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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

#131

Post by thegrimmest »

ThrustVectoring wrote: post #109
thegrimmest wrote: post #17

Earlier quoted context omitted.

If these sources of data are actually more accurate predictors of creditworthiness, then shouln't we be applauding their use? If it so happens that tall people are less likely to repay loans, why is it wrong to charge tall people higher interest? Otherwise aren't we just socializing the cost imposed by artificially fuzzy criteria?

No. We don't actually want the most economically efficient system here. There are other extremely important characteristics - fairness, due process, legibility, and incentives come to mind here. Like, presumably you could improve your creditworthiness prediction by cross-referencing against bankruptcy law related searches on Google and in library checkouts. We absolutely should not allow this, though - we care a lot…

The requirement for "fairness" and "due process" indicate that you think credit is something a person is entitled to. Is this true? If so, can I ask why you think so?

Re: IMF researchers: digital footprint yields better credit assessment

#132

Post by j16sdiz »

visarga wrote: post #95

> the type of browser and hardware used to access the internet, the history of online searches and purchases ... once powered by artificial intelligence and machine learning, these alternative data sources are often superior than traditional credit assessment methods, and can advance financial inclusion, by, for example, enabling more credit to informal workers and households and firms in rural areas Here is one of t…

Chinese social scoring system is much more extensive. It includes jaywalking and speaking evil of the government. It affects internet speed and boarding on trains.

Sure the “western countries” are heading that direction, but still have a long way

Re: IMF researchers: digital footprint yields better credit assessment

#133

Post by esotericn »

People ask me why I use cash, why I use bitcoin, why I think Uber and Deliveroo and their ilk are poison - this is why.

Take your data and shove it up your arse. If you work on this stuff, you're a cancer cell. You just haven't realised it yet.

I don't need your "credit". I don't even need you. No-one does.

Re: IMF researchers: digital footprint yields better credit assessment

#134

Post by Nextgrid »

hntrader wrote: post #36
drtillberg wrote: post #28

Earlier quoted context omitted.

This. Slippery slope to denying credit based on a consumer's decision to avoid using Facebook or to search using DuckDuckGo.

DDG is more popular in the tech-literate crowd, most of whom are earning large salaries and therefore we'd expect that DDG usage should be positively (not negatively) correlated with credit worthiness

Tech literacy is negatively correlated with the likelihood of falling for scams or predatory practices. Companies who typically make their money out of screwing their customers over (and relying on the fact that they don't know/don't bother to rectify the situation) might very well preemptively raise prices or outright deny service to people who they think wouldn't fall for their bullshit.

Re: IMF researchers: digital footprint yields better credit assessment

#135

Post by MikeUt »

visarga wrote: post #95

> the type of browser and hardware used to access the internet, the history of online searches and purchases ... once powered by artificial intelligence and machine learning, these alternative data sources are often superior than traditional credit assessment methods, and can advance financial inclusion, by, for example, enabling more credit to informal workers and households and firms in rural areas Here is one of t…

Having to trade away your privacy for access to financial services (where this is headed) is not OK just because the spying is unbiased.

This is a common red herring, like the proliferating surveillance cameras and face recognition - somehow it is always implied the main reason we should worry is the racial bias, while everyone being followed 24/7 by a digital private investigator is a secondary concern.

Re: IMF researchers: digital footprint yields better credit assessment

#136

Post by hntrader »

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…

Making the statistical model for E(claims) worse on purpose by excluding relevant features (e.g. inherent traits) is political. The insurers have no choice since the ethical views of the majority are hoisted upon them through politics. The causal path has its roots in an ethical conversation that has played out in public, but this has mediated itself through politics/legislation.

The crime analogy is inappropriate. Insurance is a private voluntary arrangement between two consenting entities. Convictions on the other hand are an involuntary imposition on an unwilling party.

One could make the argument that allowing inherent traits in the pricing of insurance is the less authoritarian and more utilitarian option, since it is less forceful state interference in private business and leads to more accurate claims pricing and less subsidisation of insurance for person A by person B. Your prison sentencing analogy on the other hand implies more force, which is why I don't view it as a valid analogy.

The ethical argument can go either way depending on the axioms we pick a priori. If we pick Libertarian deontological axioms, then the ethical choice is to allow inherent traits into the model. If we pick racial equity deontological axioms, then we get another conclusion.

Re: IMF researchers: digital footprint yields better credit assessment

#137

Post by Nowado »

swiley wrote: post #130
Cederfjard wrote: post #128

Earlier quoted context omitted.

Unless it means you won’t get credit. Edit: Like how apparently not having any social media accounts can weigh against you, if asked to produce them, when attempting to enter certain countries.

Honestly credit is completely overrated. You can rent apartments for example even if you've never owned a credit card or taken out loans provided you have a job and can prove it. People just want to know you have the ability to pay them and behavior is a really stupid way to judge that.

Create a better one and own the world.

Re: IMF researchers: digital footprint yields better credit assessment

#138

Post by yabones »

This seems ridiculously simple to abuse.

Set up a 'headless' chromium container with your social media cookies, set the user-agent to the very latest $5,000 Mac, and have it google stuff like "most exclusive golf clubs in xxx city" and "best winter tires to optimize insurance rates"

Few days of that and you'll qualify for a mcmansion mortgage in the monoculture part of the suburbs where all the dentists live.

Future is bright!

Re: IMF researchers: digital footprint yields better credit assessment

#139

Post by sokoloff »

lmohseni wrote: post #110
slg wrote: post #26

I'm not a fan of the traditional credit reporting system. It is often a black box that makes it difficult to understand how the actual credit scoring algorithm works. Although one of the important aspects of the current system is that all the inputs are known. We don't know exactly to what degree each input matters, but we know the inputs. A new system needs to keep that aspect or else is going to cause pain for a lo…

Important to consider that credit scores weren’t a thing until 1989

That is the content of a meme circulating recently which is imprecise at the most charitable (and IMO pretty close to entirely wrong)

Engineer Bill Fair and mathematician Earl Isaac (the “F” and “I” in FICO) started their company in 1956 and had a bank credit card scoring system available in 1970.

Equifax was founded in 1899 (not a typo). The original name: “Retail Credit Company”.

https://www.opploans.com/blog/a-brief-history-of-credit-scor...

https://www.myfico.com/consumer-division-of-FICO.aspx

Re: IMF researchers: digital footprint yields better credit assessment

#140

Post by sokoloff »

swiley wrote: post #130
Cederfjard wrote: post #128

Earlier quoted context omitted.

Unless it means you won’t get credit. Edit: Like how apparently not having any social media accounts can weigh against you, if asked to produce them, when attempting to enter certain countries.

Honestly credit is completely overrated. You can rent apartments for example even if you've never owned a credit card or taken out loans provided you have a job and can prove it. People just want to know you have the ability to pay them and behavior is a really stupid way to judge that.

Past behavior is not a guarantee of future behavior, but it’s a pretty good heuristic I think.

If you’re contemplating lending money with no collateral to 2 people, one with a 10 year track record of other borrowing and consistently paying back loans as agreed and no information about their employment and a second person where all you know is they have a job, which one would you rather lend to?

The lender wants to know that you will pay them not that you could afford to pay them.

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