SBEE Lecture Series: Oded Netzer

Date: 
Mon, 09/17/2018 - 11:30am to 1:00pm

Ehrlicher Room, 3100 North Quad

The Social, Behavioral and Experimental Economics lecture series is sponsored by the School of Information, the Ross School of Business and the Department of Economics. Speakers from U.S. and international universities present their research at weekly seminars during the 2018-2019 academic year.

When Words Sweat: Identifying Signals for Loan Default in the Text of Loan Applications 

Abstract:

The authors present empirical evidence that borrowers, consciously or not, leave traces of their intentions, circumstances, and personality traits in the text they write when applying for a loan. This textual information has a substantial and significant ability to predict whether borrowers will pay back the loan over and beyond the financial and demographic variables commonly used in models predicting default. The authors use text-mining and machine-learning tools to automatically process and analyze the raw text in over 120,000 loan requests from Prosper.com, an online crowdfunding platform. The authors find that loan requests written by defaulting borrowers are more likely to include words related to their family, mentions of God, the borrower’s financial and general hardship, pleading lenders for help, and short-term focused words. The authors further observe that defaulting loan requests are written in a manner consistent with the writing style of extroverts and liars. Using a counterfactual analysis, the authors demonstrate that applying their finding can yield a 9.7% additional return on investment.

About the speaker

Oded Netzer is a Professor of Business (Marketing) at the Columbia Business School. His research centers on one of the major business challenges of the data-rich environment of the 21st century: developing quantitative methods that leverage data to gain a deeper understanding  of customer behavior and guide firms' decisions. He focuses primarily on building statistical and econometric models to measure consumer preferences and understand how customer choices change over time, and across contexts. His research has won multiple awards and has been published in the leading scholarly journals. He serves on the editorial board of several leading journals including: Marketing Science, Management Science, Quantitative Marketing and Economic, and International Journal of Research in Marketing. Oded teaches the core marketing course to MBA and undergraduate students, a course in Marketing Research to MBA and Executive MBA students, a doctoral course on empirical research in marketing, as well as several executive education programs.