If all of science agreed that members of one race really were slighty smarter on average than members of another race, that could be extremely demoralizing for the people of the slightly-dumber race. See stereotype threat. This seems like a high price to pay to eliminate a popular falsehood—I imagine their are other falsehoods that would be easier to eliminate for a smaller price. And unlike religion, there’s no long-term benefit associated with its removal.
It’s mentioned below to some extent, but if you start with the assumption that there’s no systematic variation between groups, then if you see a statistical difference in how groups are treated, that’s evidence of a systematic bias. If it turns out that there is systematic variation between groups, the data can be explained without the bias. It’s the difference between “Harvard is racist” and “Harvard accepts bright people regardless of race”.
Harvard has two responses to these claims: they can continue getting called racist, or they can unfairly admit minorities who don’t deserve to get in. Both of these alternatives are preferable to telling a large group with normal human psychology that they are inferior.
Edit: I tend to think it’s OK for Harvard to admit too many minorities because I think having the upper class be made up of people from a variety of backgrounds is valuable. But I could see how this could be a problem in other domains, such as cousin_it’s mortgage example.
there’s no long-term benefit associated with its removal.
The first step in solving a problem is to recognise it. If I discovered I have cancer I would be demoralised immensely but I’d prefer that and take a shot at recovering rather than die unknowingly.
Strongly seconded. I speak from experience: when evidence starts mounting for some horrible, nightmarish proposition that you’re scared of, it is tempting to tell yourself that even if it were true, it wouldn’t really matter, that there would be no benefit to acknowledging it, that you can just go on acting as you’ve always done, as if nothing’s changed. But on your honor as an aspiring rationalist, you must face the pain directly. When you get a hint that this world is not what you thought it was, that you are not what you thought you were—look! And update!---no matter how much it hurts, no matter how much your heart may cry for the memory of the world you thought this was. Do it selfishly, in the name of the world you thought you knew: because once you have updated, once you see this hellish wasteland for what it really is, then you can start to try to patch what few things up that you can.
Suppose you really don’t like gender roles, and you’re quietly worried about something you read about evolutionary psychology. Brushing it all under the rug won’t help. Investigate, learn all you can, and then do something. Maybe something drastic, maybe something trivial, but something. Experiment with hormones! Donate a twenty to GenderPAC! Use your initials in your byline! But something, anything other than defaulting to ignorance and letting things take their natural course.
As soon as you start talking about your “honor as an aspiring rationalist”, you’re moving from the realm of rationality to ideology.
Like I said, I don’t think this question matters and I’m mostly indifferent to what the answer actually is. I’m just trying to protect the people who do care.
As soon as you start talking about your “honor as an aspiring rationalist”, you’re moving from the realm of rationality to ideology.
Well, sure, but the ideological stance is “You should care about rationality.” I should think that that’s one of the most general and least objectionable ideologies there is.
Like I said, I don’t think this question matters and I’m mostly indifferent to what the answer actually is. I’m just trying to protect the people who do care.
But I do care, and I no longer want to be protected from the actual answer. When I say that I speak from experience, it’s really true. There’s a reason that this issue has me banging out dramatic, gushy, italics-laden paragraphs on the terrible but necessary and righteous burden of relinquishing your cherished beliefs—unlike in the case of, say, theism, in which I’m more inclined to just say, “Yeah, so there’s no God; get over it”—although I should probably be more sympathetic.
So, why does it matter? Why can’t we just treat the issue with benign neglect, think of ourselves as strictly as individuals, and treat other people strictly as individuals? It is such a beautiful ideal—that my works and words should be taken to reflect only on myself alone, and that the words and works of other people born to a similar form should not be taken to reflect on me. It’s a beautiful ideal, and it seems like it should be possible to swear our loyalty to the general spirit of this ideal, while still recognizing that---
In this world, it’s not that simple. In a state of incomplete information (and it is not all clear to me what it would even mean to have complete information), you have to make probabilistic inferences based on what evidence you do have, and to the extent that there are systematic patterns of cognitive sex and race differences, people are going to update their opinions of others based on sex and race. You can profess that you’re not interested in these questions, that you don’t know—but just the same, when you see someone acting against type, you’re probably going to notice this as unusual, even if you don’t explicitly mention it to yourself.
There are those who argue—as I used to argue—that this business about incomplete information, while technically true, is irrelevant for practical purposes, that it’s easy to acquire specific about an individual, which screens off any prior information based on sex and race. And of course it’s true, and a good point, and an important point to bear in mind, especially for someone who comes to this issue with antiegalitarian biases, rather than the egalitarian biases that I did. But for someone with initial egalitarian biases, it’s important not to use it—as I think I used to use it—as some kind of point scored for the individualist/egalitarian side. Complex empirical questions do not have sides. And to the extent that this is not an empirical issue; to the extent that it’s about morality—then there are no points to score.
It gets worse—you don’t even have anywhere near complete information about yourself. People form egregiously false beliefs about themselves all the time. If you’re not ridiculously careful, it’s easy to spend your entire life believing that you have an immortal soul, or free will, or that the fate of the light cone depends solely on you and your genius AI project. So information about human nature in general can be useful even on a personal level: it can give you information about yourself that you would never have gotten from mere introspection and naive observation. I know from my readings that if I’m male, I’m more likely to have a heart attack and less likely to get breast cancer than would be the case if I were female, whereas this would not at all be obvious if I didn’t read. Why should this be true of physiology, but not psychology? If it turns out that women and men have different brain designs, and I don’t have particularly strong evidence that I’m a extreme genetic or developmental anomaly, then I should update my beliefs about myself based on this information, even if it isn’t at all obvious from the inside, and even though the fact may offend me and make me want to cry. For someone with a lot of scientific literacy but not as much rationality skill, the inside view is seductive. It’s tempting to cry out, “Sure, maybe ordinary men are such-and-this, and normal women are such-and-that, but not me; I’m different, I’m special, I’m an exception; I’m a gloriously androgynous creature of pure information!” But if you actually want to achieve your ideal (like becoming a gloriously androgynous creature of pure information), rather than just having a human’s delusion of it, you need to form accurate beliefs about just how far this world is from the ideal, because only true knowledge can help you actively shape reality.
It could very well be that information about human differences could have all sorts of terrible effects if widely or selectively disseminated. Who knows what the masses will do? I must confess that I am often tempted to say that I have no interest in such political questions—that I don’t know, that it doesn’t matter to me. This attitude probably is not satisfactory for the same sorts of reasons I’ve listed above. (How does the line go? “You might not care about politics, but politics cares about you”?) But for now, on a collective or political or institutional level, I really don’t know: maybe ignorance is bliss. But for the individual aspiring rationalist, the correct course of action is unambiguous: it’s better to know, than to not know, it’s better to make decisions explicitly and with reason, then to let your subconscious decide for you and for things to take their natural course.
that it’s easy to acquire specific about an individual, which screens off any prior information based on sex and race
I think people may be overapplying the concept of “screening off”, though?
If for example RACE → INTELLIGENCE → TEST SCORE, then knowing someone’s test score does not screen off race for the purpose of predicting intelligence (unless I’m very confused). Knowing test score should still make knowing race less useful, but not because of screening off.
On the other hand, if for example GENDER → PERSONALITY TRAITS → RATIONALIST TENDENCIES, then knowing someone’s personality traits does screen off gender for the purpose of predicting rationalist tendencies.
