Measuring Bias in Consumer Lending

• 成果类型: Article
• 署名作者: Dobbie, Will; Liberman, Andres; Paravisini, Daniel; Pathania, Vikram
• 署名单位: Harvard University; National Bureau of Economic Research; University of London; London School Economics & Political Science; Center for Economic & Policy Research (CEPR); University of Sussex
• 刊物名称: REVIEW OF ECONOMIC STUDIES
• ISSN/ISSBN: 0034-6527
• DOI: 10.1093/restud/rdaa078
• 发表日期: 2021
• 页码: 2799-2832
• 关键词: incentive contracts; DISCRIMINATION; credit; access; performance; COMPETITION; bankruptcy; OWNERSHIP; matter; loans

摘要

This article tests for bias in consumer lending using administrative data from a high-cost lender in the U.K. We motivate our analysis using a new principal-agent model of bias where loan examiners are incentivized to maximize a short-term outcome, not long-term profits, leading to bias against illiquid applicants at the margin of loan decisions. We identify the profitability of marginal applicants using the quasi-random assignment of loan examiners, finding significant bias against immigrant and older applicants when using the firm's preferred measure of long-run profits but not when using the short-run measure used to evaluate examiner performance. In this case, market incentives based on characteristics that vary across groups lead to inefficient group-based bias.