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Mathematician Says Big Data Is Causing a ‘Silent Financial Crisis’

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Re: Mathematician Says Big Data Is Causing a ‘Silent Financial Crisis’

#61

Post by bko »

tsylba wrote: post #56
bko wrote: post #40

> [algorithms] decide who gets access to credit and who pays higher insurance premiums, as well as who will receive online advertising for luxury handbags versus who’ll be targeted by predatory ads for for-profit universities. As opposed to what? Subjective decisions made by humans based on biases and personal preferences with no semblance of reason or fairness? > for example, who lives in an area targeted by crime f…

> So having more cops in a high-crime neighborhood is somehow a bad thing, because the presence of more police actually confirms the fact that there is more of a need of police in this neighborhood? That's the essence of the Security vs Liberty argument. Yes, on one hand it is a good thing to have more security in an area which needs it; but will you accept say, being filmed 24/7 for more security, with the tradeoff…

Well this is specifically for high-crime neighborhoods. I would accept less privacy and more policing in high-crime neighborhoods because that reduces the incentives of crime as the perpetrator would be more likely to be caught. When you're talking about marginal benefit (crime rate from 2/100,000 -> 1/100,000), I would be less willing to give up liberties. There is some tipping point, and we can argue where that is, but I still believe in the value of old-fashioned policing to get us to an acceptable risk

Re: Mathematician Says Big Data Is Causing a ‘Silent Financial Crisis’

#62

Post by burgreblast »

hood_syntax wrote: post #48
bko wrote: post #40

> [algorithms] decide who gets access to credit and who pays higher insurance premiums, as well as who will receive online advertising for luxury handbags versus who’ll be targeted by predatory ads for for-profit universities. As opposed to what? Subjective decisions made by humans based on biases and personal preferences with no semblance of reason or fairness? > for example, who lives in an area targeted by crime f…

> So having more cops in a high-crime neighborhood is somehow a bad thing, because the presence of more police actually confirms the fact that there is more of a need of police in this neighborhood? Did you understand what you quoted? The author is saying that citations for petty offences (which practically everyone commits with some non-zero frequency, intentionally or not) have a higher chance of affecting future p…

> petty offences (which practically everyone commits with > some non-zero frequency,

This isn't Josef K in Kafka's Der Process. Most people don't have any trouble avoiding arrestable behavior.

Lawlessness is not a virtue.

>ignorance of suffering Ads for bad for-pay universitites are good to remind us of... suffering? And sorry, but even "awareness of suffering" isn't virtuous either.

It's what you DO about what you know.

Re: Mathematician Says Big Data Is Causing a ‘Silent Financial Crisis’

#64

Post by ramblenode »

yummyfajitas wrote: post #46
SamBam wrote: post #39

Earlier quoted context omitted.

> The fact is that machine learning takes biased inputs and produces unbiased outputs That is not necessarily true, because it assumes that the biased inputs have no influence on the outputs. Suppose the training data is a bank that has historically given higher-interest loans to minorities. Those loans will default more often, and so the algorithm could "correctly" conclude that minorities default more often. Cause…

Suppose the training data is a bank that has historically given higher-interest loans to minorities. Those loans will default more often, and so the algorithm could "correctly" conclude that minorities default more often. But if the relationship is actually `defaultProb = a x interest_rate + b`, then the algorithm will reflect that. I discuss this case explicitly in the blog post I linked to in the section "What if b…

> Insufficient training data causes variance, not bias

Key point.

If one were to compare the two high-interest groups, a small sample for one group would be reflected in a large confidence interval around its mean, a greater overlap in the CIs of both group means, and less confidence that a real difference exists.

Re: Mathematician Says Big Data Is Causing a ‘Silent Financial Crisis’

#65

Post by tsylba »

Noseshine wrote: post #13
ThePhysicist wrote: post #12

There is a lot of interesting research on the societal impact and the (potential) problems caused by the use of large-scale data analysis and artificial intelligence, e.g. by Kate Crawford at MSFT Research. Last year I gave a talk on this at 32C3 where I tried to elucidate some of the problems that can pop up when using data analysis to automate things that were previously done by humans: https://www.youtube.com/watc…

> What we really need therefore (IMHO) is to teach ethics to people The issue with almost all organized teaching (as opposed to when you don't even know you are doing it, e.g. to your children, every day) is that it only targets conscious thinking. Do you already see the problem with teaching "ethics" (and empathy)? It's the wrong brain area. People will ace the tests but how they actually act won't change. Another b…

Furthermore, ethics is way too cultural and subjective to be taught. Even if we could all agree on macro-rules, eg. hurting peoples is bad whatever hurt they infliged, the more specifics (and micro) we become, the more divergences will arise. And as everythng, our perception of what is "ethics" will evolve.

Re: Mathematician Says Big Data Is Causing a ‘Silent Financial Crisis’

#66

Post by carlmcqueen »

Jerr Thorpe actually has a tool called floodwatch[1] that keeps an eye on your targeted ads and shares at the meta level to try and hold advertisers to the rules. Sadly for it to work you have to browse the internet with no ad-blockers.

