizing individuals not based on their own measurable behavioral signals, but simply due to some…

The point is that these algorythms do study your behaviour and correlate it with the behaviour of others. These predictions don't have to be 100% accurate to be useful. What's wrong with 70% of tall people benefiting from being associated with the other 30%? This only lasts until someone figures out how they are different and breaks the association right?

> This only lasts until someone figures out how they are different and breaks the association right?

Would you be OK if banks started charging you 4% more interest because say you have irish heritage? Your behaviour hasn't changed and nobody can explain why it matters that your father was irish, but the models determined it's statistically significant,

What if at some point 30 years down the line it's determined it wasn't even related to irish heritage. There was just coincidentally long running extreme predatory lending by banks in cities with large irish populations.

Would you still feel there's nothing wrong with it?

Re: IMF researchers: digital footprint yields better credit assessment

#72

Post by TheCoelacanth »

insert_coin wrote: post #27
thereisnospork wrote: post #21

Earlier quoted context omitted.

I agree with the premise, but the problem is that it gets ethically, uh 'interesting', if you replace 'tall' with say, 'black', in your argument.

I think it gets to the point. If blacks are for some reason (and I am not saying they are I do not know) less likely to pay back loans, then that is the problem that needs addressing. It might be a little painful to admit the huge racial divide but it is real and that is a problem we need to solve, taking the easy way out lying to ourselves only harms society in the long run and destroys the lives of people who canno…

What if these predictions and others like them are self-fulfilling prophesies?

Maybe someone is objectively less likely to pay back their loans, less likely to succeed in school and more likely to be arrested for a crime, but when those predictions end up forcing them to live in a worse neighborhood because they can't qualify for a loan in the better one, go to a worse school because they aren't expected to succeed in the better one and live with a higher police presence because they're more likely to be arrested, maybe those predictions aren't just predicting worse outcomes but are actually reinforcing them.

Re: IMF researchers: digital footprint yields better credit assessment

#73

Post by dredmorbius »

dredmorbius wrote: post #59

I'm trying and failing to come up with a concise expression of just how utterly evil and wrong this proposal is, and what the assumptions and presumptions it makes I think the first question needs to be "mu". Unask the question of how, or even whether , individuals' entire personal and informational histories should be deposited in the perpetual datastores of banks, credit lenders, collections agents, slumlords, and…

It looks as if The Register covered this back in December. Someone's awake. (In this case, Simon Sharwood, kudos.)

"Search history can calculate better credit ratings than pay slips, says International Monetary Fund"

https://www.theregister.com/2020/12/18/web_search_history_cr...

Re: IMF researchers: digital footprint yields better credit assessment

#74

Post by Crye »

thegrimmest wrote: post #44
pmichaud wrote: post #25

Earlier quoted context omitted.

When I have this conversation with myself, here's what I come up with: Shouldn't we be allowed to everything into account when determining credit worthiness? Even if it's socially uncomfortable? We get locally more accurate pricing / risk assessment that way, but we also create feedback loops that we as a society have decided we want to not contribute to. The cost for this is the pricing inaccuracy which we collectiv…

Well, I personally haven't consented to socializing the cost of anything. I'm not sure what the ethical grounds are for imposing this on me, and in so doing dilluting available accuracy of data about people. These feedback loops you're referring to, what order are you proposing for your chicken and your egg? What's causing what in your view?

You are consenting by participating in that society.

Re: IMF researchers: digital footprint yields better credit assessment

#75

Post by WanderPanda »

dTal wrote: post #53
pmichaud wrote: post #25

Earlier quoted context omitted.

When I have this conversation with myself, here's what I come up with: Shouldn't we be allowed to everything into account when determining credit worthiness? Even if it's socially uncomfortable? We get locally more accurate pricing / risk assessment that way, but we also create feedback loops that we as a society have decided we want to not contribute to. The cost for this is the pricing inaccuracy which we collectiv…

I think the key is "feedback loops". We're not failing to price in inherent differences, out of some moral ideal - we're trying to fix a larger inefficiency, which is that some groups of people are unable to reach their full potential. It's not a cost - it's an investment . It's regulation to fix a negative externality. [digression into risky territory, here be dragons] ...at least, that's the idea if you believe tha…

Doesn't need to be inherent to "races". Why wouldn't culture / way of living be the elephant in the room?

