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Well. At the end of the day, the companies will pick thresholds and rates to maximize their profits, based upon the data that they have available. They don't kn
by mvindahl 10y ago
Well. At the end of the day, the companies will pick thresholds and rates to maximize their profits, based upon the data that they have available. They don't know every detail of our personal lives -- which would also be kind of unsettling -- so they have to resort to a simplified picture. Simplifications are always prejudiced at the individual level but if the prejudice is reflected in the numbers, it's balanced. It may not feel perfectly just but at least it's more just than an imbalanced prejudice.
A real life example: In many (all?) countries, it's common to pay more for your car insurance if you are young, if you are male, or if you recently acquired your driver's license. One might frame this as a prejudice towards young, male drivers as being reckless. But statistically they are just that, so the prejudice is balanced (within a reasonable tolerance). It's unfair to the careful young, male driver, but well, life is not always fair.
- theBobBob 10y agoInterestingly the EU has banned insurance underwriting based on gender even with all the actuarial data backing it up. Age is still fair game though.
- reader5000 10y agoSo (assuming males are more costly to insure) either (a) females pay more than they should and are effectively subsidizing males or (b) males pay less than they should and the insurance companies will go broke..
- beejiu 10y agoOn the other hand, we didn't choose to have high levels of testosterone in our bodies.
- rahimnathwani 10y agoOr (c) insurance companies still make positive returns on both male and female customers, and the regulation just reduces their overall profits without creating losses which must be subsidized by female customers.
- mvindahl 10y ago(d) Insurance companies increase insurance premiums for every customer not in the young male demographic, blames "regulation". Results skyrocket. Management awards themselves seven digit raises to "keep attracting the best talent".
- NotSureYet 10y agoIt's OK because we subsidize their Health Care: men and women pay the same for the same age, but women use way more than men.
- deleted 10y ago[deleted]
- Ntrails 10y agoYes, female premiums went up to cover the cost of not having that factor in the model. Fortunately I'm sure people are hard at work finding "proxy factors" which happen to map to pretty well gender but have an acceptable parallel explanation for why they're meaningfully descriptive of an applicants risk profile :)
- angry-hacker 10y agoWhich made the insurance for women, who are traditionally safer drivers because not taking unless risks, go up. Well facts can't be racist but they are at the same time.
- mtgx 10y agoBut if you were a man who was an excellent driver, would you like it that you get to pay more just because you were born into a gender that was "more reckless"? Plus, women want equal rights, so why not be equal in this, too? I think for things like insurance, or healthcare taxes (the model adopted by most countries) it's fair to normalize the price for everyone. Otherwise, the system doesn't really work.
- witty_username 10y agoPrice of insurance is not a right. It is not fair to normalize the price. It penalizes people who are healthy and good drivers (for example not smoking and speeding).
- mcbits 10y agoThe whole purpose of insurance is to normalize the price. Without insurance, people who take the most risks with their health/driving would be more likely to pay (or at least owe) millions, while the health-conscious and risk-averse would generally pay much closer to $0 (until they get old or unlucky). It's interesting that insurance premiums can act as behavioral incentives in some cases, but I doubt it has ever led someone to change their gender or race.
- witty_username 10y agoNo, the purpose of insurance is to hedge the risks (i.e. one would prefer to take 0$ than to take a 50-50 bet on 1000$). For example, the price of bond insurance is not normalized between bonds with different ratings.
- tomp 10y agoIs it just driving insurance or also other kinds (e.g. health insurance, where women might be paying more than men)?
- jtbigwoo 10y agoSince the 80's, the state of Montana has banned insurance underwriting based on gender. There have been attempts to reverse that law, but none have passed. My male Montana cousins always had slightly cheaper insurance than I did, but my female Montana cousins more than made up for it.
- tptacek 10y agoThe difference with machine learning is that the model isn't designed by humans, through an actuarial process we can keep our brains wrapped around. It's a black box. We are OK attributing "crash risk" to young male drivers, because we can observe both that they are as a cohort statistically likely to crash and also understand why that would be the case. On the other hand, we're not comfortable with the idea that a computer program might spot some irrelevant correlation that determines that Armenians shouldn't get car loans --- and we're especially not comfortable with the idea that we might learn that this has happened only after years of unintended discrimination, because there is no straightforward way to interrogate the model for every possible bogus correlation it may have snagged on. That's the computer science problem being worked on here.
- tjic 10y agoPlease don't say "we". Not everyone shares your politics. I'm perfectly happy with algorithms detecting that certain people are more likely to be safe drivers than average, and giving them lower rates, and concentrating premiums on the groups more likely to be in accidents, even if I don't understand why Armenians (in your example) get in more crashes.
- tptacek 10y agoYou've just defined away the problem. It's not that we're not OK with computers accounting for the idea that Armenians get into more car accidents (we might or might not be). It's that we don't know if that's actually the case, because ML-generated models aren't that simple (if they were, we wouldn't need ML, just a bunch of actuaries using R). The distinction is that with young male drivers, we have two supporting classes of information: * A clear statistical observation * A conceptual understanding of why the observation is likely to be valid With machine learning, we might have neither of these classes of information.
- tjic 10y ago> You've just defined away the problem. <shrug> What's the null hypothesis here? From my point of view, you're the one who defined into existence as a problem something that is not a problem.
- beejiu 10y agoDiscrimination is far more nuanced than it first appears. We accept that younger drivers pay more for car insurance. And that disabled people pay more for their health insurance. And that the government (in the UK) has a special business grants scheme for ethnic minority entrepreneurs. Obviously discrimination depends on context. If a car insurance firm had a special policy for ethnic minorities, people would (rightly) be outraged. But in the context of a government intervention, based on the evidenced disadvantages that ethnic minorities face, discrimination is accepted.
- hajile 10y agoWomen's healthcare costs several times more than mens over their lifetime (and that's before factoring in pregnancy). Countries are just fine "equalizing" that even though that means that men pay way more for their health insurance than they should have to. How many people complain about this happening? Collectivism is just fine when you are the one on the receiving end. Either we set absolute lines of discrimination across all industries or we disallow it entirely.
- tptacek 10y agoGenerally we're most of us in society pretty comfortable with paying for the continuation of the species. There are exceptions to every rule, of course; some of us (not including me) are unhappy we pay to pave the streets, too.
- idanoeman 10y agoI don't think that we need to be subsidizing babies when the world population is 7.4 billion.
- qb45 10y agoThe problem is that retirement is a Ponzi scheme and it's not clear if the current 3rd world children will care (or even have the means to care) about our 1st world problems in the future.
- deleted 10y ago[deleted]
- vorotato 10y agoThat argument was just as valid when there were only 2000 people.
- tptacek 10y agoBut you're pretty happy you're here, right?