SuperFreakonomics Book Club: Can a Banker's Algorithm Help Catch Would-Be Terrorists?

The SuperFreakonomics Virtual Book Club invites readers to ask questions of some of the researchers and other characters in our book. (Earlier Q&A’s can be found here.)

This week we’re offering up “Ian Horsley.” By day, he is employed in the anti-fraud department of a large British bank; but in his every spare moment for the past few years he has been working hard in collaboration with Steve Levitt to build an algorithm that can identify potential terrorists by their retail banking data. A few excerpts:

He doesn’t work in law enforcement, or in government or the military, nor does anything in his background or manner suggest he might be the least bit heroic. He grew up in the heart of England, the son of an electrical engineer, and is now well into middle age. He still lives happily far from the maddening thrum of London. While perfectly affable, he isn’t outgoing or jolly by any measure; Horsley is, in his own words, “completely average and utterly forgettable.”


And:

The procedure [to build the algorithm] would require two steps. First, assemble all the available data on these hundred-plus suspects [already arrested by British police after the 7/7 bombings] and create an algorithm based on the patterns that set these men apart from the general population. Once the algorithm was successfully fine-tuned, it could be used to dredge through the bank’s database to identify other potential bad guys. Given that the United Kingdom was battling Islamic fundamentalists and no longer, for instance, Irish militants, the arrested suspects invariably had Muslim names. This would turn out to be one of the strongest demographic markers for the algorithm.

And:

There were also some prominent negative indicators. The data showed that a would-be terrorist was disproportionately unlikely to:

Have a savings account
Withdraw money from an ATM on a Friday afternoon
Buy life insurance

The no-ATM-on-Friday metric would seem to be a proxy for a Muslim who attends that day’s mandatory prayer service. The life-insurance marker is a bit more interesting. Let’s say you’re a twenty-six-year-old man, married with two young children. It probably makes sense to buy some life insurance so your family can survive if you happen to die young. But an insurance company may not pay out if the policyholder commits a suicide bombing. So a twenty-six-year-old family man who suspects he may one day blow himself up may not waste money on life insurance.

And:

As of this writing, Horsley has handed off the list of 30 to his superiors, who in turn have handed it off to the proper authorities. Horsley has done his work; now it is time for them to do theirs. Given the nature of the problem, Horsley may never know for certain if he was successful. And you, the reader, are even less likely to see direct evidence of his success because it would be invisible, manifesting itself in terrorist attacks that never happen.

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  1. mike c. says:

    I hope the algorithm is more sophisticated than described here. It sounds like a method for detecting observant Muslims, most of whom are of course not terrorists.

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  2. Camp Freddie says:

    I found this to be one of the worst arguments in your book. All it selects for is devout muslims.

    Savings accounts are usury and not permitted.
    Friday prayer sessions are not just for jihadis, they’re kind of a pillar of islam.
    Life assurance is a form of gambling and not permitted.

    Didn’t the book also claim there was a super-secret 4th element to the algorithm that you couldn’t reveal because of national security? That part really annoyed me when I read it, since I didn’t appreciate being teased. On the strength of the other 3 examples I just didn’t believe that some mysterious 4th variable would work (unless it’s “are more likely than average to have bought industrial quantities of hair dye and nail varnish remover”).

    It sounds about as good as analysing for IRA terrorists by checking if they have made fewer than average low-value purchases from late-night chemists.

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  3. Ian Kemmish says:

    Actually I may well find out if he’s being taken seriously, because as I’ve mentioned several times, I pass (or fail?) way too many of the tests you’ve mentioned here from time to time. (One assumes that in order to be any use at all, the “live” data would have to be anonymised, so the bit about Muslim names would seem to apply only to training the algorithm in the first place.)

    This algorithm, in my opinion, will throw up far too many false positives to be useful. It sounds like a neural network – and I’m reminded of the (possibly apocryphal) story of the neural network the Pentagon built to identify photos containing camouflaged tanks, only to discover that, because of poorly chosen training data, what they really had was a network which could identify photos taken on cloudy days.

    And by the way – you can now get a reasonably wide variety of Sharia-compliant savings accounts and life insurance here in the UK, so those two parts of the test would appear to have become obsolete since they were first proposed….

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  4. econobiker says:

    Wow what a waste of time for him to do this when commercial companies abound which could provide it.

    I bet that data mining, target market, and demographic research companies could have this done in about a couple of weeks by cross relating purchases to retail banking to residence locations etc.

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  5. Robin says:

    I suspect all terrorists are now buying large quantities of life insurance.

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  6. frankenduf says:

    the other reason for no life insurance may be to not raise any red flags (life insurance is usually taken out by spouses to cash in after the ‘accident’ anyway)

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  7. Drill-Baby-Drill Drill Team says:

    Doing the Haj to Mecca in Saudi Arabia, is something all Muslims want to do before they die. Suicical people do gesture and unique behaviors such as giving away their dear poessessions, making a will and making peace with their relations. And if you were a Muslim Fanatic and were going on a Suicide Mission, it would be a nice gesture to Allah, to complete a Haj, just as Westerner would make sure all the insurance and paperwork is in order and the suicide note has been penned.

    I wonder how many of the the 21 Suicide Bombers on 9/11 went on Haj in the months or year prior to the attack?

    I would suggest keeping a Haj list of young Muslims, or at least passport control to Saudi Arabia, who may be prone to seek Paradise prematurely on a mission to send some infidels to hell.

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  8. Not too long ago bankers were the terrorists. says:

    Can’t we just keep hassling them based on their appearance alone?

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