Math is racist and driving inequality..

Math is racist: How data is driving inequality
by Aimee Rawlins @aimeerawlins
September 6, 2016: 5:24 PM ET


It's no surprise that inequality in the U.S. is on the rise. But what you might not know is that math is partly to blame.
In a new book, "Weapons of Math Destruction," Cathy O'Neil details all the ways that math is essentially being used for evil (my word, not hers).
From targeted advertising and insurance to education and policing, O'Neil looks at how algorithms and big data are targeting the poor, reinforcing racism and amplifying inequality.
These "WMDs," as she calls them, have three key features: They are opaque, scalable and unfair.
Denied a job because of a personality test? Too bad -- the algorithm said you wouldn't be a good fit. Charged a higher rate for a loan? Well, people in your zip code tend to be riskier borrowers. Received a harsher prison sentence? Here's the thing: Your friends and family have criminal records too, so you're likely to be a repeat offender. (Spoiler: The people on the receiving end of these messages don't actually get an explanation.)
The models O'Neil writes about all use proxies for what they're actually trying to measure. The police analyze zip codes to deploy officers, employers use credit scores to gauge responsibility, payday lenders assess grammar to determine credit worthiness. But zip codes are also a stand-in for race, credit scores for wealth, and poor grammar for immigrants.
weapons math destruction author
Cathy O'Neil
O'Neil, who has a PhD in mathematics from Harvard, has done stints in academia, at a hedge fund during the financial crisis and as a data scientist at a startup. It was there -- in conjunction with work she was doing with Occupy Wall Street -- that she become disillusioned by how people were using data.
"I worried about the separation between technical models and real people, and about the moral repercussions of that separation," O'Neill writes.
She started blogging -- at mathbabe.org -- about her frustrations, which eventually turned into "Weapons of Math Destruction."
One of the book's most compelling sections is on "recidivism models." For years, criminal sentencing was inconsistent and biased against minorities. So some states started using recidivism models to guide sentencing. These take into account things like prior convictions, where you live, drug and alcohol use, previous police encounters, and criminal records of friends and family.
These scores are then used to determine sentencing.
"This is unjust," O'Neil writes. "Indeed, if a prosecutor attempted to tar a defendant by mentioning his brother's criminal record or the high crime rate in his neighborhood, a decent defense attorney would roar, 'Objection, Your Honor!'"
But in this case, the person is unlikely to know the mix of factors that influenced his or her sentencing -- and has absolutely no recourse to contest them.
Or consider the fact that nearly half of U.S. employers ask potential hires for their credit report, equating a good credit score with responsibility or trustworthiness.
This "creates a dangerous poverty cycle," O'Neil writes. "If you can't get a job because of your credit record, that record will likely get worse, making it even harder to work."
weapons math destruction
This cycle falls along racial lines, she argues, given the wealth gap between black and white households. This means African Americans have less of a cushion to fall back on and are more likely to see their credit slip.
And yet employers see a credit report as data rich and superior to human judgment -- never questioning the assumptions that get baked in.
Related: Milwaukee's staggering black-white economic divide
In a vacuum, these models are bad enough, but O'Neil emphasizes, "they're feeding on each other." Education, job prospects, debt and incarceration are all connected, and the way big data is used makes them more inclined to stay that way.
"Poor people are more likely to have bad credit and live in high-crime neighborhoods, surrounded by other poor people," she writes. "Once ... WMDs digest that data, it showers them with subprime loans or for-profit schools. It sends more police to arrest them and when they're convicted it sentences them to longer terms."
In turn, a new set of WMDs uses this data to charge higher rates for mortgages, loans and insurance.
So, you see, it's easy to be discouraged.
And yet O'Neil is hopeful, because people are starting to pay attention. There's a growing community of lawyers, sociologists and statisticians committed to finding places where data is used for harm and figuring out how to fix it.
She's optimistic that laws like HIPAA and the Americans with Disabilities Act will be modernized to cover and protect more of your personal data, that regulators like the CFPB and FTC will increase their monitoring, and that there will be standardized transparency requirements.
Related: Inequality is widening, even in real estate
And then there's the fact that these models actually have so much potential.
Imagine if you used recidivist models to provide the at-risk inmates with counseling and job training while in prison. Or if police doubled down on foot patrols in high crime zip codes -- working to build relationships with the community instead of arresting people for minor offenses.
You might notice there's a human element to these solutions. Because really that's the key. Algorithms can inform and illuminate and supplement our decisions and policies. But to get not-evil results, humans and data really have to work together.
"Big Data processes codify the past," O'Neil writes. "They do not invent the future. Doing that requires moral imagination, and that's something only humans can provide."

