
Data Mining Exec Pays For Burgers In Cash To Avoid Insurance Company Snooping - ridruejo
http://www.techdirt.com/articles/20120619/04094319383/data-mining-exec-pays-burgers-cash-to-keep-his-insurance-company-knowing-his-bad-diet-habits.shtml
======
hexagonal
Double blogspam: three-paragraph summary of a five-paragraph summary of a six-
paragraph Economist article.

------
geoka9
They also mention going through social media profiles for insurance data
mining. I wonder what this practice can lead to, if taken to an extreme.

For example, if I apply for credit and I can't provide some/most of the
information they ask in the application, my request will probably be denied.
Suppose in not so distant future I apply for credit and I don't have any
social media accounts. Will I get denied because the bank could not dig enough
information about me that they expect to be able to find about their
applicants?

I don't like the world this social media craze is making us into. Being
concerned about your privacy has always been a rule, not an exception. But
that is changing now.

~~~
jandrewrogers
Even if you can't provide some information on an application, they usually
already have access to most or all of that information once you give them just
a few facts so that they can uniquely identify you. And it takes surprisingly
sparse facts to identify individuals for this purpose. They do not make you
fill out the application for the information on that application per se; their
sources of that info are more reliable.

In terms of risk mitigation, they are probably interested in comparing the
extensive profile they have of you with what you put on the application.
Significant discrepancies would be a reasonable red flag for risk, more so
than having incomplete information.

------
cs702
I've been using cash for certain purchases for several years now, because
consumer-protection laws, regulations, and policies are _far, far, far behind_
the tectonic shifts that have already occurred in the world of data mining.

~~~
jrockway
Care to elaborate?

~~~
cs702
Here are some examples of things I prefer to buy with cash: purchases at
airports (junk food, junk media, junk items); purchases while traveling by car
(mostly junk food); purchases on riskier/dicier neighborhoods and areas;
certain occasional purchases at the grocery store or pharmacy.

Also, on occasion, I will refrain from buying or getting certain things if I
can't buy or get them anonymously.

Until the legal, regulatory, and cultural environment meaningfully change, my
presumption is that every single non-anonymous purchase I make can and
probably will be used against my economic interests, sooner or later.

~~~
Negitivefrags
There seems to be an underlying assumption here and in the rest of this thread
that insurance companies (or others) are somehow getting access to your
transaction history.

I find this concept bewildering.

By what mechanism are you suggesting this occurs? I can't believe that your
bank would simply sell it to whoever asks.

~~~
cs702
Bewildering or not, and whether you want to believe it or not, I wouldn't put
it past your bank: all the economic incentives are firmly stacked against you.

As things stand right now, the regulatory environment permits banks to send
you a difficult-to-understand, filled-with-legalese notice letting you know
they will be sharing a lot of your information with third parties and certain
"affiliates" (such as, say, joint ventures with other companies)... unless you
call some call center to opt-out.

How easy is it to opt-out? Here's what one consumer found out when he tried to
opt-out from one well-known bank's default "privacy" policy:
[http://blog.joemanna.com/chase-sucks-with-new-privacy-
policy...](http://blog.joemanna.com/chase-sucks-with-new-privacy-policy-opt-
out-process-is-painful)

Then one reads about companies like Acxiom in this recent article in the NY
Times: [http://www.nytimes.com/2012/06/17/technology/acxiom-the-
quie...](http://www.nytimes.com/2012/06/17/technology/acxiom-the-quiet-giant-
of-consumer-database-marketing.html)

~~~
Negitivefrags
Perhaps this is more of a problem in the US than in NZ.

My bank has "ASB will not sell your information to third parties." in it's
privacy policy near the top. They do talk about sharing information with
credit agencies.

At least in my country there are laws about this kind of thing. (Privacy Act
1993, NZ)

~~~
pasbesoin
It is an argument for straightforward and effective regulation. Otherwise,
individuals end up jumping through endless hoops, when they are even offered
an "opt out" or similar option.

------
kleiba
Is this so unusual? I try to use my bank cards only at my bank's ATMs to keep
profiling to a minimum. Sure, every now and then I end up at a register and
discover that I am out of cash. Makes me feel uneasy every time. But it
surprises me that this is on the front-page of a tech-savvy community - I
thought we were all like that guy anyway.

------
ams6110
Why is it not fair for an insurance company to charge you a higher premium if
you are leading a lifestyle that statistically makes you more likely to have
health problems?

~~~
Cadsby
I think on a principled level, many are becoming concerned about the ever
increasing volume of data being collected on all of us. It isn't necessarily
about any particular subset of data, or all the plausible abuses of it, it's
just the idea that some would rather not have every move they make being
recorded and logged into a system they have no information on or ability to
influence.