I agree with the overall thrust of this, but I do have some specific reservations:
It’s tempting to cry out, “Sure, maybe ordinary men are such-and-this, and normal women are such-and-that, but not me; I’m different, I’m special, I’m an exception.
The temptation is real, and it’s a temptation we should be wary of. But it’s also important to realize that the more variation there is within the groups, the more reasonable it may be to suppose that we are special (of course, we should still have some evidence for this, but the point is that the more within-group variation there is, the weaker that evidence needs to be). It’s difficult to know what to do with information about average differences between groups unless one also knows something about within-group variation.
But for the individual aspiring rationalist, the correct course of action is unambiguous: it’s better to know, than to not know, it’s better to make decisions explicitly and with reason, then to let your subconscious decide for you and for things to take their natural course.
Again, I’m very sympathetic to this view, but I think you’re overselling the case. If (correctly) believing your group performs poorly causes you to perform worse then there’s a tradeoff between that and the benefits of accurate knowledge. Maybe accurate knowledge is still best, all things considered, but that’s not obvious to me.
Beyond the context of this specific debate, the theory of the second-best shows that incremental movements in the direction of perfect rationality will not always improve decision-making. And there’s a lot of evidence that “subconscious” decision-making outperforms more explicit reasoning in some situations. Jonah Lehrer’s How We Decide, and pretty much all of Gerd Gigerenzer’s books make this argument (in addition to the more anecdotal account in Malcolm Gladwell’s Blink). I tend to think they oversell the case for intuition somewhat, but it’s still pretty clear that blanket claims about the superiority of more information and conscious deliberation are false. The really important question is how we can best make use of the strengths of different decision-strategies.
If it turns out that women and men have different brain designs, and I don’t have particularly strong evidence that I’m a extreme genetic or developmental anomaly, then I should update my beliefs about myself based on this information, even if it isn’t at all obvious from the inside, and even though the fact may offend me and make me want to cry.
Might be just mind projection on my part, but it seems to me that in those accursed cases, where various aspects of an “egalitarian” way of thought—that includes both values, moral intuitions, ethical rules, actual beliefs about the world and beliefs about one’s beliefs—all get conflated, and the entire (silly for an AI but identity-forming for lots of current humans) system perceives some statement of fact as a challenge to its entire existence… well, the LW crowd at least would pride themselves on not being personally offended.
If tomorrow it was revealed with high certainty that us Slavs are genetically predisposed against some habits that happen to be crucial for civilized living and running a state nicely, I’d most definitely try to take it in stride. But when something like this stuff is said, I tend to feel sick and uncertain; I don’t see a purely consequentialist way out which would leave me ethically unscathed.
Ah, if only it was so easy as identifying the objective state of the world, than trying to act in accordance with (what you’ve settled on as) your terminal values. But this would require both* more rationality and more compartmentalization than I’ve seen in humans so far.
“You come to amidst the wreckage of your own making. Do you stay there, eyes squeezed shut, afraid to move, hoping to bleed to death? Or do you crawl out, help your loved ones, make sure the fire doesn’t spread, try to fix it?”—Max Payne 2: The Fall of Max Payne
One day, I started looking at the people around me, and I began to realize how much they looked like apes. I quickly stopped doing this, because I feared it would cause me to treat them with contempt. And you know what? Doublethink worked. I didn’t start treating people with more contempt as a result of purposely avoiding certain knowledge that I knew would cause me to treat people with more contempt.
If you think that my efforts to suppress observations relating the appearance of humans with the appearance of apes were poorly founded, then you have a very instrumentally irrational tendency towards epistemic rationality.
[...] then you have a very instrumentally irrational tendency towards epistemic rationality.
Guilty as charged! I don’t want to win by means of doublethink—it sounds like the sort of thing an ape would do. A gloriously androgynous creature of pure information wins cleanly or not at all. (I think I’m joking somewhat, but my probability distribution on to what extent is very wide.)
At some point you will have limited resources, and you will need to decide how much that preference for winning cleanly is worth. How much risk you’re willing to take of not winning at all, in exchange for whatever victory you might still get being a clean one.
For example, say there are two people you love dangling off a cliff. You could grab one of them and pull them to safety immediately, but in doing so there’s some chance you could destabilize the loose rocks and cause the other to fall to certain death.
The gloriously androgynous creature of pure information (henceforth GACoPI) that you wish you were cannot prioritize one love over the other in a timely fashion, and will simply babble ineffectual encouragement to both until professional rescuers arrive, during which time there is some chance that somebody’s arms will get tired or the cliff will shift due to other factors, killing them both. An ape’s understanding of factional politics, on the other hand, has no particular difficulty judging one potential ally or mate as more valuable, and then rigging up a quick coin-flip or something to save face.
The gloriously androgynous creature of pure information (henceforth GACoPI) that you wish you were cannot prioritize one love over the other in a timely fashion, and will simply babble ineffectual encouragement to both until professional rescuers arrive, during which time there is some chance that somebody’s arms will get tired or the cliff will shift due to other factors, killing them both.
The grandparent uses “winning cleanly” to mean winning without resorting to doublethink. To go from that to assuming that a GACoPI is unable to enact your proposed ape solution or come up with some other courses of action than standing around like an idiot smacks of StrawVulcanism (WARNING: TVTropes).
Wouldn’t your efforts be better directed at clearing up whatever confusion leads you to react with contempt to the similarity to apes?
I can maybe see myself selling out epistemic rationality for an instrumental advantage in some extreme circumstance, but I find abhorrent the idea of selling it so cheaply. It seems to me a rationalist should value their ability to see reality higher, not give it up at the first sign of inconvenience.
Even on instrumental grounds. Just like theoretical mathematics tends to end up having initially unforeseen practical application, giving up on epistemic rationality carries potential of unforeseen instrumental disadvantage.
An approach using both instrumental and epistemic rationality would be to research chimps and bonobos and find all the good qualities of them that we share. The problem here is your association “apes = contempt,” and trying to suppress that we are apes isn’t going to fix that problem.
I agree with the overall thrust of this, but I do have some specific reservations:
It’s tempting to cry out, “Sure, maybe ordinary men are such-and-this, and normal women are such-and-that, but not me; I’m different, I’m special, I’m an exception.
The temptation is real, and it’s a temptation we should be wary of. But it’s also important to realize that the more variation there is within the groups, the more reasonable it may be to suppose that we are special (of course, we should still have some evidence for this, but the point is that the more within-group variation there is, the weaker that evidence needs to be). It’s difficult to know what to do with information about average differences between groups unless one also knows something about within-group variation.
But for the individual aspiring rationalist, the correct course of action is unambiguous: it’s better to know, than to not know, it’s better to make decisions explicitly and with reason, then to let your subconscious decide for you and for things to take their natural course.
Again, I’m very sympathetic to this view, but I think you’re overselling the case. If (correctly) believing your group performs poorly causes you to perform worse, then there’s a tradeoff between that and the benefits of accurate knowledge. Maybe accurate knowledge is still best, all things considered, but that’s not obvious to me.
Beyond the context of this specific debate, the theory of the second-best shows that incremental movements in the direction of perfect rationality will not always improve decision-making. And there’s a lot of evidence that “subconscious” decision-making outperforms more explicit reasoning in some situations. Jonah Lehrer’s How We Decide, and pretty much all of Gerd Gigerenzer’s books make this argument (in addition to the more anecdotal account in Malcolm Gladwell’s Blink). I tend to think they oversell the case for intuition somewhat, but it’s still pretty clear that blanket claims about the superiority of more information and conscious deliberation are false. The really important question is how we can best make use of the strengths of different decision-strategies.