If you put garbage in, you'll get garbage out... unfortunately this has real consequences to people.

5,300 Wells Fargo employees fired over 2 million phony accounts
by Matt Egan @mattmegan5
September 9, 2016: 8:08 AM ET

Wells Fargo fires 5,300 for creating phony accounts
Everyone hates paying bank fees. But imagine paying fees on a ghost account you didn't even sign up for.
That's exactly what happened to Wells Fargo customers nationwide.
On Thursday, federal regulators said Wells Fargo (WFC) employees secretly created millions of unauthorized bank and credit card accounts -- without their customers knowing it -- since 2011.
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The phony accounts earned the bank unwarranted fees and allowed Wells Fargo employees to boost their sales figures and make more money.
"Wells Fargo employees secretly opened unauthorized accounts to hit sales targets and receive bonuses," Richard Cordray, director of the Consumer Financial Protection Bureau, said in a statement.
Wells Fargo confirmed to CNNMoney that it had fired 5,300 employees over the last few years related to the shady behavior. Employees went so far as to create phony PIN numbers and fake email addresses to enroll customers in online banking services, the CFPB said.
Related: Who owns Wells Fargo? You, me and Warren Buffett
The scope of the scandal is shocking. An analysis conducted by a consulting firm hired by Wells Fargo concluded that bank employees opened over 1.5 million deposit accounts that may not have been authorized.
The way it worked was that employees moved funds from customers' existing accounts into newly-created ones without their knowledge or consent, regulators say. The CFPB described this practice as "widespread." Customers were being charged for insufficient funds or overdraft fees -- because there wasn't enough money in their original accounts.
Additionally, Wells Fargo employees also submitted applications for 565,443 credit card accounts without their customers' knowledge or consent. Roughly 14,000 of those accounts incurred over $400,000 in fees, including annual fees, interest charges and overdraft-protection fees.
The CFPB said Wells Fargo will pay "full restitutions to all victims."
Related: ATM and overdraft fees top $6 billion at the big 3 banks
Wells Fargo is being slapped with the largest penalty since the CFPB was founded in 2011. The bank agreed to pay $185 million in fines, along with $5 million to refund customers.
"We regret and take responsibility for any instances where customers may have received a product that they did not request," Wells Fargo said in a statement.
Wells Fargo has the highest market valuation among any bank in America, worth just north of $250 billion. Berkshire Hathaway (BRKA), the investment firm run legendary investor Warren Buffett, is the company's biggest shareholder.
Of the total fines, $100 million will go toward the CFPB's Civil Penalty Fund, $35 million will go to the Office of the Comptroller of the Currency, and another $50 million will be paid to the City and County of Los Angeles.
"One wonders whether (the CFPB) penalty of $100 million is enough," said David Vladeck, a Georgetown University law professor and former director of the Federal Trade Commission's Bureau of Consumer Protection. "It sounds like a big number, but for a bank the size of Wells Fargo, it isn't really."
Wells Fargo confirmed to CNNMoney that the 5,300 firings took place over several years. The bank listed 265,000 employees as of the end of 2015.
Related: Barclays fined $109 million for trying to hide a deal with rich clients
"At Wells Fargo, when we make mistakes, we are open about it, we take responsibility, and we take action," the bank said in a memo to employees on Thursday.
The CFPB declined to comment on when the investigation began and what sparked it, citing agency policy. "We don't comment on how we uncover these matters," a spokesman said.
As part of the settlement, Wells Fargo needs to make changes to its sales practices and internal oversight.
Customers are fuming. Brian Kennedy, a Maryland retiree, told CNNMoney he detected an unauthorized Wells Fargo account had been created in his name about a year ago. He asked Wells Fargo about it and the bank closed it, he said.
"I didn't sign up for any bloody checking account," Kennedy, who is 57 years old, told CNNMoney. "They lost me as a banking customer and I have warned family and friends."
"Consumers must be able to trust their banks," said Mike Feuer, the Los Angeles City Attorney who joined the settlement.
Feuer's office sued Wells Fargo in May 2015 over allegations of unauthorized accounts. After filing the suit, his office received more than 1,000 calls and emails from customers as well as current and former Wells Fargo employees about the allegations.
Wells Fargo declined to say when it hired a consulting firm to investigate the allegations. However, a person familiar with the matter told CNNMoney the bank launched the review after the L.A. lawsuit was filed.
Even though the Wells Fargo scandal took place nationally, the settlement with L.A. requires the bank to specifically alert all its California customers to review their accounts and shut down ones they don't recognize or want.
"How does a bank that is supposed to have robust internal controls permit the creation of over a half-million dummy accounts?" asked Vladeck. "If I were a Wells Fargo customer, and fortunately I am not, I'd think seriously about finding a new bank."

