{"id":1040,"date":"2009-05-23T08:09:20","date_gmt":"2009-05-23T16:09:20","guid":{"rendered":"\/?p=1040"},"modified":"2009-05-24T02:13:39","modified_gmt":"2009-05-24T10:13:39","slug":"the-brands-we-buy-are-the-windows-into-our-souls","status":"publish","type":"post","link":"https:\/\/www.identityblog.com\/?p=1040","title":{"rendered":"The brands we buy are “the windows into our souls”"},"content":{"rendered":"

You should read this fascinating piece <\/a>by Charles Duhigg<\/a> in last week\u2019s New York Times<\/a>. A few tidbits to whet the appetite:<\/p>\n

\"\"\u2018The exploration into cardholders\u2019 minds hit a breakthrough in 2002, when J. P. Martin, a math-loving executive at Canadian Tire, decided to analyze almost every piece of information his company had collected from credit-card transactions the previous year. Canadian Tire\u2019s stores sold electronics, sporting equipment, kitchen supplies and automotive goods and issued a credit card that could be used almost anywhere. Martin could often see precisely what cardholders were purchasing, and he discovered that the brands we buy are the windows into our souls \u2014 or at least into our willingness to make good on our debts…<\/p>\n

‘His data indicated, for instance, that people who bought cheap, generic automotive oil were much more likely to miss a credit-card payment than someone who got the expensive, name-brand stuff. People who bought carbon-monoxide monitors for their homes or those little felt pads that stop chair legs from scratching the floor almost never missed payments. Anyone who purchased a chrome-skull car accessory or a \u201cMega Thruster Exhaust System\u201d was pretty likely to miss paying his bill eventually.<\/p>\n

\u2018Martin\u2019s measurements were so precise that he could tell you the \u201criskiest\u201d drinking establishment in Canada \u2014 Sharx Pool Bar in Montreal, where 47 percent of the patrons who used their Canadian Tire card missed four payments over 12 months. He could also tell you the \u201csafest\u201d products \u2014 premium birdseed and a device called a \u201csnow roof rake\u201d that homeowners use to remove high-up snowdrifts so they don\u2019t fall on pedestrians\u2026<\/p>\n

\u2018Why were felt-pad buyers so upstanding? Because they wanted to protect their belongings, be they hardwood floors or credit scores. Why did chrome-skull owners skip out on their debts? \u201cThe person who buys a skull for their car, they are like people who go to a bar named Sharx,\u201d Martin told me. \u201cWould you give them a loan?\u201d<\/p>\n

So what if there are errors?<\/strong><\/p>\n

Now perhaps I\u2019ve had too much training in science and mathematics, but this type of thinking seems totally neanderthal to me. It belongs in the same category of things we should be protected from as “guilt by association” and “racial\u00a0profiling”.<\/p>\n

For example, the article cites one of Martin\u2019s concrete statistics:<\/p>\n

‘A 2002 study of how customers of Canadian Tire were using the company's credit cards found that 2,220 of 100,000 cardholders who used their credit cards in drinking places missed four payments within the next 12 months. By contrast, only 530 of the cardholders who used their credit cards at the dentist missed four payments within the next 12 months.’<\/p>\n

We can rephrase the statement to say that 98% of the people who used their credit cards in drinking places did NOT miss the requisite four payments.<\/p>\n

Drawing the conclusion that \u201cuse of the credit card in a drinking establishment predicts default\u201d is thus an error 98 times out of 100.<\/p>\n

Denying people credit on a premise which is wrong 98% of the time seems like one of those things regulators should rush to address, even if the premise reduces risk to the credit card company.<\/p>\n

But there won\u2019t be enough regulators to go around, since there are thousands of other examples given that are similarly idiotic from the point of view of a society fair to its members. For the article continues,<\/p>\n

\u2018Are cardholders suddenly logging in at 1 in the morning? It might signal sleeplessness due to anxiety. Are they using their cards for groceries? It might mean they are trying to conserve their cash. Have they started using their cards for therapy sessions? Do they call the card company in the middle of the day, when they should be at work? What do they say when a customer-service representative asks how they\u2019re feeling? Are their sighs long or short? Do they respond better to a comforting or bullying tone?<\/p>\n

Hmmm.<\/p>\n