I agree with the overall thrust of this, but I do have some specific reservations:
It’s tempting to cry out, “Sure, maybe ordinary men are such-and-this, and normal women are such-and-that, but not me; I’m different, I’m special, I’m an exception.
The temptation is real, and it’s a temptation we should be wary of. But it’s also important to realize that the more variation there is within the groups, the more reasonable it may be to suppose that we are special. It’s difficult to know what to do with information about average differences between groups unless one also knows about within group variation. (The only case
But for the individual aspiring rationalist, the correct course of action is unambiguous: it’s better to know, than to not know, it’s better to make decisions explicitly and with reason, then to let your subconscious decide for you and for things to take their natural course.
Again, I’m very sympathetic to this view, but I think you’re overselling the case. If (correctly) believing your group performs poorly causes you to perform worse, then there’s a tradeoff between that and the benefits of accurate knowledge. Maybe accurate knowledge is still best, all things considered, but that’s not obvious to me.
Beyond the context of this specific debate, the theory of the second-best shows that incremental movements in the direction of perfect rationality will not always improve decision-making. And there’s a lot of evidence that “subconscious” decision-making outperforms more explicit reasoning in some situations. Jonah Lehrer’s How We Decide, and pretty much all of Gerd Gigerenzer’s books make this argument (in addition to the more anecdotal account in Malcolm Gladwell’s Blink). I tend to think they oversell the case for intuition somewhat, but it’s still pretty clear that blanket claims about the superiority of more information and conscious deliberation are false. The really important question is how we can best make use of the strengths of different decision-strategies.
I agree that denial usually seems like a bad idea, but the problem with things like stereotype threat is that they suggest (and more importantly provide evidence) that sometimes it might actually be useful (a path to improvement, even if not necessarily the first-best path).
The trick, presumably, is to distinguish the situations when this will hold from those when it doesn’t.
Yes, but there is a long-term benefit associated with the removal of your cancer. On the other hand, if you had a blemish on your shoulder, you’d be better off not noticing it.
Science makes a lot of vastly more demoralizing conclusions like Darwinism or the possibility of nuclear weapons. If you really believe what you say you believe, you should focus on debunking those first.
But Darwinism and the possibility of nuclear weapons are important to know about.
Let’s say that there is systematic variation between races. What’s the benefit of knowledge about this being disseminated? So colleges will stop giving preferential treatment to minorities? If that’s the case, I think the costs outweigh the benefits.
What’s the benefit of knowledge about this being disseminated?
For one, a lot of people would find their accurate reasoning no longer denounced as racist by others. Example: before the crisis SWPL popular opinion blamed bankers for discriminatory mortgage lending to blacks. Government went in and fixed this by fiat. Today the same crowd turns around and blames bankers for disproportionate foreclosures among blacks, not realizing the implicit admission that outlawed lending practices must’ve been fair.
In short, you didn’t succeed in impressing upon me the costs of truth.
Short answer: couldn’t care less. Accepting the truth is everybody’s problem, not just mine to decide.
Long answer: you seem to assume my utility function includes a term for actions and worldviews of distant others. In fact I deny all responsibility for any actions and thoughts of people other than myself, except what’s implicit in the following pledge: I will never manipulate anyone with falsehoods or emotional extortion. Other than that, I go about my own business (including making true pronouncements in my personal vicinity, not in the least intended to “spread the word”) and the world can screw itself—I’m not its caretaker.
But the outlawed lending practices weren’t fair. My next door neighbor took forever to get a business loan even though he was an excellent risk. The new system was also broken, but the old one wasn’t good.
Edited to Add: To be more specific, his white wife handled the application and it was all smooth sailing until he walked in to sign the bottom line, and then the offer was unceremoniously retracted with no explanation.
Incidentally, when these lending rules came into effect and he did get a loan, his business boomed and he paid it off without incident. So...
I disagree. The claim is that they were discriminated against unfairly and this can be proven by your anecdote that someone didn’t fail to repay a loan. Yet in aggregate, there was a lot of non-repayment going on.
The question is much less about whether he actually did repay the loan. It’s about the decision process.
Everything looked great until they realized they were about to lend to a black man.
That is fucked up. And it doesn’t happen in isolation.
Whether he actually managed to pay the loan off or not is almost aside from the point, though his success is indeed frosting (from the argument’s PoV—obviously rather more important to us personally).
Everything looked great until they realized they were about to lend to a black man. That is fucked up. And it doesn’t happen in isolation.
No, it’s not. It’s useful information. What you’re emoting about is like saying
Everything looked great until they realized they were about to lend to a bankrupt man. That is fucked up. And it doesn’t happen in isolation.
Whatever rates they estimated as just barely covering the risk of nonpayment and allowing them to eke out a profit based on their estimate from his personal wealth and existing track record is not the rate they would have estimated after learning additional stuff. Being black is some of that additional stuff.
I think we should both slow down. I’ve slipped up, and you’re slipping up. You’re saying I’m emoting and then tripping up in two dramatic ways that you really should have caught.
A) Going bankrupt would be part of that existing track record.
B) He could have dealt with a slightly higher rate. He wasn’t offered a slightly higher rate. He wasn’t offered any rate at all.
Okay. Taking some more time to think.
Being black may provide some information, but it is almost entirely screened by the information from the admissible parts of the track record. The banks were screwing up this calculation, and in doing so were not only hurting themselves but causing extreme damage to the world around them.
Adding a bunch of unbiased actors with relevant expertise, guts, and enormous amounts of capital would have solved the problem, but so would unicorns, and we had just as many of those. Regulation brought problems, but they were different problems.
A) Going bankrupt would be part of that existing track record.
And why can’t being part of a minority group be part of a track record? In both cases, the party thinking of giving the loan has learned new and material information.
B) He could have dealt with a slightly higher rate. He wasn’t offered a slightly higher rate. He wasn’t offered any rate at all.
So? If they had offered a loan at 100% interest, people would be bitching anyway about discrimination. Maybe it is a calculated PR move that people will complain less about not getting a loan than about getting a loan at +2% interest; maybe it has to do with the fixed overhead of servicing loans; maybe they only had so much appetite for risk even if the interest rate were raised to make the loan +EV again; maybe this is an unexpected consequence of the millions of words of regulation governing banks.
Being black may provide some information, but it is almost entirely screened by the information from the admissible parts of the track record.
I doubt that and I suspect you have no good reason to believe that.
I doubt that and I suspect you have no good reason to believe that.
Maybe for people with a really thin track record. Not for people who’ve run a profitable business for a decade, have a solid business case, etc.. Just what independent information does being black provide, here? (No need to respond to this point here—you can put it in response to TheOtherDave’s parallel comment)
Now, I freely grant that if you only look at the bankers’ side of things, regulation doesn’t make sense. They should be perfectly informed and make the ideal decisions as to who will succeed or not! And if they can’t make perfect use of that information, that’s their problem!
But of course, it’s not only their problem, and the purpose of the law is not solely to help the bankers get money.
A ‘being black’ penalty even of only 2% on loans would be colossal. Think how much debt a growing business has to incur, and compound that over the years. Apply it to choices of housing, of auto financing. Everyone in the community has less money, so they can’t buy as much, so businesses have a harder time growing, so people earn less. It’s self-perpetuating.