Who owns Wells Fargo anyway? You, me and Warren Buffett
by Matt Egan @mattmegan5
September 8, 2016: 6:23 PM ET


Wells Fargo fires 5,300 for creating phony accounts
Wells Fargo -- which was slapped with a $185 million fine for creating millions of fake accounts, and charging its customers fees for years -- is also America's most valuable bank.
It is one of the nation's most widely-held stocks.
The bank is even backed by America's most beloved investor, Warren Buffett. The legendary billionaire owns $100 million of Wells Fargo (WFC) stock in his personal account, according to FactSet. His firm Berkshire Hathaway (BRKA) is the bank's biggest shareholder, holding nearly 10% of the stock.
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It's ironic, given the shocking revelations, that the key driver for Buffett's investment in Wells Fargo is the bank's reputation for not being one of Wall Street's bad guys.
"Wells Fargo behaves better than the average big bank. But nobody's perfect," Charlie Munger, Berkshire's vice chairman and Buffett's right-hand man, told CNNMoney last year.
Buffett has himself weighed in, saying, according to the Motley Fool, "What Wells Fargo didn't do is what defines their greatness."
Berkshire first bought Wells Fargo stock in 1989, and has since added more.
Related: 5,300 Wells Fargo employees fired over 2 million phony accounts
Today, Wells Fargo is worth $250 billion -- the most valuable bank in the U.S. by market value. To put that in context, Bank of America (BAC) is valued at $160 billion and JPMorgan Chase (JPM) is worth $243 billion.
Many everyday Americans own shares of Wells Fargo in their retirement accounts. Popular mutual fund managers such as Vanguard, BlackRock (BLK) and Fidelity are the bank's top investors, after Berkshire.
And due to Wells Fargo's size, the bank is a staple of most bank ETFs, the popular form of investing in a basket of stocks.

Kinda makes you wonder where those 5300 Wells Fargo employees are now.

Workers tell Wells Fargo horror stories
by Matt Egan @mattmegan5
September 9, 2016: 4:24 PM ET

