The Law of Equal Opportunities or Unintended Consequences? The Impact of Unisex Risk Assessment in Consumer Credit

32 Pages Posted: 9 Aug 2018 Last revised: 14 Feb 2019

See all articles by Galina Andreeva

Galina Andreeva

University of Edinburgh - Business School

Anna Matuszyk

Warsaw School of Economics (SGH); Warsaw School of Economics (SGH)

Date Written: February 7, 2019

Abstract

Gender is prohibited from use in decision-making in many countries. This does not necessarily benefit females, as this paper shows by analysing a unique proprietary dataset on car loans from an EU bank. The results suggest that inclusion of Gender as a dummy variable is statistically significant, but does not alter the predictive accuracy of the model. Yet the proportions of accepted women/men depend on whether Gender is included. The paper explores the association between predictors in the model with Gender, to demonstrate the omitted variable bias and how other variables proxy for Gender. It points to inconsistencies of the existing regulations in the context of automated decision-making.

Keywords: credit scoring, gender, disrimination, algorithmic decision-making

JEL Classification: G21, C44

Suggested Citation

Andreeva, Galina and Matuszyk, Anna, The Law of Equal Opportunities or Unintended Consequences? The Impact of Unisex Risk Assessment in Consumer Credit (February 7, 2019). Available at SSRN: https://ssrn.com/abstract=3212702 or http://dx.doi.org/10.2139/ssrn.3212702

Galina Andreeva (Contact Author)

University of Edinburgh - Business School ( email )

University of Edinburgh
29 Buccleuch Place
Edinburgh, Scotland EH8 9JS
UNITED KINGDOM

Anna Matuszyk

Warsaw School of Economics (SGH) ( email )

aleja Niepodleglosci 162
PL-Warsaw, 02-554
Poland

Warsaw School of Economics (SGH) ( email )

aleja Niepodleglosci 162
PL-Warsaw, 02-554
Poland

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