Re: IMF researchers: digital footprint yields better credit assessment

#76

Post by numpad0 »

aneemzic wrote: post #63
hntrader wrote: post #46

Earlier quoted context omitted.

We must disambiguate between political objectives and the practice of credit risk modelling. Credit risk, f(X), is an unknown population function that needs to be estimated using observed data X. If including tallness into X improves our estimate of f(X), then we've gotten a better model. You've asserted that X should only contain an individual's past actions instead of their inherent traits such as tallness. This ma…

I don't agree that this has anything to do with political objectives. It's a question of ethics. My domain knowledge is irrelevant, the ML Modelling aspect is irrelevant. The discussion was specifically around whether it's ok to include inherent traits when determining the credit worthiness of an individual. If you think it is, that's fine. We might as well just taking the same approach to crime, and start locking in…

> It's a question of ethics.

Which is an important thing that isn’t math.

Re: IMF researchers: digital footprint yields better credit assessment

#77

Post by condomhacker »

Credit companies should have no access to my digital presence. I expect no company to have access to my digital footprint whatsoever. Law enforcement for public safety? Sure. Financial services? Definitely no.

Will it yield better credit assessments? sure. But it doesn’t benefit the general population. It is a one way proposal which only benefits the financial corporations.

It is just like saying keeping slaves increases the productivity of an enterprise.

Re: IMF researchers: digital footprint yields better credit assessment

#78

Post by WanderPanda »

slg wrote: post #33
pmichaud wrote: post #25

Earlier quoted context omitted.

When I have this conversation with myself, here's what I come up with: Shouldn't we be allowed to everything into account when determining credit worthiness? Even if it's socially uncomfortable? We get locally more accurate pricing / risk assessment that way, but we also create feedback loops that we as a society have decided we want to not contribute to. The cost for this is the pricing inaccuracy which we collectiv…

That is a good summary. An analogy I might add that could further clarify things would be preexisting condition protections for health insurance. Preventing insurance companies from turning down people who they know will require expensive medical care is going to lead to worse pricing for the rest of us. However much of society has decided that is a cost worth enduring in the name of fairness.

Problem with this is, this cuts open the feedback loop of being responsible for ones own health. Credit assignment problem all the way

Re: IMF researchers: digital footprint yields better credit assessment

#79

Post by WanderPanda »

thegrimmest wrote: post #44
pmichaud wrote: post #25

Earlier quoted context omitted.

When I have this conversation with myself, here's what I come up with: Shouldn't we be allowed to everything into account when determining credit worthiness? Even if it's socially uncomfortable? We get locally more accurate pricing / risk assessment that way, but we also create feedback loops that we as a society have decided we want to not contribute to. The cost for this is the pricing inaccuracy which we collectiv…

Well, I personally haven't consented to socializing the cost of anything. I'm not sure what the ethical grounds are for imposing this on me, and in so doing dilluting available accuracy of data about people. These feedback loops you're referring to, what order are you proposing for your chicken and your egg? What's causing what in your view?

It's called tyranny of the majority and happens in countries with a weak constitution.

Re: IMF researchers: digital footprint yields better credit assessment

#80

Post by numpad0 »

warkdarrior wrote: post #43
insert_coin wrote: post #27

Earlier quoted context omitted.

I think it gets to the point. If blacks are for some reason (and I am not saying they are I do not know) less likely to pay back loans, then that is the problem that needs addressing. It might be a little painful to admit the huge racial divide but it is real and that is a problem we need to solve, taking the easy way out lying to ourselves only harms society in the long run and destroys the lives of people who canno…

Of course we should address those problems as we identify them. But solutions may take years, even decades, to take root. What should lenders do in the mean time?

Lobby politicians to outlaw discriminatory risk assessment just to maintain balance of power in the market?
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