Wells Fargo fires 5,300 for creating phony accounts
Relentless pressure. Wildly unrealistic sales targets. Employees leaning on family members and friends to open unnecessary bank accounts.
That's how more than a dozen former Wells Fargo employees described the bank's culture to CNNMoney.
Wells Fargo (WFC)has been accused by federal regulators of illegal activity on a stunning level. Authorities say employees at the bank secretly created millions of unauthorized bank and credit card accounts between 2011 and July 2015, allowing the bank to make more money in fees and meet internal sales targets.
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Wells Fargo agreed to pay penalties of $185 million and fired 5,300 employees over the last few years related to this illegal activity. The news is rocking the industry and rippling across Wells Fargo's millions of customers nationwide.
Former employees tell CNNMoney that they felt incredible demands from managers to meet sales quotas. The same managers turned a blind eye when ethical and even legal lines were crossed.
"I had managers in my face yelling at me," Sabrina Bertrand, who worked as a licensed personal banker for Wells Fargo in Houston in 2013, told CNNMoney. "They wanted you to open up dual checking accounts for people that couldn't even manage their original checking account."
Currently a middle school teacher, Bertrand said she believes the sales targets were set by managers who were higher up: "The sales pressure from management was unbearable."
The pressure cooker environment is also described in a lawsuit filed by Los Angeles against Wells Fargo in May 2015. The lawsuit says that Wells Fargo's district managers discussed daily sales for each branch and employee "four times a day, at 11 am, 1 pm, 3 pm and 5 pm."
It all stems from Wells Fargo's internal goal of selling at least eight financial products per customer. It's what Wells Fargo calls the "Gr-eight initiative." Currently, Wells Fargo boasts an average of about six financial products per customer.
In pursuit of this goal, Wells Fargo employees engaged in all kinds of sordid practices. One of them was internally called "pinning," where the bank issued ATM cards and assigned PIN numbers without customer authorization.
The bankers would impersonate their customers and "input false generic email addresses such as 1234@wellsfargo.com, noname@wellsfargo.com, or none@wellsfargo.com to ensure the transaction is completed," the lawsuit said. The customer, meanwhile, remained completely unaware of the unauthorized activity.
Related: Do more heads need to roll at Wells Fargo?
wells fargo fake account employee
Anthony Try, who worked at Wells Fargo's branches in San Francisco and San Diego as a personal banker and sales representative, told CNNMoney that he believes "management was fully aware of this," but his bosses deliberately "turned a blind eye."
Try, who quit in 2013 because he no longer believed in what he was doing, thinks the illegal activity was systemic.
"It was ingrained in the culture for a long time," he said.
Try, currently a musician and manager, said he did not open unauthorized accounts. However, he did open accounts for friends and family -- with their permission -- in order to meet the incredible demands from managers.
"There would be days where we would open five checking accounts for friends and family just to go home early," he said.
Related: 5,300 Wells Fargo employees fired over 2 million phony accounts
The California lawsuit supports these claims. Wells Fargo paid $50 million to the City and County of Los Angeles to settle the suit as part of the broader $185 million in fines announced on Thursday.
Employees who failed to meet their daily goals were "reprimanded and told to do whatever it takes to meet individual sales quotas," the California lawsuit alleges.
Management even encouraged employees to "achieve 'solutions' through family members," the suit says.
Some Wells Fargo employees say they have "tapped out every family member and friend for accounts," while others say they "spend holiday dinners trying to convince" them to sign up, the lawsuit said.
Employees and the California lawsuit both allege that higher-ups at Wells Fargo also share in the blame for the fraud.
Wells Fargo has "known about and encouraged these practices for years," the California lawsuit said. "Wells Fargo has engineered a virtual fee-generating machine, through which its customers are harmed, its employees take the blame, and Wells Fargo reaps the profits."
"The culprit in this case in not just the individuals involved, but the corporate culture itself," said Julie Ragatz, director of the Center for Ethics in Financial Services at the American College of Financial Services.
In response to CNNMoney's reporting, a Wells Fargo spokeswoman said the "majority of our team members do work hard to do what's in customers' best interest."
Wells Fargo also said it made a number of "fundamental changes to help ensure our team members are not being pressured to sell products."
Those changes include enhanced training that values ethics and how to report concerns, increased risk management professionals at branches and additional mystery shoppers.
Related: Who owns Wells Fargo anyway? You, me and Warren Buffett
One former Wells Fargo employee, who requested his name not be used so he doesn't hurt his career in banking, said he experienced this firsthand. He said managers told him to open unauthorized accounts and, when customers called, to apologize and say it was a mistake.
"This was not done by employees trying to hit their sales numbers, it was more of threats from upper management," he said, adding that workers feared they would lose their job.
According to the California lawsuit, Wells Fargo employees for years engaged in practices known as "gaming." One of them was "sandbagging," which occurred when bankers refused to open accounts requested by customers until the next reporting period to boost their sales quotas, the lawsuit claimed.
A former longtime Wells Fargo consumer bank employee in the Minneapolis region, who also spoke on the condition of anonymity, described a "cutthroat" environment that caused employees to fear for their job and make "bad ethical choices."
"It was a real s**t show over there," he said.

So back to the original post. Math (really statistical analysis) has no more racism than gravity.

by KATHERINE TIMPF September 8, 2014 5:58 PM @KATTIMPF Are racial microaggressions making you fat? One professor at an N.J. public university thinks so. A study by Rutgers University – Newark claims that minorities are obese because racial microaggressions cause them to eat fast food and avoid exercise. “When you are exposed to negative stereotypes, you may gravitate more toward unhealthy foods as opposed to healthy foods,” said Luis Rivera, the experimental social psychologist who conducted the study. “You may have a less positive attitude toward watching your carbs or cutting back on fast food, and toward working out and exercising,” he explained. Rivera said Hispanics who believed negative stereotypes about themselves were three times more likely to be overweight or obese — evidence that the obesity comes from believing the stereotypes. He said that these stereotypes were spread not only through the mass media, but also subconsciously through seemingly harmless social interactions, including so-called microaggressions. “There are more subtle ways in conversations and interactions with others,” he said. “Although people don’t say explicitly ‘you are A, you are B,’ there are ways in which those messages are communicated,. It could be teachers. It could be your parents. It could be your friends.” Rivera’s study appears in this summer’s edition of the Journal of Social Issues.

Read more at: http://www.nationalreview.com/article/387408/psychologist-minorities-are-obese-because-racism-katherine-timpf[/quote]