But it wasn’t that mild. Instead, the loans were simply turned down. The near-total absence of capital was crippling.
Do you think this is a problem? What might you do about it?
In the scales of values, where does
“equal opportunity”
rank up against
“allowing each individual to make the best choices available to them personally without regard to the impact that choice has on what choices other individuals get”?
(No need to respond to this point here—you can put it in response to TheOtherDave’s parallel comment)
(Responded.)
But it wasn’t that mild. Instead, the loans were simply turned down. The near-total absence of capital was crippling.
To repeat myself:
So? If they had offered a loan at 100% interest, people would be bitching anyway about discrimination. Maybe it is a calculated PR move that people will complain less about not getting a loan than about getting a loan at +2% interest; maybe it has to do with the fixed overhead of servicing loans; maybe they only had so much appetite for risk even if the interest rate were raised to make the loan +EV again; maybe this is an unexpected consequence of the millions of words of regulation governing banks.
Moving on:
A ‘being black’ penalty even of only 2% on loans would be colossal. Think how much debt a growing business has to incur, and compound that over the years. Apply it to choices of housing, of auto financing. Everyone in the community has less money, so they can’t buy as much, so businesses have a harder time growing, so people earn less. It’s self-perpetuating.
So, are you arguing that the ‘being black’ penalty is not accurate here? That the 2% penalty is compensating for risk that does not exist? If so then that’s quite an opportunity: a free 2% price cut. Especially in the current low-interest rate environment, that’s a lot of money being left on the table.
Or are you arguing that the penalty is accurate and anyone who tried to offer at non-penalty rates would lose their shirts as tons of loans defaulted?
I thought you were arguing against the latter, before… If you’ve changed your mind, it’d be good to say so clearly and explicitly before going on.
You persist in only looking at the effect on the banker. As I said, the regulation won’t make much if any sense from that point of view alone. Your pointing this out once more doesn’t really change anything.
That said, considering that the regulated banks had a low default rate until everything went screwy because of the (non-regulated) predatory lenders, I think I’ll stick with the theory that there was a market inefficiency.
Now, it wasn’t a simple barrier-free market inefficiency. If only one bank had moved, it could well have lost its shirt. Being the sole investor in a dead area is rough. It’s a bit like a many-player game with ‘staying out’ having a positive payoff from being able to invest elsewhere, and ‘going in’ having a payoff that starts out negative with no other cooperators, increases with cooperators for a while, peaks above ‘staying out’, then declines down to the ‘staying out’ level once the market is fully competitive (then below if it becomes saturated). When no one is there, you’d be crazy to move first.
Changing the rules so the banks had to serve their localities guaranteed a minimum level of going in, which made it no longer a bad move to go in.
Just so I understand that last part… are you claiming: 1) …there is no factor or set of factors X such that X screens off skin color for purposes of calculating loan EV, 2) …there may be such an X, but we don’t know what it is and/or have no way of measuring it, 3) …we know what X is, but the admissible parts of the track record don’t include it, ...or something else?
#1 seems really unlikely to me, so if you think it likely I’m interested in your reasons. #2 seems plausible. #3 also seems plausible, but if true, suggests that talking about the admissability of skin color is a herring of unspecified hue; as a bank, I should be trying to get X admitted instead.
I am claiming that you have jumped to the conclusion that claims 1-n must all be false and hence the cancellation is a Bad thing. For my purpose, any of 1-3 can be correct, and I don’t need to argue for any specific one especially if you already find plausible any of them.
If you want to overrule the bank’s reaction, you need a lot of local domain-specific knowledge, and that’s something neither you nor I have.
Here’s an example of the sort of obscure knowledge you might need: are you familiar with the term “minority fronts”? This is when a government or other entity attempts a form of affirmative action in which minority-owned businesses or organizations get financially favored for grants or bidding on contracts; yet of course there aren’t very many competent minority-owned businesses (that’s why they’re doing it in the first place), so this immediately leads to fraud in which a person meeting the minority criteria is put in place as the straw owner of a company actually run by other people of other groups and then the business bids on business as a minority-owned business, frequently simply passing on the work and money to a normal business minus the straw owner’s share. Naturally, this is largely meaningless for a white-owned business as whites are not considered a minority. Now, remembering that the ‘owner’ in such cases has stooped to conspiracy and felony fraud to steal possibly millions, do you think that their shell business is a better or worse credit risk than an equivalent white owner matched on other observables like income?
Personally, I’d say worse. This is just a cute example of why race can be a salient factor in loans and why a white owner might be different from a black owner; I bring it up to stand for the larger class of relevant details and possibilities, not being a banker or economist or risk specialist. So before you can say that the ‘discrimination’ is purely irrational and unjustifiable, you need to know about all these details. Do you? I don’t think you do.
EDIT: Ran into an international example of the abuse of affirmative action in The Economist:
The same goes for civil-service quotas. When jobs are dished out for reasons other than competence, the state grows less competent, as anyone who has wrestled with Indian or Nigerian officialdom can attest. Moreover, rules favouring businesses owned by members of particular groups are easy to game. Malaysians talk of “Ali-Baba” firms, where Ali (an ethnic Malay) lends his name, for a fee, to Baba (a Chinese businessman) to win a government contract.
Although these policies tend to start with the intention of favouring narrow groups, they spread as others clamour to be included. That American federal programme began by awarding no-bid contracts to firms owned by blacks, Hispanics and Native Americans; now it covers people with ancestry from at least 33 countries. In India 60% of the population are eligible for privileges as members of scheduled castes, tribes or “other backward classes”. Such policies poison democracy by encouraging divisions along lines drawn by discriminatory rules. The anger thus stoked has helped stir bloody conflicts in India, Rwanda and Sri Lanka. And such rules, once in place, are almost impossible to get rid of. In 1949 India’s constitution said quotas should be phased out in ten years, but they are now more widespread than ever. America’s policies have survived decades of legal pushback, though not unscathed.
For my purpose, any of 1-3 can be correct, and I don’t need to argue for any specific one especially if you already find plausible any of them.
OK.
you have jumped to the conclusion that claims 1-n must all be false
If that’s true, I haven’t noticed. If you feel like summarizing the evidence for believing I’ve reached that conclusion, though, I’ll certainly listen.
If you want to overrule the bank’s reaction, you need a lot of local domain-specific knowledge
I certainly agree that overruling the bank’s decision about loans without knowing about as much about loans as the bank does is going to have unexpected consequences, so unless the bank is currently pessimizing for my values I’m probably going to be less happy with the result than I am now.
And I certainly agree that I don’t know about all the details that go into making decisions about loans.
If the solution didn’t work, maybe one should consider the possibility that whatever problem there was, it wasn’t what one thought it was.
The solution actually wasn’t THAT bad- the community banks actually regulated by the community reinvestment act had/have lower rates of foreclosure then the national average, and lower rates of foreclosure on their loans to minorities.
Edit: this is because they are generally required to keep more skin-in-the-game, not BECAUSE they were regulated by the CRA (most fall under various patches of the regulations put in place after the S&L crisis). My point being, community banks were able to responsibly lend to a diverse population, and certainly the CRA wasn’t causal in the foreclosure crisis.
The solution actually wasn’t THAT bad- the community banks actually regulated by the community reinvestment act had/have lower rates of foreclosure then the national average, and lower rates of foreclosure on their loans to minorities.
