[yummyfajitas]

Because that's not the reality that's being dealt with, in which whites and blacks have identical circumstances.

Of course it is. There may be 5 blacks and 100 whites with a credit score of 830. But as long as blacks and whites with an 830 credit score behave the same, then data from whites will generalize to blacks and the problem tlb brought up doesn't apply. Redundant encoding is also irrelevant - this is useless information so an accuracy maximizer has no reason to pay any attention.

Insofar as blacks and whites with an 830 credit score behave differently, then algorithms might treat them differently. That's the "race realism" hypothesis.

[SamReidHughes]

Having the same credit score, or other data, does not mean they have identical circumstances. For example, your willingness to follow the rules of society, even to your detriment, might be a result of whether society's rules have treated you fairly in the past.

So belief that you'll get different default rates given some financial data does not imply that you are a scientific racist. To create identical circumstances you'd have to do a brain swap (and some other relevant internal organs) on some black and white infants. A scientific racist view is that then the likelihood of paying off the loans would follow the brain, not the skin.