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Submitted via IRC for TheMightyBuzzard about a story that appeared on CNN on September 9, 2016.
From targeted advertising and insurance to education and policing, Cathy O'Neil's new book 'Weapons of Math Destruction' [WMD] looks at how algorithms and big data are targeting the poor, reinforcing racism and amplifying inequality.
[...] In a vacuum, these models are bad enough, but O'Neil emphasizes, "they're feeding on each other." Education, job prospects, debt and incarceration are all connected, and the way big data is used makes them more inclined to stay that way.
"Poor people are more likely to have bad credit and live in high-crime neighborhoods, surrounded by other poor people," she writes. "Once ... WMDs digest that data, it showers them with subprime loans or for-profit schools. It sends more police to arrest them and when they're convicted it sentences them to longer terms."
In turn, a new set of WMDs uses this data to charge higher rates for mortgages, loans and insurance.
[...] "Big Data processes codify the past," O'Neil writes. "They do not invent the future. Doing that requires moral imagination, and that's something only humans can provide."
I'm not interested in the story. I'm interested in what it says about once proud CNN's current quality of journalism. Fox News: Left Division?
Source: http://money.cnn.com/2016/09/06/technology/weapons-of-math-destruction/
(Score: 2) by butthurt on Monday October 03 2016, @10:11AM
The only other option is to charge everyone else more and 'redistribute' it to bad risks. There is also a word for that philosophy.
The word, of course, is "insurance."
[...] your property value (often the object of the loan or the collateral) is lower AND it generally means it will be on a downward slope [...]
The sort of reasoning expressed in the article was: "people in your zip code tend to be riskier borrowers." ZIP codes are the postal codes used in the United States.
SoylentNews recently had a story about them, "How ZIP Codes Nearly Masked the Lead Problem in Flint" [soylentnews.org]. SunTzuWarmaster commented on it:
The problem comes when you use the Mail Delivery Code for segregating people into water zones, or "affluent neighborhoods", demographic characteristics, or other features which are _not_ mailing letters. Like every engineering tool, it has advantages, disadvantages, and limits.
What you're writing about is different. Like the original poster, you are proposing practices that are different, and perhaps more defensible that the ones the article is about. Certainly the value of something being offered as collateral is pertinent to a loan. This is commonly evaluated in an appraisal. I can see how the overhead in making and collecting on micro-loans could be greater, as a percentage, than that for mega-loans. If a bank were to charge higher rates for smaller loans, that could be justified (then again, a default on a large loan could render the bank insolvent)--but again, that's not what the article says. I'm not sure how future changes in value are assessed, or whether conventional bankers make the attempt. Someone who could reliably predict such trends could become very wealthy indeed.