That doesn’t necessarily address my point: if there were unjust discrimination, discrimination which was not a rational reaction to the credit risk, then saying “well, they didn’t cause as many losses as some aggregate measure of loss during the greatest period of property-related losses in the history of America” isn’t proving that. To prove that, you need to show something like that the loans turned out to have been made profitably on net in the long-term after adjusting for risk and opportunity cost etc.
To prove that, you need to show something like that the loans turned out to have been made profitably on net in the long-term after adjusting for risk and opportunity cost etc.
I’m not sure thats true, I think what you would want to show is that the loans ‘forced’ on the community banks are at-least-as-profitable as the loans the banks voluntarily took on. Given the bizarre financial period we just lived through, the losses on loans is going to be markedly higher across all institutions.
Maybe the next decade of CRA type lending won’t be contaminated by massive changes in the financial sector and a large crash- in which case maybe the questions of discrimination will become easier to untangle. For the last decade, the housing market underwent major changes, and the community banks were such a negligible sliver of the overall market that the CRAs effects are on community banks are higher order corrections to higher order corrections.
I’m not sure thats true, I think what you would want to show is that the loans ‘forced’ on the community banks are at-least-as-profitable as the loans the banks voluntarily took on.
No, because you’re comparing apples and oranges. If the banks were forced to take on loans to the groups in question due to political pressure despite having been previously correct in demanding higher interest to compensate them for the loans, and also simultaneously engaged in an epic miscalculation about the safety of loans to other groups based on naive models, then you could produce this inversion. They made a mistake, and then made an even larger mistake; this doesn’t make the original mistake not a mistake.
No, because you’re comparing apples and oranges. If the banks were forced to take on loans to the groups in question due to political pressure despite having been previously correct in demanding higher interest to compensate them for the loans, and also simultaneously engaged in an epic miscalculation about the safety of loans to other groups based on naive models, then you could produce this inversion.
Only if the loans were in different asset classes. Because these are all housing loans, the underlying model of the housing market is an input to both group’s loans, with minority status as an additional adjustment.
Anyway, I don’t think looking at CRA and pre-CRA loans to minorities you can answer discrimination questions with any kind of precision. The data seems to lean in the direction of former discrimination, but massive structural changes to finance dwarf the tiny changes created by the CRA.
If all of science agreed that members of one race really were slighty smarter on average than members of another race, that could be extremely demoralizing for the people of the slightly-dumber race. See stereotype threat. This seems like a high price to pay to eliminate a popular falsehood—I imagine their are other falsehoods that would be easier to eliminate for a smaller price. And unlike religion, there’s no long-term benefit associated with its removal.
It’s mentioned below to some extent, but if you start with the assumption that there’s no systematic variation between groups, then if you see a statistical difference in how groups are treated, that’s evidence of a systematic bias. If it turns out that there is systematic variation between groups, the data can be explained without the bias. It’s the difference between “Harvard is racist” and “Harvard accepts bright people regardless of race”.
Harvard has two responses to these claims: they can continue getting called racist, or they can unfairly admit minorities who don’t deserve to get in. Both of these alternatives are preferable to telling a large group with normal human psychology that they are inferior.
Edit: I tend to think it’s OK for Harvard to admit too many minorities because I think having the upper class be made up of people from a variety of backgrounds is valuable. But I could see how this could be a problem in other domains, such as cousin_it’s mortgage example.
You do realize the top universities (and especially the Ivy Leagues) systematically discriminate against Asian students right?
Its really hard to fight or talk about something like that if one can’t just point out that East Asians have higher average IQs than say Europeans.
Maybe. Maybe not.
The first step in solving a problem is to recognise it. If I discovered I have cancer I would be demoralised immensely but I’d prefer that and take a shot at recovering rather than die unknowingly.
Denial is not a path to improvement.
Strongly seconded. I speak from experience: when evidence starts mounting for some horrible, nightmarish proposition that you’re scared of, it is tempting to tell yourself that even if it were true, it wouldn’t really matter, that there would be no benefit to acknowledging it, that you can just go on acting as you’ve always done, as if nothing’s changed. But on your honor as an aspiring rationalist, you must face the pain directly. When you get a hint that this world is not what you thought it was, that you are not what you thought you were—look! And update!---no matter how much it hurts, no matter how much your heart may cry for the memory of the world you thought this was. Do it selfishly, in the name of the world you thought you knew: because once you have updated, once you see this hellish wasteland for what it really is, then you can start to try to patch what few things up that you can.
Suppose you really don’t like gender roles, and you’re quietly worried about something you read about evolutionary psychology. Brushing it all under the rug won’t help. Investigate, learn all you can, and then do something. Maybe something drastic, maybe something trivial, but something. Experiment with hormones! Donate a twenty to GenderPAC! Use your initials in your byline! But something, anything other than defaulting to ignorance and letting things take their natural course.
As soon as you start talking about your “honor as an aspiring rationalist”, you’re moving from the realm of rationality to ideology.
Like I said, I don’t think this question matters and I’m mostly indifferent to what the answer actually is. I’m just trying to protect the people who do care.
Well, sure, but the ideological stance is “You should care about rationality.” I should think that that’s one of the most general and least objectionable ideologies there is.
But I do care, and I no longer want to be protected from the actual answer. When I say that I speak from experience, it’s really true. There’s a reason that this issue has me banging out dramatic, gushy, italics-laden paragraphs on the terrible but necessary and righteous burden of relinquishing your cherished beliefs—unlike in the case of, say, theism, in which I’m more inclined to just say, “Yeah, so there’s no God; get over it”—although I should probably be more sympathetic.
So, why does it matter? Why can’t we just treat the issue with benign neglect, think of ourselves as strictly as individuals, and treat other people strictly as individuals? It is such a beautiful ideal—that my works and words should be taken to reflect only on myself alone, and that the words and works of other people born to a similar form should not be taken to reflect on me. It’s a beautiful ideal, and it seems like it should be possible to swear our loyalty to the general spirit of this ideal, while still recognizing that---
In this world, it’s not that simple. In a state of incomplete information (and it is not all clear to me what it would even mean to have complete information), you have to make probabilistic inferences based on what evidence you do have, and to the extent that there are systematic patterns of cognitive sex and race differences, people are going to update their opinions of others based on sex and race. You can profess that you’re not interested in these questions, that you don’t know—but just the same, when you see someone acting against type, you’re probably going to notice this as unusual, even if you don’t explicitly mention it to yourself.
There are those who argue—as I used to argue—that this business about incomplete information, while technically true, is irrelevant for practical purposes, that it’s easy to acquire specific about an individual, which screens off any prior information based on sex and race. And of course it’s true, and a good point, and an important point to bear in mind, especially for someone who comes to this issue with antiegalitarian biases, rather than the egalitarian biases that I did. But for someone with initial egalitarian biases, it’s important not to use it—as I think I used to use it—as some kind of point scored for the individualist/egalitarian side. Complex empirical questions do not have sides. And to the extent that this is not an empirical issue; to the extent that it’s about morality—then there are no points to score.
