Tuesday, October 30, 2018 - 4:10pm to 5:45pm
Location: 
Room 219, Flavelle Building, 78 Queen's Park

LAW & ECONOMICS COLLOQUIUM

presents

Talia Gillis
Harvard Law School

Big Data and Discrimination

Tuesday, October 30, 2018
4:10 - 5:45
Room FL219 / John Willis Classroom
78 Queen's Park

The ability to distinguish between people in setting prices is often constrained by legal rules that aim to prevent discrimination. These legal requirements have developed focusing on human decision-making contexts, and so their effectiveness is challenged as pricing increasingly relies on intelligent algorithms that extract information from big data. In this paper, we bring together existing legal requirements with the structure of machine learning decision-making in order to identify tensions between old law and new methods and lay the ground for legal solutions. We argue that while automated pricing rules provide increased transparency, their complexity also limits the application of existing law. Using a simulation exercise based on real-world mortgage data to illustrate our arguments, we note that restricting the characteristics that the algorithm is allowed to use can have a limited effect on disparity and can in fact increase pricing gaps. Second, we argue that there are limits to interpreting the pricing rules set by machine learning that hinders the application of existing discrimination laws. We end by discussing a framework for testing discrimination that evaluates algorithmic pricing rules in a controlled environment. Unlike the human decision-making context, this framework allows for ex-ante testing of price rules, facilitating comparisons between lenders.

Talia Gillis is an economics PhD candidate at the Department of Economics and Harvard Business School as well as a SJD candidate at Harvard Law School.  Her research interests include regulation of household finance and mental accounting.  She is currently working on research that seeks to understand how changes in technology and advances in research on financial decision-making shape the role of consumer financial protection regulators. In addition, she is working with a number of financial institutions to understand the effect of pay frequency and bill cycles on consumer spending and saving. She holds a LLB from the Hebrew University and a BCL from Oxford University.


For more colloquium information, please send an email to events.law@utoronto.ca.