More specific to insurance companies, the potential/plausible abuses to
increase profit don't take much effort to ferret out. And to make matters
worse the data they use will invariable flag a lot of false positives that
you'll have little to no way of fixing. For example, my girlfriend regularly
picks me up a pack of cigarettes on her way home from work. She usually uses
her credit card instead of cash. Ok, now she's flagged in the system as being
a chronic smoker and her rates get jacked up to holy hell. Except, of course,
she's not actually a smoker and I'd be super skeptical about her ability to
reasonably explain this to some random customer service rep over the
telephone.

Data mining usage habits rarely result in lower prices for people making
positive, less risky choices. Non-smokers will probably be giving a trivial
token discount, but unlikely anything more.

~~~
yummyfajitas
_Data mining usage habits rarely result in lower prices for people making
positive, less risky choices._

This is because we live in an inflationary economy. Most prices go up. As a
healthy guy, I'd like the price increases to be inflicted on the fattie
smokers rather than me.

Not that it really matters in the context of health insurance - the laws
surrounding it are structured in such a way as to subsidize the fattie smokers
at the expense of healthy gym guy, regardless of what info the insurance
company has (and they will become worse in a couple of years, unless the
supreme court stops it - good luck with that).

~~~
nitrogen
_As a healthy guy, I'd like the price increases to be inflicted on the fattie
smokers rather than me._

I have a friend who agrees with you, and I am constantly dismayed at the
willingness of people to throw their fellow human beings under the bus.

There are better ways of improving total health than letting insurance
companies screw more cash out of the more vulnerable members of society.

~~~
yummyfajitas
Why are you characterizing people who choose to overeat and engage in
dangerous habits as the "more vulnerable members of society"?

~~~
nitrogen
Because those habits are associated with lower income and education levels. An
increase in expenses is the last thing someone on the brink of financial ruin
needs, and advocating for such seems to show a lack of empathy.

~~~
yummyfajitas
If someone is on the brink of financial ruin, they should stop wasting money
on cigarettes and excess food. That will improve both their health and their
financial situation.

To describe such a person as "vulnerable" is a little silly. Their
vulnerability is something they created themselves.

~~~
nitrogen
Tell me. Have you ever been on the brink of financial ruin? When life seems
bleak, rationality becomes incredibly remote. You'll burn through all your
mental willpower just stressing about how you're going to pay enough of your
bills to keep the utilities running. Cheap, high-calorie food and other time
wasters typically avoided by the more financially able become essential
escapes from the misery of baseline existence. They become the only way to
stay sane.

If you want people to stop eating fast food and watching TV all day, give them
something more to live for than their next junk food hit instead of making
their continued survival even more uncertain.

~~~
yummyfajitas
I guess I disagree - I don't think that people with "lower income and
education levels" are mentally incompetent and unable to manage their own
lives.

I think they merely have different utility functions than me, and assign a
lower value to health, but a higher value to leisure. And I'd argue they have
the right to continue eating chips and watching TV - they just don't have the
right to force other people to pay for their choices.

But lets take your theory of mental incompetence seriously - in that case,
isn't the solution some sort of institutionalization? I.e., assign some
bureaucrat to make good choices for them, rather than merely forcing
responsible adults to pay for their irrational bad choices?

~~~
nitrogen
I didn't say they're mentally incompetent. I said that the state of being poor
imposes such a high mental cost that even the intelligent poor struggle to
apply their intelligence consistently. Even if we assume (incorrectly) that
poor people are exclusively those on the left half of the intelligence
distribution, the answer to their problems isn't charging them more money,
thus making their problems generational because they can't afford the
education, nutrition, and childcare necessary to end the cycle of ignorance.
The answer lies in making a positive life more appealing, e.g. by making
healthy foods more affordable, more available, and tastier; improving access
to education (MITx/edX/Khan Academy/etc.); making education and societal
contribution more culturally appealing through changes in entertainment and
early education; etc.

It's probably worth mentioning the philosophy that drives my opinions on these
issues. I want to minimize individual and total human suffering while
maximizing individual and total human potential. In other words, I believe
that every human being should have the right not to suffer, along with the
opportunity to make their best contribution to the progress of humanity. Being
poor and trapped by the mental stresses of staying alive leads to suffering,
fast food temporarily alleviates that suffering, and increasing the cost of
health insurance will exacerbate that suffering. I still care even if it's
someone else suffering while I enjoy the money I might save each month by not
paying for their lifestyle.

~~~
yummyfajitas
_I said that the state of being poor imposes such a high mental cost that even
the intelligent poor struggle to apply their intelligence consistently...I
believe that every human being should have the right not to suffer, along with
the opportunity to make their best contribution to the progress of humanity._

You seem to want to have it both ways. Either the poor are adults capable of
making their own choices, or they aren't.

If they are mentally competent, they have the right not to "suffer"
("suffering" isn't the word I'd normally use to describe a life of leisure).
They just choose not to exercise it.

