PREDICTIVE

In most of this country you cannot legally drive without insurance, and the price of that insurance is set, in part, by a number that has nothing to do with your driving.

It is built from your credit report. Whether you carry a balance. How long your file has been open. What a collections agency filed about you four years ago. The insurer runs that history through a model, and the model produces a credit-based insurance score, and the score helps decide what you pay to do a thing the state requires you to do.

Congress had a suspicion about this. In 2003 it wrote the suspicion into law. Section 215 of the FACT Act ordered the Federal Trade Commission to study what these scores do to “the availability and affordability of credit and insurance,” measured “by geography, income, ethnicity, race, color, religion, national origin, age, sex, marital status, and creed,” and to determine whether scoring “could result in negative or differential treatment of protected classes under the Equal Credit Opportunity Act.”

It ordered one thing more. Find out whether the same results could be had “through the use of factors with less negative impact.”

Two questions, then. What does this cost Black people, and can it be done with less harm. The statute required the Commission to consult the Office of Fair Housing and Equal Opportunity.

The FTC did the work. It published the answer in 2007, and the answer has been sitting in public ever since.

What the government measured

The report is two hundred and forty-two pages. The finding is one sentence, in the conclusion.

“The FTC’s analysis revealed that the use of scores for consumers whose information was included in the FTC’s database caused the average predicted risk for African Americans and Hispanics to increase by 10% and 4.2%, respectively, while it caused the average predicted risk for non-Hispanic whites and Asians to decrease by 1.6% and 4.9%, respectively.”

Turn on the scoring and Black drivers get riskier by a tenth. White drivers get safer.

The Commission did not leave the consequence to the reader. The next sentence: “These changes in predicted risk are likely to have an effect on the insurance premiums that these groups on average pay.”

And the distribution underneath it, also the Commission’s own words: “more than one-half of all African Americans have credit scores in the lowest quarter of the overall score distribution.”

More than half. The lowest quarter.

That is the federal government, under a mandate from Congress, reporting that a private pricing instrument moves the cost of a legally required product up for Black people and down for white people. It is a measurement, taken by the agency that was told to take it.

The word

Here is what the same report concluded.

“Scores have only a small effect as a ‘proxy’ for membership in racial and ethnic groups in estimating of insurance risk, remaining strong predictors of risk when controls for race, ethnicity and income are included in risk models.”

Read those two findings side by side, because they are both true and they are both in the same document. The scoring raises what Black drivers are charged. And the scoring is not merely a mask for race, because it still sorts risk inside every racial group.

Now read the mandate again. Congress did not ask whether the scores were a mask for race. It asked what they cost, and whether the same result could be had with less harm. The Commission answered both. The proxy question was its own.

That unasked answer is what let the first finding stand.

The word doing the work is predictive. Not fair. Not justified. Not right. Predictive. The score is permitted because it predicts, and prediction is treated as its own defense, a thing that needs no further account of itself. A number that forecasts is a number that has earned its keep.

The sentence they printed anyway

The Commission did not hide it. It printed it third in its own conclusion.

“It has not been clearly established why scores are predictive of risk.”

The government does not know why it works.

It knows that the number correlates. It does not know what the number is measuring. It cannot tell you what a missed payment has to do with a car crash. Nobody can. The report says so, in the conclusion, in the report that let the practice continue.

So predictive is not an explanation. It is a description of a correlation whose cause the federal government explicitly declined to claim it understood. And that unexplained correlation is the legal justification for charging Black drivers more to do something the law compels them to do.

A prediction that cannot say why it predicts is not a finding. It is a pattern wearing a badge.

The models that did not help

This was Congress’s second question, and the Commission did the work. It built models using only non-Hispanic whites. It built models that discounted the variables with the largest racial differences.

The result, in the Commission’s words: “although the race neutral models that the FTC built accurately predict risk, they do not decrease the differences in credit-based insurance scores among racial and ethnic groups.”

They took race out of the model. The gap stayed.

That result is usually read as a defense of scoring, and the industry has read it that way for nineteen years. It is the opposite. If you can remove every racial variable and the racial gap survives untouched, then the gap was never in the model. The gap is in the country the model is measuring. This archive has spent four casefiles documenting that country: the claim denied in Greenwood, the corridor cut through Black Bottom, the map that graded a neighborhood red, the word that condemned Mill Creek Valley. All of it lands in a credit file.

The file is clean. The score is neutral. The neutral score charges you more.

You drive to work. Your file is clean. You pay more to get there.

Nineteen years

The report came out in July 2007. Nothing in it required anyone to stop.

The FTC was asked whether the score acts as a proxy for race. Its answer, in its own words: scores “do not act solely as a proxy for these characteristics.”

Solely. The practice needed nothing more than that.