Structural Interventions and the Dynamics of Inequality

Abstract

Recent conversations in the algorithmic fairness literature have raised several concerns with standard conceptions of fairness. First, constraining predictive algorithms to satisfy fairness benchmarks may lead to non-optimal outcomes for disadvantaged groups. Second, technical interventions are often ineffective by themselves, especially when divorced from an understanding of structural processes that generate social inequality. Inspired by both these critiques, we construct a common decision-making model, using mortgage loans as a running example. We show that under some conditions, any choice of decision threshold will inevitably perpetuate existing disparities in financial stability unless one deviates from the Pareto optimal policy. Then, we model the effects of three different types of interventions. We show how different interventions are recommended depending upon the difficulty of enacting structural change upon external parameters and depending upon the policymaker's preferences for equity or efficiency. Counterintuitively, we demonstrate that preferences for efficiency over equity may lead to recommendations for interventions that target the under-resourced group. Finally, we simulate the effects of interventions on a dataset that combines HMDA and Fannie Mae loan data. This research highlights the ways that structural inequality can be perpetuated by seemingly unbiased decision mechanisms, and it shows that in many situations, technical solutions must be paired with external, context-aware interventions to enact social change.