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You have described the reason why many of us don't consider maximizing profit to be a desired behavior in all circumstances.
by TuringTest 10y ago
You have described the reason why many of us don't consider maximizing profit to be a desired behavior in all circumstances.
- AnthonyMouse 10y agoI think you misunderstand. In this case for once the profit-maximizing thing is the thing we want them to do and vice versa. You can make a legitimate objection if the algorithm predicts that 20% of black people will default on their loans and in reality only 10% of black people default on their loans. But if the algorithm is doing that then it's losing the bank money. They're giving loans to some other less creditworthy people instead of those more creditworthy people, or not giving profit-generating loans at all even though they have money to lend. A purely profit-motivated investor is not interested in that happening. But if it happens that disproportionately many of some group of people are in actual fact uncreditworthy, giving the uncreditworthy people credit anyway is crazy. It's the thing that caused the housing crisis. An excessive number of them will default, lose the lender's money and ruin their own credit even further. It only hurts everybody.