~~~
nitrogen
Your definition of competence seems to differ significantly from mine. For one
thing, there's not some binary threshold of competence vs. incompetence. What
I'm describing is a temporary condition caused by depletion of mental
willpower. You also seem to be applying a degree of the typical mind fallacy.
Maybe you are the ubermensch incarnate and could maintain total control of
your creative mental faculties through the most painful torture, but most
people have limits. That doesn't make them incompetent; it just makes them
human.

~~~
yummyfajitas
_Maybe you are the ubermensch incarnate and could maintain total control of
your creative mental faculties through the most painful torture..._

Hardly. I certainly wouldn't hold a person being tortured responsible for
their actions, but I also wouldn't permit them to make their own decisions.

My position is that the right to make a choice and the responsibility for that
choice go hand in hand. Either the poor are allowed to make choices and suffer
the consequences, or they aren't. If you'd like shades of grey, perhaps they
could jointly make decisions with a guardian, and the guardian is partially
responsible for those choices.

~~~
nitrogen
I take exception to the example of invisibly raising of insurance prices as a
result of unannounced data mining. It's entirely unfair to hold people to
standards they aren't told about in advance.

------
jezclaremurugan
This article is based on Economist's www.economist.com/node/21556263, reading
that would show that the 'data mining exec' pays in cash because data mining
software found a correlation between paying in cash and living longer.

~~~
mseebach
Huh. So the title of the piece should be "Data mining exec doesn't understand
the difference between correlation and causation". Which is pretty stupid.

------
citricsquid
Key point:

> he predicts

He's avoiding it because he thinks it's the natural progression of the product
these companies offer, not because they _do_ , it might never happen.

~~~
dredmorbius
Here's the bit about all of this data tracking that bothers me the most.

The data is, in large part, a one-way street. The companies which are most
aggressive in _collecting_ information are also the most aggressive in _not
disclosing_ how they use, share, distribute, aggregate, correlate, etc., this
information. Look at the NDAs and "no talk" policies of Google, Facebook, any
of the credit bureaus, to say nothing of the vastly less visible enterprises
which service the B2B markets of data mining and information. It's an area in
which I had some experience and washed my hands in disgust years ago -- it's
also an area in which I'd very much like to leverage open channels and tools
to provide the public with the ability to fight back against the problem.

I've had a very clear view for over a decade now that this will not end well.

The truth is that _the public_ has little understanding of _what_ data are
being used, _how_ , or _by whom_. Much more pernicious is how data can be
aggregated. Your insurance company gets information about your car and
license. Your smog check station runs a standard battery of tests against your
vehicle and reports this to the state in a large electronic record. Your state
turns around and sells this database, at a very, very low charge, to companies
providing services to the insurance industry, so that based on VIN and license
information, a huge dump of data form your car's onboard data collection
systems is now available to your insurer. They're mostly interested in total
mileage, but as car data collection systems advance, there could be a great
deal more information there -- accelleration/decelleration, speed, conceivably
in the future, GPS waymarks.

And you'd never know about it.

The mileage stuff? That's for realz and has been for a decade or more.

Edit: and just to put a face on this: <http://www.iso.com/>

The truth? That few even within the datamining field know what others within
the field are doing with data (see above WRT one-way information), unless that
information is being directly marketed/sold. Where derived products (e.g.:
risk/profitability profiles based on models in which individual inputs are not
disclosed) are sold, even uses which are directly sold may be using
information in way undisclosed to the data suppliers / users, let alone the
members of the public who are being profiled.

What could possibly go wrong?

------
jackalope
I have a very healthy diet, but I buy all of my produce at markets that only
accept cash. I wonder what conclusions an insurer would draw from my
supermarket purchases (mostly meat & dairy)?

~~~
kintamanimatt
That you're a fattychunks and need to be charged a higher premium to
compensate for your vegetable-free diet. /s

Data mining is very hard to get right. Suppose I swipe my card at McDonalds
every few days. That charge alone doesn't even mean I'm eating unhealthy food.
I could be buying food for the homeless dude outside, or just buying bottle
after bottle of Dasani for lulz.

People do unusual and unpredictable things all the time.

