Perspectives on credit scoring and fair mortgage lending: article two

Credit scoring systems ; Mortgages

FairCanary: Rapid Continuous Explainable Fairness

Machine Learning (ML) models are being used in all facets of today's society to make high stake decisions like bail granting or credit lending, with very minimal regulations. Such systems are extremely vulnerable to both propagating and amplifying social biases, and have therefore been subject to growing research interest. One of the main issues with conventional fairness metrics is their narrow definitions which hide the complete extent of the bias by focusing primarily on positive and/or negative outcomes, whilst not paying attention to the overall distributional shape. Moreover, these metrics are often contradictory to each other, are severely restrained by the contextual and legal landscape of the problem, have technical constraints like poor support for continuous outputs, the requirement of class labels, and are not explainable. In this paper, we present Quantile Demographic Drift, which addresses the shortcomings mentioned above. This metric can also be used to measure intra-group privilege. It is easily interpretable via existing attribution techniques, and also extends naturally to individual fairness via the principle of like-for-like comparison. We make this new fairness score the basis of a new system that is designed to detect bias in production ML models without the need for labels. We call the system FairCanary because of its capability to detect bias in a live deployed model and narrow down the alert to the responsible set of features, like the proverbial canary in a coal mine

Monetizing Explainable AI: A Double-edged Sword

Algorithms used by organizations increasingly wield power in society as they decide the allocation of key resources and basic goods. In order to promote fairer, juster, and more transparent uses of such decision-making power, explainable artificial intelligence (XAI) aims to provide insights into the logic of algorithmic decision-making. Despite much research on the topic, consumer-facing applications of XAI remain rare. A central reason may be that a viable platform-based monetization strategy for this new technology has yet to be found. We introduce and describe a novel monetization strategy for fusing algorithmic explanations with programmatic advertising via an explanation platform. We claim the explanation platform represents a new, socially-impactful, and profitable form of human-algorithm interaction and estimate its potential for revenue generation in the high-risk domains of finance, hiring, and education. We then consider possible undesirable and unintended effects of monetizing XAI and simulate these scenarios using real-world credit lending data. Ultimately, we argue that monetizing XAI may be a double-edged sword: while monetization may incentivize industry adoption of XAI in a variety of consumer applications, it may also conflict with the original legal and ethical justifications for developing XAI. We conclude by discussing whether there may be ways to responsibly and democratically harness the potential of monetized XAI to provide greater consumer access to algorithmic explanations

Framing TRUST in Artificial Intelligence (AI) Ethics Communication: Analysis of AI Ethics Guiding Principles through the Lens of Framing Theory

With the fast proliferation of Artificial Intelligence (AI) technologies in our society, several corporations, governments, research institutions, and NGOs have produced and published AI ethics guiding documents. These include principles, guidelines, frameworks, assessment lists, training modules, blogs, and principle-to-practice strategies. The priorities, focus, and articulation of these innumerable documents vary to different extents. Though they all aim and claim to ensure AI usage for the common good, the actual AI system outcomes in various social applications have invigorated ethical dilemmas and scholarly debates. This study presents the analysis of AI ethics principles and guidelines text published by three pioneers from three different sectors - Microsoft Corporation, National Institute of Standards and Technology (NIST), AI HLEG set up by the European Commission through the lens of media and communication’s Framing Theory. The TRUST Framings extracted from recent academic AI literature are used as standard construct to study the ethics framings in the selected text. The institutional framing of AI principles and guidelines shapes the AI ethics of an institution in a soft (as there is no legal binding) but strong (incorporating their respective position/societal role’s priorities) way. The AI principles’ framing approach directly relates to the AI actor’s ethics that enjoins risk mitigation and problem resolution associated with AI development and deployment cycle. Thus, it has become important to examine institutional AI ethics communication. This paper brings forth a Comm-Tech perspective around the ethics of evolving technologies known under the umbrella term - Artificial Intelligence and the human moralities governing them

A Performance-Explainability-Fairness Framework For Benchmarking ML Models

Machine learning (ML) models have achieved remarkable success in various applications; however, ensuring their robustness and fairness remains a critical challenge. In this research, we present a comprehensive framework designed to evaluate and benchmark ML models through the lenses of performance, explainability, and fairness. This framework addresses the increasing need for a holistic assessment of ML models, considering not only their predictive power but also their interpretability and equitable deployment. The proposed framework leverages a multi-faceted evaluation approach, integrating performance metrics with explainability and fairness assessments. Performance evaluation incorporates standard measures such as accuracy, precision, and recall, but extends to overall balanced error rate, overall area under the receiver operating characteristic (ROC) curve (AUC), to capture model behavior across different performance aspects. Explainability assessment employs state-of-the-art techniques to quantify the interpretability of model decisions, ensuring that model behavior can be understood and trusted by stakeholders. The fairness evaluation examines model predictions in terms of demographic parity, equalized odds, thereby addressing concerns of bias and discrimination in the deployment of ML systems. To demonstrate the practical utility of the framework, we apply it to a diverse set of ML algorithms across various functional domains, including finance, criminology, education, and healthcare prediction. The results showcase the importance of a balanced evaluation approach, revealing trade-offs between performance, explainability, and fairness that can inform model selection and deployment decisions. Furthermore, we provide insights into the analysis of tradeoffs in selecting the appropriate model for use cases where performance, interpretability and fairness are important. In summary, the Performance-Explainability-Fairness Framework offers a unified methodology for evaluating and benchmarking ML models, enabling practitioners and researchers to make informed decisions about model suitability and ensuring responsible and equitable AI deployment. We believe that this framework represents a crucial step towards building trustworthy and accountable ML systems in an era where AI plays an increasingly prominent role in decision-making processes

A Review of Bias and Fairness in Artificial Intelligence

Automating decision systems has led to hidden biases in the use of artificial intelligence (AI). Consequently, explaining these decisions and identifying responsibilities has become a challenge. As a result, a new field of research on algorithmic fairness has emerged. In this area, detecting biases and mitigating them is essential to ensure fair and discrimination-free decisions. This paper contributes with: (1) a categorization of biases and how these are associated with different phases of an AI model’s development (including the data-generation phase); (2) a revision of fairness metrics to audit the data and AI models trained with them (considering agnostic models when focusing on fairness); and, (3) a novel taxonomy of the procedures to mitigate biases in the different phases of an AI model’s development (pre-processing, training, and post-processing) with the addition of transversal actions that help to produce fairer models

The economic explainability of machine learning and standard econometric models-an application to the U.S. mortgage default risk

This study aims to bridge the gap between two perspectives of explainability−machine learning and engineering, and economics and standard econometrics−by applying three marginal measurements. The existing real estate literature has primarily used econometric models to analyze the factors that affect the default risk of mortgage loans. However, in this study, we estimate a default risk model using a machine learning-based approach with the help of a U.S. securitized mortgage loan database. Moreover, we compare the economic explainability of the models by calculating the marginal effect and marginal importance of individual risk factors using both econometric and machine learning approaches. Machine learning-based models are quite effective in terms of predictive power; however, the general perception is that they do not efficiently explain the causal relationships within them. This study utilizes the concepts of marginal effects and marginal importance to compare the explanatory power of individual input variables in various models. This can simultaneously help improve the explainability of machine learning techniques and enhance the performance of standard econometric methods