It gets worse—you don’t even have anywhere near complete information about yourself. People form egregiously false beliefs about themselves all the time. If you’re not ridiculously careful, it’s easy to spend your entire life believing that you have an immortal soul, or free will, or that the fate of the light cone depends solely on you and your genius AI project. So information about human nature in general can be useful even on a personal level: it can give you information about yourself that you would never have gotten from mere introspection and naive observation. I know from my readings that if I’m male, I’m more likely to have a heart attack and less likely to get breast cancer than would be the case if I were female, whereas this would not at all be obvious if I didn’t read. Why should this be true of physiology, but not psychology? If it turns out that women and men have different brain designs, and I don’t have particularly strong evidence that I’m a extreme genetic or developmental anomaly, then I should update my beliefs about myself based on this information, even if it isn’t at all obvious from the inside, and even though the fact may offend me and make me want to cry. For someone with a lot of scientific literacy but not as much rationality skill, the inside view is seductive. It’s tempting to cry out, “Sure, maybe ordinary men are such-and-this, and normal women are such-and-that, but not me; I’m different, I’m special, I’m an exception; I’m a gloriously androgynous creature of pure information!” But if you actually want to achieve your ideal (like becoming a gloriously androgynous creature of pure information), rather than just having a human’s delusion of it, you need to form accurate beliefs about just how far this world is from the ideal, because only true knowledge can help you actively shape reality.
It could very well be that information about human differences could have all sorts of terrible effects if widely or selectively disseminated. Who knows what the masses will do? I must confess that I am often tempted to say that I have no interest in such political questions—that I don’t know, that it doesn’t matter to me. This attitude probably is not satisfactory for the same sorts of reasons I’ve listed above. (How does the line go? “You might not care about politics, but politics cares about you”?) But for now, on a collective or political or institutional level, I really don’t know: maybe ignorance is bliss. But for the individual aspiring rationalist, the correct course of action is unambiguous: it’s better to know, than to not know, it’s better to make decisions explicitly and with reason, then to let your subconscious decide for you and for things to take their natural course.
I think people may be overapplying the concept of “screening off”, though?
If for example RACE → INTELLIGENCE → TEST SCORE, then knowing someone’s test score does not screen off race for the purpose of predicting intelligence (unless I’m very confused). Knowing test score should still make knowing race less useful, but not because of screening off.
On the other hand, if for example GENDER → PERSONALITY TRAITS → RATIONALIST TENDENCIES, then knowing someone’s personality traits does screen off gender for the purpose of predicting rationalist tendencies.
I agree with the overall thrust of this, but I do have some specific reservations:
The temptation is real, and it’s a temptation we should be wary of. But it’s also important to realize that the more variation there is within the groups, the more reasonable it may be to suppose that we are special (of course, we should still have some evidence for this, but the point is that the more within-group variation there is, the weaker that evidence needs to be). It’s difficult to know what to do with information about average differences between groups unless one also knows something about within-group variation.
Again, I’m very sympathetic to this view, but I think you’re overselling the case. If (correctly) believing your group performs poorly causes you to perform worse then there’s a tradeoff between that and the benefits of accurate knowledge. Maybe accurate knowledge is still best, all things considered, but that’s not obvious to me.
Beyond the context of this specific debate, the theory of the second-best shows that incremental movements in the direction of perfect rationality will not always improve decision-making. And there’s a lot of evidence that “subconscious” decision-making outperforms more explicit reasoning in some situations. Jonah Lehrer’s How We Decide, and pretty much all of Gerd Gigerenzer’s books make this argument (in addition to the more anecdotal account in Malcolm Gladwell’s Blink). I tend to think they oversell the case for intuition somewhat, but it’s still pretty clear that blanket claims about the superiority of more information and conscious deliberation are false. The really important question is how we can best make use of the strengths of different decision-strategies.
Might be just mind projection on my part, but it seems to me that in those accursed cases, where various aspects of an “egalitarian” way of thought—that includes both values, moral intuitions, ethical rules, actual beliefs about the world and beliefs about one’s beliefs—all get conflated, and the entire (silly for an AI but identity-forming for lots of current humans) system perceives some statement of fact as a challenge to its entire existence… well, the LW crowd at least would pride themselves on not being personally offended.
If tomorrow it was revealed with high certainty that us Slavs are genetically predisposed against some habits that happen to be crucial for civilized living and running a state nicely, I’d most definitely try to take it in stride. But when something like this stuff is said, I tend to feel sick and uncertain; I don’t see a purely consequentialist way out which would leave me ethically unscathed.
Ah, if only it was so easy as identifying the objective state of the world, than trying to act in accordance with (what you’ve settled on as) your terminal values. But this would require both* more rationality and more compartmentalization than I’ve seen in humans so far.
“You come to amidst the wreckage of your own making. Do you stay there, eyes squeezed shut, afraid to move, hoping to bleed to death? Or do you crawl out, help your loved ones, make sure the fire doesn’t spread, try to fix it?”—Max Payne 2: The Fall of Max Payne
One day, I started looking at the people around me, and I began to realize how much they looked like apes. I quickly stopped doing this, because I feared it would cause me to treat them with contempt. And you know what? Doublethink worked. I didn’t start treating people with more contempt as a result of purposely avoiding certain knowledge that I knew would cause me to treat people with more contempt.
If you think that my efforts to suppress observations relating the appearance of humans with the appearance of apes were poorly founded, then you have a very instrumentally irrational tendency towards epistemic rationality.
Maybe the lesson to draw is that you don’t respect apes enough?
Guilty as charged! I don’t want to win by means of doublethink—it sounds like the sort of thing an ape would do. A gloriously androgynous creature of pure information wins cleanly or not at all. (I think I’m joking somewhat, but my probability distribution on to what extent is very wide.)
At some point you will have limited resources, and you will need to decide how much that preference for winning cleanly is worth. How much risk you’re willing to take of not winning at all, in exchange for whatever victory you might still get being a clean one.
For example, say there are two people you love dangling off a cliff. You could grab one of them and pull them to safety immediately, but in doing so there’s some chance you could destabilize the loose rocks and cause the other to fall to certain death.
The gloriously androgynous creature of pure information (henceforth GACoPI) that you wish you were cannot prioritize one love over the other in a timely fashion, and will simply babble ineffectual encouragement to both until professional rescuers arrive, during which time there is some chance that somebody’s arms will get tired or the cliff will shift due to other factors, killing them both. An ape’s understanding of factional politics, on the other hand, has no particular difficulty judging one potential ally or mate as more valuable, and then rigging up a quick coin-flip or something to save face.
The grandparent uses “winning cleanly” to mean winning without resorting to doublethink. To go from that to assuming that a GACoPI is unable to enact your proposed ape solution or come up with some other courses of action than standing around like an idiot smacks of Straw Vulcanism (WARNING: TVTropes).
Wouldn’t your efforts be better directed at clearing up whatever confusion leads you to react with contempt to the similarity to apes?
I can maybe see myself selling out epistemic rationality for an instrumental advantage in some extreme circumstance, but I find abhorrent the idea of selling it so cheaply. It seems to me a rationalist should value their ability to see reality higher, not give it up at the first sign of inconvenience.
Even on instrumental grounds. Just like theoretical mathematics tends to end up having initially unforeseen practical application, giving up on epistemic rationality carries potential of unforeseen instrumental disadvantage.
Good point.
An approach using both instrumental and epistemic rationality would be to research chimps and bonobos and find all the good qualities of them that we share. The problem here is your association “apes = contempt,” and trying to suppress that we are apes isn’t going to fix that problem.
Do you have evidence that the direct good effects of your doublethink outweighed the indirect bad effects?
