Judging You By the Online Company You Keep 117
theodp writes "Network analysis uses data about your social network interactions to make assumptions and predictions about your behavior. The Economist notes the upside for companies looking to sell products. But don't forget about the downside, warns Adrian Chen, of living in a world where network analysis is used by financial firms to determine risky borrowers by looking at social ties, or by Internet businesses to determine which customers are more equal than others (nice to see Microsoft's back on the forefront of some tech!). So, did Mom envision Social Network Analytics when she gave you that you-are-the-company-you-keep lecture?"
Re:Financial Meltdown (Score:2, Interesting)
The problem isn't that there aren't enough dowsing rods for telling good borrowers from bad ones. The problem is that there is so much (free) money going around that the people who are in a position to lend have run out of ideas for investments. That's why they knowingly lend to people who are likely to default. The trick is to get rid of the risk before it manifests. The money from the housing crisis isn't gone. On the contrary, even more money has been made available. The trick is to know where it's being "invested". If you can spot the next inevitable bubble early, you can get out in time and make a killing.
Doesn't work for right-leaning managers. (Score:1, Interesting)
This approach doesn't work well at all for the many managers and executives who lean towards right-wing "ideals". They're too preoccupied by socially stigmatizing certain traits that they'll end up intentionally skipping many of the best candidates if they do in-depth research like that, especially into the personal lives of prospective employees.
For example, one of the best Ruby developers I know is a raging homosexual. I'm not saying that in a negative way, or because he uses Ruby, or because he only uses Apple hardware. I'm saying that because he very flamboyant. In the past, his Facebook status messages have said stuff like "Back later. Taking black cock up my arse." or "Sperm: my favorite flavor."
Anyway, if you looked at just his code and his employment history, you'd see that he was a great developer who could write excellent software. If you interviewed him, you'd probably get the hint that he's homosexual. If you looked at his Facebook profile, there'd be no doubt.
I don't think that many right-leaning managers would be able to hire somebody like him after seeing his Facebook profile. His blatant homosexuality would probably trigger the guilt those managers feel regarding their own repressed homosexuality, and they just wouldn't hire him, although skill-wise he was clearly the best candidate for the job. At least left-leaning managers tend to be more open to individualism among their employees.
Re:Hmmm (Score:2, Interesting)
Re:Financial Meltdown (Score:3, Interesting)
Okay, then I'll get a loan from a company with decent statisticians who recognize that your friends don't determine how safe a debtor you are. And if it turns out having friends with poor credit scores actually does indicate how safe you are (I really doubt it) then I'm all for that information being used appropriately.
So all those folks on the skids tend to hang out together and are all bad credit risks, and all the millionaires tend to hang out together and are good credit risks, so there's a correlation. Unfortunately, if anybody with a good credit rating turns philanthropist and starts working with and befriending those down on their luck their credit rating is going to take a hit, so they're not going to do that. Way to discourage good works, folks.
Re:Financial Meltdown (Score:3, Interesting)
Winning the lottery is a sure-fire way of suddenly getting lots of Facebook friends with low credit scores.
In France the system is very sensible. You take your monthly net income after tax, remove monthly debt repayments such as credit cards and any other mortgages, and divide by 3. You can take out any mortgage as long as the monthly repayment does not exceed this figure. Credit scores are irrelevant. Of course it sucks if you are self-employed.
kestaskj is correct though, not giving you money at that cannot afford to pay back is in the best interest of both parties (not really relevant to the story but he makes an important point).
Phillip.
Re:Financial Meltdown (Score:3, Interesting)
O Rly?
http://www.businessweek.com/smallbiz/content/aug2010/sb20100830_829624.htm [businessweek.com]
Generally speaking, we found more demand for loans among business owners. And among the banks that responded to our survey, 72 percent indicated that the number of loan applications they received had increased during the last six months. So there's demand for capital. Something's not quite sitting right when we hear from the banks that there's no demand.
http://www.mcclatchydc.com/2010/03/12/90309/too-small-to-succeed-firms-still.html [mcclatchydc.com]
Yet when Collins approached the bank about borrowing at least $500,000 to expand his 12-employee firm -- which retrofits buildings with energy efficient technologies -- he was rebuffed, told that his company lacks resources and collateral. US Bancorp declined comment.