Saturday, May 03, 2008
American Bankruptcy Institute/University of Illinois College of Law's Interdisciplinary Academic Symposium on Debt
I'm sitting in the session that Elizabeth Warren & Bruce Markell are doing in the Debt symposium, marveling at how well this whole interdisciplinary symposium is going. (For some play-by-play blogging of the conference, see Mechele Dickerson's posts over at Credit Slips.)
What really strikes me about this session is how finely sliced the private data are that credit card companies have gathered about consumers and how easily those data can be used to tailor credit card products to capture particular consumers' proclivities to make certain types of errors in incurring debt. The large-scale use of private interdisciplinary research enables credit card companies to garner ever-increasing profits.
Are these profits bad? Certainly not from the shareholders' point of view. Credit card companies are in the business of making money. But there's something about the act of using research to capitalize on human weakness that makes me a bit queasy.
Now, I don't know for a fact that credit card companies (1) have the research that shows how to capitalize on individual consumers' proclivities for particular types of human error or (2) intend to use the research in a way that in fact capitalizes on that error. But for a moment, let's assume that the companies have the research and intend to use it for that purpose.
Is such a use so different from how Enron manipulated the deregulated energy markets to make enormous profits, with, e.g., round-tripping energy out of California and then back in at a much higher price? In other words, an act may be technically legal to do but still not moral to do. At the end of the movie Enron: The Smartest Guys in the Room, one energy trader blames himself for not asking more questions about why he was making some of the trading decisions that he had chosen to do and why his colleagues were behaving in certain ways. He looks directly at the camera and admits that, unlike Enron's famous ad tagline ("Ask Why"), he was afraid to ask "why," because he was afraid to know the answer. I wonder if the private researchers for the credit card companies are asking themselves about the uses to which their experiments are being put.
One of the issues in this morning's session was why the credit card companies didn't use academics to do the research on the various credit card products. Maybe academics would refuse; maybe not. For many of us, there's a hunger to pursue all sorts of research without regard to the implications for the findings of our research. Or maybe there's a simple explanation: maybe the companies didn't want to go through all of the extra steps that doing research on human subjects would require in a university environment.
I've been arguing for true interdisciplinary research at universities for many years, and this morning's session only confirms that we need to continue to break down the silos in higher education that prevent such collaborative work. Private industry does interdisciplinary work all the time, and it provides incentives for collaboration. Within higher education, virtually all of the incentives are intradisciplinary. If we are going to have our own data to compare to any private data trotted out in public policy debates, we're going to need to rethink the incentives within higher education to produce our own studies. And, just as I'd hope private researchers do, we need to think about the implications of our own research--not necessarily to chill that work, but to be aware that relevant work can be used for more purposes than those we originally intended.