I agree with the overall thrust of this, but I do have some specific reservations:
The temptation is real, and it’s a temptation we should be wary of. But it’s also important to realize that the more variation there is within the groups, the more reasonable it may be to suppose that we are special (of course, we should still have some evidence for this, but the point is that the more within-group variation there is, the weaker that evidence needs to be). It’s difficult to know what to do with information about average differences between groups unless one also knows something about within-group variation.
Again, I’m very sympathetic to this view, but I think you’re overselling the case. If (correctly) believing your group performs poorly causes you to perform worse, then there’s a tradeoff between that and the benefits of accurate knowledge. Maybe accurate knowledge is still best, all things considered, but that’s not obvious to me.
Beyond the context of this specific debate, the theory of the second-best shows that incremental movements in the direction of perfect rationality will not always improve decision-making. And there’s a lot of evidence that “subconscious” decision-making outperforms more explicit reasoning in some situations. Jonah Lehrer’s How We Decide, and pretty much all of Gerd Gigerenzer’s books make this argument (in addition to the more anecdotal account in Malcolm Gladwell’s Blink). I tend to think they oversell the case for intuition somewhat, but it’s still pretty clear that blanket claims about the superiority of more information and conscious deliberation are false. The really important question is how we can best make use of the strengths of different decision-strategies.
I agree with the overall thrust of this, but I do have some specific reservations:
The temptation is real, and it’s a temptation we should be wary of. But it’s also important to realize that the more variation there is within the groups, the more reasonable it may be to suppose that we are special. It’s difficult to know what to do with information about average differences between groups unless one also knows about within group variation. (The only case
Again, I’m very sympathetic to this view, but I think you’re overselling the case. If (correctly) believing your group performs poorly causes you to perform worse, then there’s a tradeoff between that and the benefits of accurate knowledge. Maybe accurate knowledge is still best, all things considered, but that’s not obvious to me.
Beyond the context of this specific debate, the theory of the second-best shows that incremental movements in the direction of perfect rationality will not always improve decision-making. And there’s a lot of evidence that “subconscious” decision-making outperforms more explicit reasoning in some situations. Jonah Lehrer’s How We Decide, and pretty much all of Gerd Gigerenzer’s books make this argument (in addition to the more anecdotal account in Malcolm Gladwell’s Blink). I tend to think they oversell the case for intuition somewhat, but it’s still pretty clear that blanket claims about the superiority of more information and conscious deliberation are false. The really important question is how we can best make use of the strengths of different decision-strategies.
I agree that denial usually seems like a bad idea, but the problem with things like stereotype threat is that they suggest (and more importantly provide evidence) that sometimes it might actually be useful (a path to improvement, even if not necessarily the first-best path).
The trick, presumably, is to distinguish the situations when this will hold from those when it doesn’t.
Yes, but there is a long-term benefit associated with the removal of your cancer. On the other hand, if you had a blemish on your shoulder, you’d be better off not noticing it.
Science makes a lot of vastly more demoralizing conclusions like Darwinism or the possibility of nuclear weapons. If you really believe what you say you believe, you should focus on debunking those first.
But Darwinism and the possibility of nuclear weapons are important to know about.
Let’s say that there is systematic variation between races. What’s the benefit of knowledge about this being disseminated? So colleges will stop giving preferential treatment to minorities? If that’s the case, I think the costs outweigh the benefits.
For one, a lot of people would find their accurate reasoning no longer denounced as racist by others. Example: before the crisis SWPL popular opinion blamed bankers for discriminatory mortgage lending to blacks. Government went in and fixed this by fiat. Today the same crowd turns around and blames bankers for disproportionate foreclosures among blacks, not realizing the implicit admission that outlawed lending practices must’ve been fair.
In short, you didn’t succeed in impressing upon me the costs of truth.
Yes, alright, I see how incorrect egalitarian views could be a problem in scenarios unrelated to college admissions.
Short answer: couldn’t care less. Accepting the truth is everybody’s problem, not just mine to decide.
Long answer: you seem to assume my utility function includes a term for actions and worldviews of distant others. In fact I deny all responsibility for any actions and thoughts of people other than myself, except what’s implicit in the following pledge: I will never manipulate anyone with falsehoods or emotional extortion. Other than that, I go about my own business (including making true pronouncements in my personal vicinity, not in the least intended to “spread the word”) and the world can screw itself—I’m not its caretaker.
Sorry, I edited my comment a bunch of times, and I’m unsure which version you’re replying to.
In any case, if that’s really your view, I’m not sure I like you very much.
But the outlawed lending practices weren’t fair. My next door neighbor took forever to get a business loan even though he was an excellent risk. The new system was also broken, but the old one wasn’t good.
Edited to Add: To be more specific, his white wife handled the application and it was all smooth sailing until he walked in to sign the bottom line, and then the offer was unceremoniously retracted with no explanation.
Incidentally, when these lending rules came into effect and he did get a loan, his business boomed and he paid it off without incident. So...
“You say X on average, but a friend of mine did ~X, so you must be wrong!”
It was often enough that it got to be a nationally known problem that needed a solution, right? That the solution was terrible doesn’t change that.
If the solution didn’t work, maybe one should consider the possibility that whatever problem there was, it wasn’t what one thought it was.
The solution DID work. It just came with a bunch of other problems. Unforeseen consequences do not negate the original problem.
Actually, they sorta do. (“The operation was a complete success! Unfortunately, the patient died.”)
It is possible to construct examples where they are connected like that.
The topic at hand is not one of them.
I disagree. The claim is that they were discriminated against unfairly and this can be proven by your anecdote that someone didn’t fail to repay a loan. Yet in aggregate, there was a lot of non-repayment going on.
The question is much less about whether he actually did repay the loan. It’s about the decision process.
Everything looked great until they realized they were about to lend to a black man.
That is fucked up. And it doesn’t happen in isolation.
Whether he actually managed to pay the loan off or not is almost aside from the point, though his success is indeed frosting (from the argument’s PoV—obviously rather more important to us personally).
No, it’s not. It’s useful information. What you’re emoting about is like saying
Whatever rates they estimated as just barely covering the risk of nonpayment and allowing them to eke out a profit based on their estimate from his personal wealth and existing track record is not the rate they would have estimated after learning additional stuff. Being black is some of that additional stuff.
I think we should both slow down. I’ve slipped up, and you’re slipping up. You’re saying I’m emoting and then tripping up in two dramatic ways that you really should have caught.
A) Going bankrupt would be part of that existing track record.
B) He could have dealt with a slightly higher rate. He wasn’t offered a slightly higher rate. He wasn’t offered any rate at all.
Okay. Taking some more time to think.
Being black may provide some information, but it is almost entirely screened by the information from the admissible parts of the track record. The banks were screwing up this calculation, and in doing so were not only hurting themselves but causing extreme damage to the world around them.
Adding a bunch of unbiased actors with relevant expertise, guts, and enormous amounts of capital would have solved the problem, but so would unicorns, and we had just as many of those. Regulation brought problems, but they were different problems.
And why can’t being part of a minority group be part of a track record? In both cases, the party thinking of giving the loan has learned new and material information.
So? If they had offered a loan at 100% interest, people would be bitching anyway about discrimination. Maybe it is a calculated PR move that people will complain less about not getting a loan than about getting a loan at +2% interest; maybe it has to do with the fixed overhead of servicing loans; maybe they only had so much appetite for risk even if the interest rate were raised to make the loan +EV again; maybe this is an unexpected consequence of the millions of words of regulation governing banks.
