The benefits of better credit-risk models will be spread unevenly

IN “PLAYER PIANO”, a novel by Kurt Vonnegut, society is divided into a workless majority and an elite who tend all-powerful machines. A character tells how her husband lost his status as a writer when his novel fails to hit the “readability quotient”. She turns to sex work after he refuses the public-relations job he is assigned. “I’m proud to say that he’s one of the few men on earth with a little self-respect left,” she says.

The novel, published in 1952, anticipates present-day fears about the social impact of automation. Clever algorithms already make finely graded distinctions about the price each consumer pays for an air ticket, or which advertisements or news he sees. They will soon decide who gets credit, and on what terms. Vonnegut touches on a deeper worry. The husband fails to reach the mark because his book is anti-machine. It is easy to imagine credit being similarly denied for reasons other than credit risk—such as...

via The Economist: Finance and economics Business Feeds

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