Algorithmic risk prediction individualizes insurance and erodes social solidarity

Evidence

The credit default swap, the notorious financial instrument implicated in the credit crunch of 2008, was originally an insurance against borrowers defaulting on their loans, before becoming a speculative device on borrowers’ inability to repay those loans (Mazzucato 2018). … Meanwhile, the introduction of new techniques of algorithmic prediction further challenges the probabilistic model of risk calculation and distribution, drawing on “big data” and machine learning to produce more “individualized risk forecasts” (Cevolini and Esposito 2020). In so doing, these techniques produce new forms of discrimination and exclusion and pose new threats to the solidaristic model of social insurance, precipitating a further redistribution of responsibility burdens from the state to citizens (McFall 2019). — Aris Komporozos-Athanasiou, Speculative Communities, 421

Categorization

• XREF: The credit default swap morphing from hedge into speculative bet parallels the CDS scandal material the reader knows from finance literature. — connects to: Systemic risk is emergent and irreducible to the sum of individual risks — Mark Blyth, Austerity: The History of a Dangerous…, 134; Algorithmic discrimination affects real people despite targeting only probabilistic data doubles. — Nick Couldry & Ulises A. Mejias, The Costs of Connection: How Data Is…, 408; Neoliberal risk thinking undermines the actuarial categories classical insurance requires — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 336 (+2 more)
• QUESTION: What new discrimination mechanisms do individualized risk forecasts actually encode — and is ‘actuarial fairness’ genuinely the goal or a rhetorical cover?
• SEED: The credit default swap as a parable of insurance-to-speculation mutation — an essay on how protective instruments get repurposed.

Broader Connections

• Algorithmic discrimination affects real people despite targeting only probabilistic data doubles. #expands (0.82) — Nick Couldry & Ulises A. Mejias, The Costs of Connection, 408
• Neoliberal risk thinking undermines the actuarial categories classical insurance requires #complicates (0.78) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 336