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.

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.

That doesn't seem all that likely to me.

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.

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.

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...

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...

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)

In Europe there are "data protection" laws and what this means is that there is always a checkbox to check before companies could sell your data.

BUT, they try as much as they can to make you check it. If you do you will receive a "gift"(useless piece of crap) or 10 euro discount.

I never do but my mother does and she can't stop receiving junk in the mail box from different parties. My mother always says "how do they know my adress or my age?

Database selling or exchange between companies is routine.

I'm pretty sure they don't even give the merchant a break on their processing rate if they provide that info, and that it's just for reference by the merchant. I've never read the fine print though, so who knows.

While I agree that the data sharing has gotten way out of hand in the pursuit of profits, only the stupidest of companies would sell their customers out in this way.

It seems like you're just protecting yourself from your card information getting recorded and replayed (old hack in the book).

By shifting to cash, they can't track any of that.

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.

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).

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.

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

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.

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?

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.

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.

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.

* Car insurance, which is basically required across the U.S., seems to work a little closer to the way it is "supposed to".

2. For the same reason that your employer is not entitled to put cameras in your bathroom to make sure you aren't doing anything that might impact your job performance.

2.. Because many employees would choose to not work for such an employer, and this negative impact would outweigh the potential benefit? I haven't seen anything to suggest that people would choose not to be insured by a company that profiles its clients in this way.

And if you want to start down the "lifestyle" road then why shouldn't people who have kids pay more (it is a choice too), or the people in LA (who are more likely to get skin cancer). And remember back in the 60s people didn't think cigarettes were that harmful. Soon we'll find out that fat is good, or bad, or was it salt? Do we get to retroactively charge and refund people as scientific evidence mounts up?

A contributing reason that health insurance is so expensive is that people have been using it as a way to only pay 20% or less of expenses they know they are going to have.

By the way, if you buy your own insurance, and you have kids, or want maternity coverage, you pay more.

That is 100% correct. My point was that the US system of health "insurance" is anything but insurance.

> ... that people have been using it as a way to only pay 20% or less of expenses ...

That isn't the case. Ultimately the premiums paid by you and/or your employer as part of your "benefits" (foregone salary) will cover most of your expenses, otherwise it isn't a viable business model as pretty much everything involves an insurance transaction. The actual procedures really don't cost that much. It is the extra layers of obfuscation, administration, multiple parties etc that totally confuse what is going on.

You should try buying your own insurance someday. It becomes obvious again how it really isn't insurance. I believe California health insurance now requires maternity coverage.

Because you don't hire them to nag you, you hire them to finance certain forms of consumption. None of the numbers about even smoking have held up very well over time. "Lifestyle policing" is, like exercise mania, about vanity, not health. The exercise industry is there to pump up sports medicine spending while assuaging the Baby Boomer terror of death. Go look up which is faster rising, sports medicine or oncology. People have enough information about consumption choices to make informed choices. We should leave them be.

But the point is you hire them, they don't own you.

"The servant is the one that takes the money" - Lawrence of Arabia.

> 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.

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?

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.

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.

I honestly do believe that it's easy to position consumer data mining as a good thing by initially offering it as an option with the promise of "fairer" rates. Some people will be happy to donate their spending habits to get a discount. This optional program is likely to become less optional over time as people become more used to the idea of sharing their spending habits. After all, that's what we're doing with loyalty card schemes already, isn't it? Credit scores are the epitome of this kind of program.

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.

"Follows paelo diet."

"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."

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

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).

The loyalty cards can also backfire on supermarket chains. Safeway was sued for not notifying customers of product recalls even though it had the purchase data: http://www.progressivegrocer.com/top-stories/headlines/healt...

Ultimately, the shopper failed to prove his case. He claimed Vons was negligent for not cleaning up spilled yogurt, but during the trial somehow failed to prove (1) that there was some spilled substance which would have caused him to slip and (2) that his knee injury was caused by the slip and not by subsequent activities after he left the store.

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.

Yeah, there would be slim chances of recovering the stolen money, but that already is the case with cash, given a smart enough robber. The right way to tackle that problem is not to make the stolen goods easy to track, but to have preventive measures. In Bitcoin's case, these measures would be good security practices.

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.

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!

Um, life insurance is also a explicit bet on someone's death, right (a short bet, but a bet nevertheless). Also, a defined-benefit pension plan is a long bet on someone's death.

How else would people hedge against this stuff?

This is what the entire life insurance business model is base on. What's amazing is the level of information gathering possible now, not the fact that they're (still) doing it.

1. http://www.lisa.org/content/51/Life-Settlement-History.aspx

(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)

But this may turn out to be a bad example, if medicine continues finding that heart attack risk is mostly linked to cholesterol you produce yourself (this is apparently hereditary), and not much affected by cholesterol you eat.

...says the guy who sells data mining.