~~~
jrockway
Remember, this isn't a court where you get to argue your individual case. If
data mining starts affecting insurance premiums, you probably aren't going to
notice. The insurance company is not going to say "because of your daily
McDonald's purchases...". They're just going to say, "effective 6/6/2020, your
rate is $x".

People that do "unusual and unpredictable things all the time" are so rare
that they don't matter at the scale of data mining. Most people do usual and
predicable things, and that assumption is probably worth money.

However, a number of factors have to come together for this to work. First,
the insurance companies need to correlate purchases and insurance claim rate.
Then insurance companies need to secretly implement this plan. Then when you
get the letter that says your premiums are being raised, they need you to not
switch to a competitor that is undercutting their new rate. And finally,
they'll have to avoid the rage of citizens and legislators. With their
upcoming special status in 2014, it's unlikely that lawmakers are going to let
insurance companies do whatever they want.

So ultimately, being different isn't going to protect you from data mining,
but I think the market will. Do _you_ want to be the first company to announce
they're spying on your purchases? Do _you_ want to own the grocery chain
that's known as the spying one?

Probably not.

~~~
SoftwareMaven
All those grocery store loyalty programs...they are _already_ spying on you.
And since the data is there, it's a nice asset to sell quietly to somebody
else who could make use of it, like insurance companies. It's not a stretch
because the data has been collected for years and nobody cares.

~~~
jrockway
Could you give me a concrete example of how the data is already being sold?

~~~
SoftwareMaven
<http://www.acxiom.com/>

Multi-billion dollar company that does nothing but buy and sell that kind of
data. They have categories of information about people that only the
government is allowed to access.

~~~
jrockway
I didn't see "grocery store purchases" listed anywhere on their website.

------
rhplus
I buy fruit and vegetables in bulk from a small local store and pick up beer
and convenience food from nearby supermarket when I need it. It's crossed my
mind more than once that the supermarket is the one that's most likely to sell
my purchasing history, and within that data-set I'm a junk food addict. Which
is why I sometimes throw some fruit into my basket, just to skew the data a
little.

~~~
excuse-me
There was a US supermarket that threatened a customer who was suing them after
he slipped in their store - they said they would present the history of his
liquor purchases to suggest to the court he was alcoholic

~~~
haberman
That is exactly the kind of insinuation that evidence rules are designed to
protect against (in my layman's understanding of the law). From Federal Rules
of Evidence, rule 404 (<http://www.law.cornell.edu/rules/fre/rule_404>)

"Evidence of a person’s character or character trait is not admissible to
prove that on a particular occasion the person acted in accordance with the
character or trait."

~~~
Cadsby
I can't comment on the legal accuracy of that interpretation of the law, but
as someone who has performed jury duty on a number of occasions I can say that
whatever the letter of the law, character assassination, in lieu of objective
evidence, is common and very routine.

~~~
haberman
Your jury duty experience was different than mine then. I sat on a criminal
trial where we were told almost nothing about the numerous past convictions of
the defendant, the fact that he beat his girlfriend, or the fact that the
trial's key witness had been beaten shortly before the trial began in an
apparent effort to prevent her testimony. I learned about all these things
only when the trial was over. The judge even threw out a recorded phone call
that the defendant placed from prison because it repeated some boilerplate
disclaimers about the call being from a prison inmate.

My jury experience led me to believe that evidence rules are very stringently
applied.

~~~
Mz
It seems to me you are comparing apples to oranges: Criminal charges are not
the same as a civil suit (i.e. "being sued"). It is why I opted to not put in
my two cents: I think my experience probably doesn't apply.

