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Creditworthy

I just finished reading “Creditworthy”, Josh Lauer’s thorough picture of the history and trajectory of consumer surveillance by the credit industry.
Lauer’s work illuminates the early evolution of the social contract at the heart of the information era: convenience, service, and social inclusion in exchange for privacy. Though this exchange is familiar to a twenty first century reader, details from the evolution of this contract (in the context of credit) offer us lessons as we seek to broadly re-negotiate the terms of our privacy forfeitures in all spheres of modern life.
The first lesson is that information is unlike other commodities in how it is collected, synthesized and deployed, and regulations that sought to ensure its responsible custodianship in the context of credit failed to do so largely because they ignored key properties of data that were under-appreciated at the time of regulation:

  • Reproducibility: Data can be copied any number of times, at close to zero cost, which creates an incentive for its infinite duplication and dissemination. Once a piece of data about an individual is collected, we should expect that market forces will drive the collecting actor to share or sell it broadly and without restraint.
  • Supra-Summative: Data is more identifying, valuable and intrusive the more of it that can be accessed and combined by any given actor. Linking two datasets together routinely produces more value than the two datasets offer when ingested and examined in isolation. The increasing returns to scale of surveillance, synthesis and sale of information encourages “data-maximalism”, the indiscriminate and unabashed collection of data in all spheres of life.
  • Opacity: Data can be used to predict outcomes (such as default rate) without offering explanations as to why the data is an indicator of the outcome. This, in concert with the reality of dense correlations in all factors of life, confounds efforts to root out social injustice buried in Black-Box algorithms. Racism, sexism and ableism all still exist in credit scoring despite the prohibition on the explicit consideration of race, sex or ability. The same problems that plagued credit interpretation in the 1970’s are compounded in today’s deep learning algorithms, where nobody understands what inferences the system uses to draw its conclusions, even though the system may be able to consistently predict reality.
The second lesson is that privacy is rarely taken, it is almost always traded away, primarily for convenience, service, and social inclusion. In the early days of credit reporting, personal information was relinquished in exchange for the convenience of deferring payment on purchased goods to a later date. As credit surveillance evolved, even purchasing goods in cash at many retailers was recorded for use in credit evaluation - mere access to the service demanded the forfeiture of personal data. Later, credit reports were (and are) used in job and rental applications, and even social club membership, clearly demonstrating that ceding control over one’s information was (and is) necessary for full participation in society.
Today we have to grapple with more totalizing and transparent exchanges of privacy, but the same benefits of convenience, service and social inclusion are still the weights on the scale opposite privacy. TSA PreCheck offers the convenience of shorter airport security lines in exchange for detailed histories of your living arrangements, known connections and travel data. Department stores use sophisticated IMEI tracking to pinpoint your location while you enjoy the service of browsing in their stores. Social networks and ad providers siphon up your digital detritus as you browse the internet in order to offer more relevant (and lucrative) ads. The tools requisite for living and working productively in the 21st century (email, chat, search, maps, and connectivity) can easily become tools of surveillance when requested by law enforcement. Full participation in 21st century society requires capitulation to surveillance.
Though the inevitable arc of credit surveillance presented by Lauer can be disheartening, the book also helped me recognize that we may be able to bend the world back toward privacy.
The third lesson is that Americans do care about privacy. “Creditworthy” is sprinkled with anecdotes about people recognizing the ills of mass-surveillance and acting (both as individuals and in collectives) to mitigate its harms. Our moral intuition speaks clearly when we are asked whether an individual should be able to live down past mistakes, whether personal information should be given basic protections, and whether corporations should be allowed to collect data for a one purpose and use it for another. Privacy is an integral component of freedom, and Americans across the political spectrum throughout our nation’s history have had the moral wisdom to fight against encroachments on both.
Though we frequently forfeit our information in transactions large and small, this does not indicate a lack of resistance to the intrusions of surveillance into our lives. It is largely rational for a consumer to forfeit information when individual transactions are viewed at the margin, as the harms from such forfeitures are smeared across all such transactions and their costs are impossible to predict. This asymmetry in immediate known marginal benefit against abstract high-variance cost helps explain the dissonance between our apparent docility as willing consumers and our appetite for institutional change as privacy concerned Americans.
The fourth lesson is also a hopeful one. Regulation heavily shaped the consumer credit industry, and it could influence the shape, scope and intrusions of the information economy in the future. The use of credit scoring in federal loan screening in the 1960’s led to the ascension of algorithms over individual intuition within credit offices. When the first regulations were placed on credit bureaus in the early 1970’s, a waterfall of rapid consolidation resulted. Civil rights regulation in the 1980’s was able to eliminate much of the explicit discrimination on problematic grounds in credit ratings.
Though these efforts are sprinkled with as many half-successes as half-failures, they all demonstrate the power that regulation has over the information economy, and leads me to be hopeful that well structured regulations could allow our country to renegotiate the social contract underlying the information age.
Creditworthy is a fantastic book. Lauer paints historical details large and small with explanation and context, illuminating not only how our present world came to be, but the individual and collective incentives and choices that got us here. In it I read a history of mass surveillance and a path toward restoring balance, but another reader could just as easily find compelling evidence for the strength of American capitalism and ingenuity, or the disruptive influence of technology. I’m sure that it will hold up to multiple readings.