Who Gets the Loan?
A fairness audit of the 1990 Boston mortgage-lending data, done two ways: the econometrics of the racial approval gap, and what a machine-learning model trained without race does by race. Results are associations after controlling for the variables recorded, with their limits stated first.
Read the brief
The problem
My econometrics course used this data for one problem set: a few regressions of loan approval on race and finances. I wanted to know how far the answer moves with what you control for, and whether a model that never sees race ends up treating applicants equally.
What I built
- Linear probability, probit and logit models with marginal effects, a ladder of controls, race interactions and an Oaxaca-Blinder decomposition of the gap.
- Approval models trained without race, measured for demographic parity, equalized odds and calibration by group, plus how much race the other inputs carry.
- Mitigation trade-offs and a label-bias what-if, since the "approved" label is the decision being audited.
What it found
White applicants were approved 90.8% of the time and Black or Hispanic applicants 70.8%. About 63% of that gap isn't accounted for by the recorded finances and credit histories, which fits discrimination but also things the files don't record. A model trained without race kept a 21-point gap.
How I tested it
The course's models reproduce the instructor's Stata output to every printed digit (81 of 81 numbers), the fairness metrics are tested against hand-worked cases, and every push rebuilds the results and fails if they drift.