The law of equal opportunities or unintended consequences?: The effect of unisex risk assessment in consumer credit

• Main Authors: Andreeva, G. (Author), Matuszyk, A. (Author)
• Format: Article
• Language: English
• Published: Blackwell Publishing Ltd 2019
• Subjects: Algorithmic decision making; Credit scoring; Gender; Statistical discrimination
• Online Access: View Fulltext in Publisher

 Gender is prohibited from use in decision making in many countries. This does not necessarily benefit females in situations of automated algorithmic decisions, e.g. when a credit scoring model is used as a decision tool for loan granting. By analysing a unique proprietary data set on car loans from a European bank, the paper shows that gender as a variable in a credit scoring model is statistically significant. Its removal does not alter the predictive accuracy of the model, yet the proportions of accepted women/men depend on whether gender is included. The paper explores the association between predictors in the model with gender, to demonstrate the omitted variable bias and how other variables proxy for gender. It points to inconsistencies of the existing regulations in the context of automated decision making. © 2019 The Authors. Journal of the Royal Statistical Society: Series A (Statistics in Society) Published by John Wiley & Sons Ltd on behalf of Royal Statistical Society.