Some Ethics Discussions for Actuarial Science Students

Sean van der Merwe

Introduction

Ethics is not about right and wrong, it’s about doing the best you can

Topics

• Ethics frameworks
• Tools in a toolbox
• Ethics issues for actuaries
  • Data and privacy
  • Treating customers fairly
    • False proxies

Ethics frameworks

Main frameworks

• Deontology: All about rules, duties, and obligations. Consequences don’t matter so much.
• Utilitarianism: Making decisions that maximise overall happiness/well-being/utility for the greatest number of people.
• Rights theories: Respecting and protecting individual rights.
• Ubuntu: Responsibility to the group. Universal bond of sharing and connection. Collective well-being, social harmony, and the interconnectedness of individuals within a community.

Deontology in practice

An actuary might use deontological ethics to ensure they adhere to professional standards and regulations when calculating insurance premiums, even if bending the rules could lead to higher profits for their company.

For an actuarial science student, this could mean always following academic integrity guidelines, such as not cheating on exams or assignments, to uphold the policies they agreed to when registering: https://www.ufs.ac.za/about-the-ufs/governance/policy-documents

Utilitarianism in practice

An actuary might apply utilitarianism by designing insurance products that provide the most benefit to the largest number of policyholders, even if it means lower profits for the company by covering needy clients at lower costs or missing niche profit areas.

For an actuarial science student, this could involve collaborating on group projects in a way that ensures all members understand the material and benefit from the learning experience, rather than just focusing on getting the highest grade for themselves.

Rights theories in practice

An actuary might apply rights theories by ensuring that their work respects the rights of policyholders, such as the right to privacy when handling sensitive personal data, and the right to fair treatment with regard to protected qualities (race, gender, etc.)

For an actuarial science student, this could mean advocating for their right to a fair and unbiased grading process, ensuring that all students are evaluated based on their merit and effort.

Ubuntu in practice

An actuary might apply group ethics by considering the broader impact of their financial models on the community, such as ensuring that insurance products are accessible and beneficial to under-served populations. An actuary guided by Ubuntu might prioritize creating insurance solutions that foster community resilience and support social welfare programs.

For an actuarial science student, this could mean participating in study groups where the focus is on mutual support and collective success, or engaging in community service projects that benefit the local community, reflecting the spirit of interconnectedness and mutual care.

Data and privacy

Example: HR Survey

HR does a survey where they ask questions like

• How much do you enjoy your work?
• How well do you get along with your boss?
  • Do you ever feel intimidated by your manager?
• Are you happy with Top Management?
• Are you happy with your salary?
• Is your home life interfering with your work?

They say there is no risk because they say the survey is anonymous.

Here’s the problem though

The also ask questions like

• Department name
• Age
• Level
• Gender

The claim they want to summarise the results by these factors.

What does this look like?

HR data access

However, many HR employees also have access to the full employee database.

Re-identifying data

So, they could use a simple merge function in R or Excel and arrive at the table below, which of course then gets emailed around.

Right to privacy

• The right to privacy is enshrined in our constitution.
• Collecting data from somebody necessarily infringes on the right to privacy.
  • As does as form of direct marketing.
• The constitution says rights may only be infringed upon when there is care and consideration for both the individual and the greater good.
  • So a balance of risks against benefits \(\Rightarrow\) ethics.
• It does not say companies can do what they want in the name of profit, yet profit is the primary driving force behind data collection in the information age.
• Educating yourself is the first step in the fight to bring ethics into data.

POPIA

• The Protection of Personal Information Act makes the right to privacy practical in law.
• Applies whenever there is data that has anything even remotely ‘personal’ in it and that information can be connected to some sort of personal identifier.
• Sounds like it is quite specific, but it is actually broad.
• If a data set contains an email address and an opinion on a religious topic then it is protected by POPIA.
  • Even if it is posted publicly, e.g. Facebook group.
  • Just because information is publicly available that does not make it public information.

POPIA example in practice

• Sending an email to a large group of people, like a sports club, a parents group, workshop participants, or a group of clients (existing or potential), can be a POPIA violation if done wrong.
• If all the emails are individually visible it is a problem because it creates a list of emails tied to the personal information of knowing that these people belong to said club. It can suppress freedom of association.
• Use a mailing group or the BCC box for such cases (BCC = blind carbon copy).

Responding to ethical issues

Whistleblowing

• Most places, including the UFS, have whistle-blower hotlines and/or emails
• Usually a last resort
• Should be anonymous
• Easy to mess up
• Need to quietly collect evidence in secret, sometimes over a long period, before reporting
• Effort, but worth it in very serious cases where reporting is a risk to the reporting party

Direct engagement

• Raise issue within internal processes whenever possible
  • Give your line manager preference and the benefit of the doubt (at first)
• Again, ensure that you have a clear argument and evidence first
• Risk of retaliation is real, even if the company has policies against it
• Point out that ethical processes are in the long run best interests of the company
• Do everything in writing (email). Keep your language formal and objective.

Follow up (active monitoring)

• Ethics issues are difficult to address and easy to ignore
• Give reasonable time: For small things follow up once a day to once a week, for bigger issues once a week to once a month
• Pay attention how people respond!
  • If someone says, “Give me time to look into it.” then do that, give them space
  • If someone gives a reasonable counter argument then acknowledge that and reconsider you position, or at least acknowledge that there is not consensus
  • But if they say that an issue is not so serious without explaining why it is less serious then it could be an attempt to sweep it under the rug.