Machine Learning as a Tool for Hypothesis Generation

Jens Ludwig and Sendhil Mullainathan

No 31017, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: While hypothesis testing is a highly formalized activity, hypothesis generation remains largely informal. We propose a systematic procedure to generate novel hypotheses about human behavior, which uses the capacity of machine learning algorithms to notice patterns people might not. We illustrate the procedure with a concrete application: judge decisions about who to jail. We begin with a striking fact: The defendant’s face alone matters greatly for the judge’s jailing decision. In fact, an algorithm given only the pixels in the defendant’s mugshot accounts for up to half of the predictable variation. We develop a procedure that allows human subjects to interact with this black-box algorithm to produce hypotheses about what in the face influences judge decisions. The procedure generates hypotheses that are both interpretable and novel: They are not explained by demographics (e.g. race) or existing psychology research; nor are they already known (even if tacitly) to people or even experts. Though these results are specific, our procedure is general. It provides a way to produce novel, interpretable hypotheses from any high-dimensional dataset (e.g. cell phones, satellites, online behavior, news headlines, corporate filings, and high-frequency time series). A central tenet of our paper is that hypothesis generation is in and of itself a valuable activity, and hope this encourages future work in this largely “pre-scientific” stage of science.

JEL-codes: B4 C01 (search for similar items in EconPapers)
Date: 2023-03
New Economics Papers: this item is included in nep-big, nep-cmp and nep-ecm
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Citations: View citations in EconPapers (6)

Published as Jens Ludwig & Sendhil Mullainathan, 2024. "Machine Learning as a Tool for Hypothesis Generation," The Quarterly Journal of Economics, vol 139(2), pages 751-827.

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Journal Article: Machine Learning as a Tool for Hypothesis Generation* (2024)
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