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But if it actually does correlate with the truth, if it actually makes predictions more accurate on average, why shouldn't it be used? Because statistics. Cor

But if it actually does correlate with the truth, if it actually makes predictions more accurate on average, why shouldn't it be used? Because statistics. Correlation applies to populations of data points, not individual data points. Even if 99% of the data points have a certain feature (an extremely strong correlation), the 1% of outliers should not be penalized for being similar to the rest of the group in other ways.

Houshalter 13y ago
But this is an argument against making any kind of predictions at all, as it could negatively affect some individuals. I don't see why that should be so, especially if it positively benefits everyone else a lot more and is a net benefit. For every person that loses one dollar, 500 people gain 50 cents. To look at it another way, by not taking that data into account, you are making those 500 worse off. I don't see how that is preferable. If we had a time machine to go into the future and see what loans would be paid back and which ones wouldn't, that would be ideal. But we can only guess. If our guesses aren't 100% accurate, are we saying we shouldn't try at all?
- fnayr 13y ago
  Taking a millionaire's wealth and distributing it to the starving would have a positive net benefit as well.
  - Houshalter 13y ago
    Yes, it definitely would. What is your point?
- sliverstorm 13y ago
  this is an argument against making any kind of predictions at all, as it could negatively affect some individuals. The question we ask is, what is this prediction based on? Some things are sacred; we will not allow predictions to be made based on race or gender, but we will allow predictions to be made based on billing history. The latter is much more within an individual's control than the former!
  - Houshalter 13y ago
    It's not always under an individuals control. Things happen outside their control so they can't pay back their loan. In insurance, getting into an accident isn't always the persons fault and we still use it to determine their rates. Why should some predictors should be considered "sacred"? The point is to make the best predictions possible. It doesn't really matter what information is used to determine that.
    - sliverstorm 13y ago
      We aren't talking about vehicle insurance, which does allow the use of gender, age, and happenstance.
      - Houshalter 13y ago
        It's basically the same thing though.
        sliverstorm 13y ago
        If we assume they are the same, then one is wrong. How do we know which one is wrong?
        Houshalter 13y ago
        I meant that risk prediction is insurance is very similar to risk prediction in loans. I'm not sure what you mean. What one is wrong?
    - nitrogen 13y ago
      Some predictors must be sacred because relying on them reinforces divisions in society, leading to greater long-term unrest.
      - Houshalter 13y ago
        >Some predictors must be sacred because relying on them reinforces divisions in society, leading to greater long-term unrest. Even using something objectionable like race as a predictor wouldn't "lead to long-term unrest", just the potential of slightly higher and lower interest rates for different individuals. There is no "reinforcing divisions in society". If anything more accurate predictions benefit society with less risk for investors and lower interest rates for borrowers.

Houshalter 13y ago

But this is an argument against making any kind of predictions at all, as it could negatively affect some individuals. I don't see why that should be so, especially if it positively benefits everyone else a lot more and is a net benefit. For every person that loses one dollar, 500 people gain 50 cents. To look at it another way, by not taking that data into account, you are making those 500 worse off. I don't see how that is preferable. If we had a time machine to go into the future and see what loans would be paid back and which ones wouldn't, that would be ideal. But we can only guess. If our guesses aren't 100% accurate, are we saying we shouldn't try at all?

fnayr 13y ago
Taking a millionaire's wealth and distributing it to the starving would have a positive net benefit as well.
- Houshalter 13y ago
  Yes, it definitely would. What is your point?
sliverstorm 13y ago
this is an argument against making any kind of predictions at all, as it could negatively affect some individuals. The question we ask is, what is this prediction based on? Some things are sacred; we will not allow predictions to be made based on race or gender, but we will allow predictions to be made based on billing history. The latter is much more within an individual's control than the former!
- Houshalter 13y ago
  It's not always under an individuals control. Things happen outside their control so they can't pay back their loan. In insurance, getting into an accident isn't always the persons fault and we still use it to determine their rates. Why should some predictors should be considered "sacred"? The point is to make the best predictions possible. It doesn't really matter what information is used to determine that.
  - sliverstorm 13y ago
    We aren't talking about vehicle insurance, which does allow the use of gender, age, and happenstance.
    - Houshalter 13y ago
      It's basically the same thing though.
      - sliverstorm 13y ago
        If we assume they are the same, then one is wrong. How do we know which one is wrong?
        Houshalter 13y ago
        I meant that risk prediction is insurance is very similar to risk prediction in loans. I'm not sure what you mean. What one is wrong?
  - nitrogen 13y ago
    Some predictors must be sacred because relying on them reinforces divisions in society, leading to greater long-term unrest.
    - Houshalter 13y ago
      >Some predictors must be sacred because relying on them reinforces divisions in society, leading to greater long-term unrest. Even using something objectionable like race as a predictor wouldn't "lead to long-term unrest", just the potential of slightly higher and lower interest rates for different individuals. There is no "reinforcing divisions in society". If anything more accurate predictions benefit society with less risk for investors and lower interest rates for borrowers.