Auditing social-media algorithms has become a focus of public-interest research and policymaking to ensure their fairness across demographic groups such as race, age, and gender in consequential domains such as the presentation of employment opportunities. However, such demographic attributes are often unavailable to auditors and platforms. When demographics data is unavailable, auditors commonly \emph{infer} them from other available information. In this work, we study the effects of inference error on auditing for bias in one prominent application: \emph{black-box} audit of ad delivery using \emph{paired ads}. We show that inference error, if not accounted for, causes auditing to falsely miss skew that exists. We then propose a way to mitigate the inference error when evaluating skew in ad delivery algorithms. Our method works by adjusting for expected error due to demographic inference, and it makes skew detection more sensitive when attributes must be inferred. Because inference is increasingly used for auditing, our results provide an important addition to the auditing toolbox to promote correct audits of ad delivery algorithms for bias. While the impact of attribute inference on accuracy has been studied in other domains, our work is the first to consider it for black-box evaluation of ad delivery bias, when only aggregate data is available to the auditor.
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Hometown Ties and the Quality of Government Monitoring: Evidence from Rotation of Chinese Auditors
Audits are a standard mechanism for reducing corruption in government investments. The quality of audits themselves, however, may be affected by relationships between auditor and target. We study whether provincial chief auditors in China show greater leniency in evaluating prefecture governments in their hometowns. In city-fixed-effect specifications—in which the role of shared background is identified from auditor turnover—we show that hometown auditors find 38 percent less in questionable monies. This hometown effect is similar throughout the auditor’s tenure and is diminished for audits ordered by the provincial Organization Department as a result of the departure of top city officials. We argue that our findings are most readily explained by leniency toward local officials rather than an endogenous response to concerns of better enforcement by hometown auditors. We complement these city-level findings with firm-level analyses of earnings manipulation by state-owned enterprises (SOE) via real activity manipulation (a standard measure from the accounting literature), which we show is higher under hometown auditors. (JEL D73, H54, H83, L32, M42, O18, P25)
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- Award ID(s):
- 1729806
- PAR ID:
- 10286083
- Date Published:
- Journal Name:
- American Economic Journal: Applied Economics
- Volume:
- 13
- Issue:
- 3
- ISSN:
- 1945-7782
- Page Range / eLocation ID:
- 176 to 201
- Format(s):
- Medium: X
- Sponsoring Org:
- National Science Foundation
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