What Prosper and Mechanical Turk tell you

Jeremy Liew · March 20, 2009 · Short URL: https://vator.tv/n/77e

It takes two Web 2.0 services to tell you that many people who look shifty are indeed shifty

The Economist has another fascinating article about face. Specifically, about physiognomy - the idea that the way you look is a reflection of your character.

 In particular, it describes research done by at Rice University to see if people could identify people who were bad credit risks by the way they look. They looked at 6,821 loan applications on Prosper. They asked 25 Mechanical Turk workers to assess each of the potential borrowers’s likelihood to repay a $100 loan. Here is what they found:

Their first finding was that the assessments of trustworthiness, and of likelihood to repay a loan, that were made by Mechanical Turk workers did indeed correlate with potential borrowers’ credit ratings based on their credit history. That continued to be so when the other variables, from beauty to race to obesity, were controlled for statistically. Shifty physiognomy, it seems, is independent of these things.

That shiftiness was also recognised by those whose money was actually at stake. People flagged as untrustworthy by the Mechanical Turks were less likely than others to be offered a loan at all. To have the same chance of getting one as those deemed most trustworthy they were required to pay an interest rate that was, on average, 1.82 percentage points higher, even when the effects of historical creditworthiness were statistically eliminated.

So it takes two web 2.0 services to tell you that many people who look shifty are indeed shifty.

(For more from Jeremy, see his blog)

(Image source:images.salon)

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Money and lending is typically controlled by large institutions. Prosper wants to change that.