Recently, three economists—Oded Netzer and Alain Lemaire, both of Columbia, and Michal Herzenstein of the University of Delaware—looked for ways to predict the likelihood of whether a borrower would pay back a loan. The scholars used data from Prosper, a peer-to-peer lending site. Potential borrowers write a brief description of why they need a loan and why they are likely to make good on it, and potential lenders decide whether to provide them the money. Overall, about 13 percent of borrowers defaulted on their loan.
It turns out the language that potential borrowers use is a strong predictor of their probability of paying back. And it is an important indicator even if you control for other relevant information lenders were able to obtain about those potential borrowers, including credit ratings and income.
Listed below are ten phrases the researchers found that are commonly used when applying for a loan. Five of them positively correlate with paying back the loan. Five of them negatively correlate with paying back the loan. In other words, five tend to be used by people you can trust, five by people you cannot. See if you can guess which are which.
God, promise, debt-free, minimum payment, lower interest rate, will pay, graduate, thank you, after-tax, hospital.
Read the full article here by Seth Stephens-Davidowitz, Science Of Us
Everybody Lies – Book Review
Everybody Lies: Big Data, New Data, and What the Internet Can Tell Us About Who We Really Are by Seth Stephens-Davidowitz
Foreword by Steven Pinker, author of The Better Angels of our Nature
Blending the informed analysis of The Signal and the Noise with the instructive iconoclasm of Think Like a Freak, a fascinating, illuminating, and witty look at what the vast amounts of information now instantly available to us reveals about ourselves and our world—provided we ask the right questions.
By the end of an average day in the early twenty-first century, human beings searching the internet will amass eight trillion gigabytes of data. This staggering amount of information—unprecedented in history—can tell us a great deal about who we are—the fears, desires, and behaviors that drive us, and the conscious and unconscious decisions we make. From the profound to the mundane, we can gain astonishing knowledge about the human psyche that less than twenty years ago, seemed unfathomable.
Everybody Lies offers fascinating, surprising, and sometimes laugh-out-loud insights into everything from economics to ethics to sports to race to sex, gender and more, all drawn from the world of big data. What percentage of white voters didn’t vote for Barack Obama because he’s black? Does where you go to school effect how successful you are in life? Do parents secretly favor boy children over girls? Do violent films affect the crime rate? Can you beat the stock market? How regularly do we lie about our sex lives and who’s more self-conscious about sex, men or women?
Investigating these questions and a host of others, Seth Stephens-Davidowitz offers revelations that can help us understand ourselves and our lives better. Drawing on studies and experiments on how we really live and think, he demonstrates in fascinating and often funny ways the extent to which all the world is indeed a lab. With conclusions ranging from strange-but-true to thought-provoking to disturbing, he explores the power of this digital truth serum and its deeper potential—revealing biases deeply embedded within us, information we can use to change our culture, and the questions we’re afraid to ask that might be essential to our health—both emotional and physical. All of us are touched by big data everyday, and its influence is multiplying. Everybody Lies challenges us to think differently about how we see it and the world.
“This book is about a whole new way of studying the mind . . . an unprecedented peek into people’s psyches . . . Time and again my preconceptions about my country and my species were turned upside-down by Stephens-Davidowitz’s discoveries . . . endlessly fascinating.” (Steven Pinker, author of The Better Angels of Our Nature)
“Move over Freakonomics. Move over Moneyball. This brilliant book is the best demonstration yet of how big data plus cleverness can illuminate and then move the world. Read it and you’ll see life in a new way.” (Lawrence Summers, President Emeritus and Charles W. Eliot University Professor of Harvard University)
“Everybody Lies relies on big data to rip the veneer of what we like to think of as our civilized selves. A book that is fascinating, shocking, sometimes horrifying, but above all, revealing.” (Tim Wu, author of The Attention Merchants)
“Brimming with intriguing anecdotes and counterintuitive facts, Stephens-Davidowitz does his level best to help usher in a new age of human understanding, one digital data point at a time.” (Fortune, Best New Business Books)
“Freakonomics on steroids—this book shows how big data can give us surprising new answers to important and interesting questions. Seth Stephens-Davidowitz brings data analysis alive in a crisp, witty manner, providing a terrific introduction to how big data is shaping social science.” (Raj Chetty, Professor of Economics at Stanford University)
“Everybody Lies is a spirited and enthralling examination of the data of our lives. Drawing on a wide variety of revelatory sources, Seth Stephens-Davidowitz will make you cringe, chuckle, and wince at the people you thought we were.” (Christian Rudder, author of Dataclysm)
“A tour de force—a well-written and entertaining journey through big data that, along the way, happens to put forward an important new perspective on human behavior itself. If you want to understand what’s going on in the world, or even with your friends, this is one book you should read cover to cover.” (Peter Orszag, Managing Director, Lazard and former Director of the Office of Management and Budget)
“Stephens-Davidowitz, a former data scientist at Google, has spent the last four years poring over Internet search data . . . What he found is that Internet search data might be the Holy Grail when it comes to understanding the true nature of humanity.” (New York Post)
“Everybody Lies is an astoundingly clever and mischievous exploration of what big data tells us about everyday life. Seth Stephens-Davidowitz is as good a data storyteller as I have ever met.” (Steven Levitt, co-author, Freakonomics )
“A whirlwind tour of the modern human psyche using search data as its guide. . . . The empirical findings in Everybody Lies are so intriguing that the book would be a page-turner even if it were structured as a mere laundry list.” (The Economist)