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> the office estimates that 0.21% of the system’s financial aid was fraudulently disbursed, the spokesperson said The optimal amount of fraud is non-zero. If y

by paxys 2y ago

> the office estimates that 0.21% of the system’s financial aid was fraudulently disbursed, the spokesperson said The optimal amount of fraud is non-zero. If your financial aid process actually has 0% fraud then it is guaranteed that (1) you spent more resources vetting applicants than saving from fraud and (2) a large chunk of deserving applications were denied in the process just to be extra careful. So the 0.21% seems pretty reasonable to me.

kassner 2y ago
I think that depends on the ratio between detected and undetected fraud. Some fraud will only be detected once they find no one to pay for loans, or when the person being collected has go thru an insurmountable bureaucracy to prove they never enrolled it. Given the evolution of the technology, I’d say 0.21% is neither static and guaranteed to raise significantly in the to near future if the identification issues don’t get solved overnight.
rr808 2y ago
If there are over a million people in community college in CA so 0.21% is a huge amount of money. https://lao.ca.gov/Education/EdBudget/Details/620 https://lao.ca.gov/Education/EdBudget/Details/620
- thatguy0900 2y ago
  The argument here is that it would also cost a huge amount of money (potentially more money overall) to vet every applicant better.
  - pixl97 2y ago
    Hey, there are no shortage of people that would spend a billion dollars trying to save a million dollars.
newsclues 2y ago
"The optimal amount of fraud is non-zero." No, the optimal amount of fraud is ZERO. The cost of fraud detection and prevention is different, but in an ideal society, the taxpayers aren't paying for fraud (because the people don't scam the government). If fraud detection is so expensive, maybe it's important to be more selective of who has access to the community and keep the scammers out.
- frontfor 2y ago
  OP is making a reference to patio11's article https://www.bitsaboutmoney.com/archive/optimal-amount-of-fraud https://www.bitsaboutmoney.com/archive/optimal-amount-of-fra.... "Ideal society" doesn't exist. And how would you "be more selective" and "keep scammers out" without incurring more costs? At some point, it costs way more to prevent the last 0.1% or 0.001% of fraud than would be saved by preventing said fraud. And the cost might be paid by non-fraud being detected as false positive.
  - newsclues 2y ago
    Acceptable and optimal are different words. I worked in retail loss prevention, what is acceptable isn’t optimal.
    - yowzadave 2y ago
      > I worked in retail loss prevention Your salary was the exact kind of thing that needs to be balanced against the cost of fraud; if it was larger than the amount of fraud you prevented, then the company would have been better off just accepting the fraud as a cost of doing business. The closer you get to zero fraud, the more expensive it becomes to reduce it further (and the more likely your countermeasures will negatively impact the business in other ways), so there definitely is an "optimal" balance to be struck between fraud and preventive measures.
    - pixl97 2y ago
      You don't live in an optimal world so what use is it talking about? Are you also doing your business calculations using frictionless spherical cows in a vacuum? Simply put every living system on the planet earth has some amount of parasites. To have no parasites at all would require massive amounts of energy by the host to ensure said parasites don't exist. If the host can spend a much smaller amount of energy and ensure that 99% of parasites don't exist that is optimal thereby negating your original premise.

by paxys 2y ago

kassner 2y ago

I think that depends on the ratio between detected and undetected fraud. Some fraud will only be detected once they find no one to pay for loans, or when the person being collected has go thru an insurmountable bureaucracy to prove they never enrolled it. Given the evolution of the technology, I’d say 0.21% is neither static and guaranteed to raise significantly in the to near future if the identification issues don’t get solved overnight.

rr808 2y ago

If there are over a million people in community college in CA so 0.21% is a huge amount of money. https://lao.ca.gov/Education/EdBudget/Details/620 https://lao.ca.gov/Education/EdBudget/Details/620

thatguy0900 2y ago
The argument here is that it would also cost a huge amount of money (potentially more money overall) to vet every applicant better.
- pixl97 2y ago
  Hey, there are no shortage of people that would spend a billion dollars trying to save a million dollars.

newsclues 2y ago

"The optimal amount of fraud is non-zero." No, the optimal amount of fraud is ZERO. The cost of fraud detection and prevention is different, but in an ideal society, the taxpayers aren't paying for fraud (because the people don't scam the government). If fraud detection is so expensive, maybe it's important to be more selective of who has access to the community and keep the scammers out.

frontfor 2y ago
OP is making a reference to patio11's article https://www.bitsaboutmoney.com/archive/optimal-amount-of-fraud https://www.bitsaboutmoney.com/archive/optimal-amount-of-fra.... "Ideal society" doesn't exist. And how would you "be more selective" and "keep scammers out" without incurring more costs? At some point, it costs way more to prevent the last 0.1% or 0.001% of fraud than would be saved by preventing said fraud. And the cost might be paid by non-fraud being detected as false positive.
- newsclues 2y ago
  Acceptable and optimal are different words. I worked in retail loss prevention, what is acceptable isn’t optimal.
  - yowzadave 2y ago
    > I worked in retail loss prevention Your salary was the exact kind of thing that needs to be balanced against the cost of fraud; if it was larger than the amount of fraud you prevented, then the company would have been better off just accepting the fraud as a cost of doing business. The closer you get to zero fraud, the more expensive it becomes to reduce it further (and the more likely your countermeasures will negatively impact the business in other ways), so there definitely is an "optimal" balance to be struck between fraud and preventive measures.
  - pixl97 2y ago
    You don't live in an optimal world so what use is it talking about? Are you also doing your business calculations using frictionless spherical cows in a vacuum? Simply put every living system on the planet earth has some amount of parasites. To have no parasites at all would require massive amounts of energy by the host to ensure said parasites don't exist. If the host can spend a much smaller amount of energy and ensure that 99% of parasites don't exist that is optimal thereby negating your original premise.