I doubt that and I suspect you have no good reason to believe that.
Maybe for people with a really thin track record. Not for people who’ve run a profitable business for a decade, have a solid business case, etc.. Just what independent information does being black provide, here? (No need to respond to this point here—you can put it in response to TheOtherDave’s parallel comment)
Now, I freely grant that if you only look at the bankers’ side of things, regulation doesn’t make sense. They should be perfectly informed and make the ideal decisions as to who will succeed or not! And if they can’t make perfect use of that information, that’s their problem!
But of course, it’s not only their problem, and the purpose of the law is not solely to help the bankers get money.
A ‘being black’ penalty even of only 2% on loans would be colossal. Think how much debt a growing business has to incur, and compound that over the years. Apply it to choices of housing, of auto financing. Everyone in the community has less money, so they can’t buy as much, so businesses have a harder time growing, so people earn less. It’s self-perpetuating.
But it wasn’t that mild. Instead, the loans were simply turned down. The near-total absence of capital was crippling.
Do you think this is a problem? What might you do about it?
In the scales of values, where does “equal opportunity” rank up against “allowing each individual to make the best choices available to them personally without regard to the impact that choice has on what choices other individuals get”?
(Responded.)
To repeat myself:
Moving on:
So, are you arguing that the ‘being black’ penalty is not accurate here? That the 2% penalty is compensating for risk that does not exist? If so then that’s quite an opportunity: a free 2% price cut. Especially in the current low-interest rate environment, that’s a lot of money being left on the table.
Or are you arguing that the penalty is accurate and anyone who tried to offer at non-penalty rates would lose their shirts as tons of loans defaulted?
I thought you were arguing against the latter, before… If you’ve changed your mind, it’d be good to say so clearly and explicitly before going on.
You persist in only looking at the effect on the banker. As I said, the regulation won’t make much if any sense from that point of view alone. Your pointing this out once more doesn’t really change anything.
That said, considering that the regulated banks had a low default rate until everything went screwy because of the (non-regulated) predatory lenders, I think I’ll stick with the theory that there was a market inefficiency.
Now, it wasn’t a simple barrier-free market inefficiency. If only one bank had moved, it could well have lost its shirt. Being the sole investor in a dead area is rough. It’s a bit like a many-player game with ‘staying out’ having a positive payoff from being able to invest elsewhere, and ‘going in’ having a payoff that starts out negative with no other cooperators, increases with cooperators for a while, peaks above ‘staying out’, then declines down to the ‘staying out’ level once the market is fully competitive (then below if it becomes saturated). When no one is there, you’d be crazy to move first.
Changing the rules so the banks had to serve their localities guaranteed a minimum level of going in, which made it no longer a bad move to go in.
Just so I understand that last part… are you claiming:
1) …there is no factor or set of factors X such that X screens off skin color for purposes of calculating loan EV,
2) …there may be such an X, but we don’t know what it is and/or have no way of measuring it,
3) …we know what X is, but the admissible parts of the track record don’t include it,
...or something else?
#1 seems really unlikely to me, so if you think it likely I’m interested in your reasons.
#2 seems plausible.
#3 also seems plausible, but if true, suggests that talking about the admissability of skin color is a herring of unspecified hue; as a bank, I should be trying to get X admitted instead.
I am claiming that you have jumped to the conclusion that claims 1-n must all be false and hence the cancellation is a Bad thing. For my purpose, any of 1-3 can be correct, and I don’t need to argue for any specific one especially if you already find plausible any of them.
If you want to overrule the bank’s reaction, you need a lot of local domain-specific knowledge, and that’s something neither you nor I have.
Here’s an example of the sort of obscure knowledge you might need: are you familiar with the term “minority fronts”? This is when a government or other entity attempts a form of affirmative action in which minority-owned businesses or organizations get financially favored for grants or bidding on contracts; yet of course there aren’t very many competent minority-owned businesses (that’s why they’re doing it in the first place), so this immediately leads to fraud in which a person meeting the minority criteria is put in place as the straw owner of a company actually run by other people of other groups and then the business bids on business as a minority-owned business, frequently simply passing on the work and money to a normal business minus the straw owner’s share. Naturally, this is largely meaningless for a white-owned business as whites are not considered a minority. Now, remembering that the ‘owner’ in such cases has stooped to conspiracy and felony fraud to steal possibly millions, do you think that their shell business is a better or worse credit risk than an equivalent white owner matched on other observables like income?
Personally, I’d say worse. This is just a cute example of why race can be a salient factor in loans and why a white owner might be different from a black owner; I bring it up to stand for the larger class of relevant details and possibilities, not being a banker or economist or risk specialist. So before you can say that the ‘discrimination’ is purely irrational and unjustifiable, you need to know about all these details. Do you? I don’t think you do.
EDIT: Ran into an international example of the abuse of affirmative action in The Economist:
OK.
If that’s true, I haven’t noticed.
If you feel like summarizing the evidence for believing I’ve reached that conclusion, though, I’ll certainly listen.
I certainly agree that overruling the bank’s decision about loans without knowing about as much about loans as the bank does is going to have unexpected consequences, so unless the bank is currently pessimizing for my values I’m probably going to be less happy with the result than I am now.
And I certainly agree that I don’t know about all the details that go into making decisions about loans.
The solution actually wasn’t THAT bad- the community banks actually regulated by the community reinvestment act had/have lower rates of foreclosure then the national average, and lower rates of foreclosure on their loans to minorities.
Edit: this is because they are generally required to keep more skin-in-the-game, not BECAUSE they were regulated by the CRA (most fall under various patches of the regulations put in place after the S&L crisis). My point being, community banks were able to responsibly lend to a diverse population, and certainly the CRA wasn’t causal in the foreclosure crisis.
That doesn’t necessarily address my point: if there were unjust discrimination, discrimination which was not a rational reaction to the credit risk, then saying “well, they didn’t cause as many losses as some aggregate measure of loss during the greatest period of property-related losses in the history of America” isn’t proving that. To prove that, you need to show something like that the loans turned out to have been made profitably on net in the long-term after adjusting for risk and opportunity cost etc.
I’m not sure thats true, I think what you would want to show is that the loans ‘forced’ on the community banks are at-least-as-profitable as the loans the banks voluntarily took on. Given the bizarre financial period we just lived through, the losses on loans is going to be markedly higher across all institutions.
Maybe the next decade of CRA type lending won’t be contaminated by massive changes in the financial sector and a large crash- in which case maybe the questions of discrimination will become easier to untangle. For the last decade, the housing market underwent major changes, and the community banks were such a negligible sliver of the overall market that the CRAs effects are on community banks are higher order corrections to higher order corrections.
No, because you’re comparing apples and oranges. If the banks were forced to take on loans to the groups in question due to political pressure despite having been previously correct in demanding higher interest to compensate them for the loans, and also simultaneously engaged in an epic miscalculation about the safety of loans to other groups based on naive models, then you could produce this inversion. They made a mistake, and then made an even larger mistake; this doesn’t make the original mistake not a mistake.
Only if the loans were in different asset classes. Because these are all housing loans, the underlying model of the housing market is an input to both group’s loans, with minority status as an additional adjustment.
Anyway, I don’t think looking at CRA and pre-CRA loans to minorities you can answer discrimination questions with any kind of precision. The data seems to lean in the direction of former discrimination, but massive structural changes to finance dwarf the tiny changes created by the CRA.