[1] https://floodwatch.o-c-r.org/

Re: Mathematician Says Big Data Is Causing a ‘Silent Financial Crisis’

#67

Post by ves »

lmm wrote: post #58
yummyfajitas wrote: post #51

Earlier quoted context omitted.

In most fields of human endeavor you do have an objective function better than "do what humans do". Mortgages are very specifically an area where you do. First of all, there is historical data. Second of all, you can backtest well before 25 years. A couple of weeks ago I wrote a blog post explaining specifically how to make measurements in the presence of delayed reactions - I'm discussing a situation involving senso…

There's no historical data on the default rates of people who didn't get mortgages, because they didn't get mortgages. I'm willing to believe that theoretical solutions exist. I know from direct personal experience in the big data/lending industry that they are not always applied. If you are claiming that real-world lenders never train their models on human decisions then you are simply wrong. Nice zinger - I hope yo…

To my knowledge, more sophisticated lenders will let through loans that have poor model scores to fill in that data for training future models.

Re: Mathematician Says Big Data Is Causing a ‘Silent Financial Crisis’

#68

Post by burgreblast »

guelo wrote: post #45
bko wrote: post #40

> [algorithms] decide who gets access to credit and who pays higher insurance premiums, as well as who will receive online advertising for luxury handbags versus who’ll be targeted by predatory ads for for-profit universities. As opposed to what? Subjective decisions made by humans based on biases and personal preferences with no semblance of reason or fairness? > for example, who lives in an area targeted by crime f…

> the presence of more police actually confirms the fact that there is more of a need of police in this neighborhood? If we were to enforce all laws we would need massively more police in every neighborhood. When police are sent to flood a poor neighborhood they end up ticketing poor residents for a bunch of "violations" that they would also find if they went to the rich neighborhoods. But if they ever actually did i…

> they end up ticketing poor residents for a bunch of > "violations" that they would also find if they went > to the rich neighborhoods.

I'm not sure what data you have to support this. But check out violent crime rates. Larceny-thefts. Burglary/Property theft. Motor Vehicle Theft. Aggrevated assult. Robbery (mugging, stickups. etc).

These very popular crimes aren't so popular in nicer neighborhoods. Rich neighborhoods have their own problems, but let's not appeal to the spirit of lawlessness (cops are bad, rules are bad, unfairly arrested, etc.)

Re: Mathematician Says Big Data Is Causing a ‘Silent Financial Crisis’

#69

Post by tunap »

Noseshine wrote: post #13
ThePhysicist wrote: post #12

There is a lot of interesting research on the societal impact and the (potential) problems caused by the use of large-scale data analysis and artificial intelligence, e.g. by Kate Crawford at MSFT Research. Last year I gave a talk on this at 32C3 where I tried to elucidate some of the problems that can pop up when using data analysis to automate things that were previously done by humans: https://www.youtube.com/watc…

> What we really need therefore (IMHO) is to teach ethics to people The issue with almost all organized teaching (as opposed to when you don't even know you are doing it, e.g. to your children, every day) is that it only targets conscious thinking. Do you already see the problem with teaching "ethics" (and empathy)? It's the wrong brain area. People will ace the tests but how they actually act won't change. Another b…

Being deliberately obtuse goes a long way to delay a logical ending. Flashback to 2004 and the same type of debate/affirmations were posited to Dr Mandelbrot's apocalyptic warnings[0][1] of the imminent subprime crisis.

Instead of learning lessons, the players continue to 'print money out of thin air'[2] and deny any fault for the last collapse. The rationale seems to be, 2007 was an extreme culmination of events that wouldn't happen again in millions of years. Problem is, in a universe of infinite variables, an infinite number of combinations exist and could manifest anytime a given set of vulnerabilities and unanticipated outlier events present themselves concurrently.

[0] The (Mis)Behavior Of Markets 2004

http://www.goodreads.com/book/show/665134.The_Mis_Behavior_o...

[1] 2006 reminder

http://www.ft.com/cms/s/2/5372968a-ba82-11da-980d-0000779e23...

[2]The Quants

Great Monday Morning QB analysis on what went wrong & why it will be repeated(hint:greed +ability +hubris)

http://www.goodreads.com/book/show/7495395-the-quants

edit: fixed links

Re: Mathematician Says Big Data Is Causing a ‘Silent Financial Crisis’

#70

Post by macintux »

burgreblast wrote: post #62
hood_syntax wrote: post #48

Earlier quoted context omitted.

> So having more cops in a high-crime neighborhood is somehow a bad thing, because the presence of more police actually confirms the fact that there is more of a need of police in this neighborhood? Did you understand what you quoted? The author is saying that citations for petty offences (which practically everyone commits with some non-zero frequency, intentionally or not) have a higher chance of affecting future p…

> petty offences (which practically everyone commits with > some non-zero frequency, This isn't Josef K in Kafka's Der Process. Most people don't have any trouble avoiding arrestable behavior. Lawlessness is not a virtue. >ignorance of suffering Ads for bad for-pay universitites are good to remind us of... suffering? And sorry, but even "awareness of suffering" isn't virtuous either. It's what you DO about what you k…

> Most people don't have any trouble avoiding arrestable behavior.

I think we've pretty well established the past couple of years that there is no lower bound on what's considered "arrestable behavior" when it comes to minorities in the US.

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