~~~
haberman
They're not the same, but it appears that evidence rules apply to both. In
particular, the Federal Rules of Evidence that I cited applies to both,
according to Wikipedia:
<http://en.wikipedia.org/wiki/Federal_Rules_of_Evidence>

~~~
Mz
Thanks. I did upvote you earlier.

My experience with this: I worked at an insurance company for five years. A
lot of what we did was driven by questions of what would hold up in a court of
law if we got sued. Generally speaking, proving someone was an alcoholic had
no bearing on the decision (there were exceptions: some policies had odd
language driving those exceptions).

------
ck2
Not only to avoid data-snooping but a great way to stay on budget is to once a
week buy a ~$1 item and get cash withdrawal at the register. Then use that
cash for the week without going over because you cannot use your card again.

------
pasbesoin
Here's another weakness in all this _analysis_ : The (presumed) value of the
data and analysis.

For years -- decades -- the medical professions have told us that "salt is
bad". Now, we're finally learning that, specific and limited medical
conditions or extreme diets aside, this is not so much the case. In fact, to
_little_ salt -- even when not "extremely" little -- may present significant
problems.

Imagine insurers having had purchase/dietary information available during this
"salt is bad" phase. How much harm might their resulting "persuasion" have
caused? (As a simplistic argument/point.)

Taken to extreme, such controls are like "best practices". They can trend
towards mono-cultures, which nature shows us tend to be fragile things.

Humans need to understand that our population has diversity, that this is a
_good thing_ , and that, wedged together in our cities, towns, countries, and
onto this blue marble, to some extent we are "all in it together". Like it or
not.

TL;DR: Some of these data analysis practices should spend more time worrying
about _their own_ garden.

P.S. I'm not against analysis, in general in life. I am against biased
analysis warped by self-serving motivations.

------
jmount
Just a marketing stunt.

------
beaker
The last thing I need is this kind of kruft polluting my brain causing me to
continuously second guess myself. I have a hard enough time deciding if a
purchase is "business related" or not, now I have to ponder the future
implications that every purchase I make will have on my permanent record?
Sorry but I can't play this game without encumbering my mind with an amount of
stress that completely outweighs any future benefit this bit of clever
purchasing discretion would bring. I surrender to our big data overlords and
beg for mercy on my consumption footprint. Maybe someday someone will be able
to provide a technical defense to all of this nonsense: e.g.
[http://www.theatlantic.com/technology/archive/2012/06/apple-...](http://www.theatlantic.com/technology/archive/2012/06/apple-
wants-to-protect-your-identity-by-cloning-you/258873/)

------
nivertech
I guess he 100% sure, that his insurance company do not data mine techdirt.com
;)

------
kirian
This is why I think something like Bitcoin is so vital. As physical cash is
more and more being replaced by digital money the ability to have financial
privacy is imperative. Think about all the data mining that would be possible
if your every transaction ever was recorded in some database. The financial
privacy possible with Bitcoin is one of its best qualities in my opinion.

~~~
rogerbinns
What is the difference between a bitcoin transaction and a theft? If you have
total financial privacy then the law can't help, and a heck of a lot of people
are going to want police/law intervention when they get robbed or any other
injustices.

~~~
kirian
I don't really get what you are trying to say, why is a bitcoin transaction
the same as a theft? A bitcoin transaction is the digital equivalent of a cash
transaction, you can keep your financial privacy so that all your transactions
are not stored in a database linked to your identity.

~~~
gaius
Because, if you set up sufficient privacy to disassociate yourself from your
Bitcoin account, there is no way for the police to tell the difference between
"I paid X" and "X stole from me" other than your say-so. It's not as if
dusting your keyboard for fingerprints will help...

~~~
kirian
That is incorrect, you can prove that you are the owner of the private key
that spent the bitcoins if you wish. Anyway this seems like a silly argument,
with physical cash how can you prove that you paid X with that cash like in
the scenario you outline?

My point is that as payments become more and more digital then we must be wary
of what that means in terms of data mining and things like that.

~~~
gaius
Now you've reassociated yourself with your Bitcoin account.

When you report a cash theft, the police don't go looking for the serial
numbers of the notes (usually). They look for other evidence, like your house
being broken into and the burglar leaving evidence behind. Imagine you've
created a situation where there is no evidence that you live in your own
house!

~~~
kirian
You can prove you were the owner of the spent coins to the police if you wish
but this doesn't allow the data mining company to know all of your financial
history.

------
Jare
The original article linked talks about some company buying an old lady's
health insurance (they end up not buying because they datamine and find the
lady is not unhealthy). That such a thing is possible blows my mind - a
company placing an explicit bet on someone's death?

~~~
mikecane
Betting on Death [http://www.washingtonpost.com/wp-
dyn/content/article/2009/06...](http://www.washingtonpost.com/wp-
dyn/content/article/2009/06/20/AR2009062000010.html)

~~~
Jare
Thank you, that article describes the matter pretty clearly. Now excuse me I
have to go throw up.

(to clarify my comment to others, what I'm amazed at is the idea that some
company bets to EARN money upon someone's death. With any 'normal' insurance
policy the company wants me to live long and prosper and never have any
problem)

------
chris_wot
In Australia, divulging this sort of information is against he law.

------
planetguy
Ehh, the miles which I get by using my credit card wind up being worth about
2%, so you'd have to convince me that each five-dollar burger raises my
insurance premium by more than ten cents.

~~~
ojbyrne
That's not a completely correct analysis, as the insurance premiums are a
recurring payment. So it would have to increase the present value of the
stream of recurring payments by more than ten cents.

~~~
spindritf
Discounted to the present value.

------
gcb
All insurance companies are/will have to spend billions on data mining...

...says the guy who sells data mining.

