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Measuring discrimination using principles of stochastic dominance

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  • Hoy, Michael
  • Huang, Rachel J.

Abstract

This note develops a new approach to measuring discrimination. A partial ordering of discrimination patterns is proposed that is consistent with the properties of second-degree stochastic dominance (SSD), which are related to changes in the distributions of either the reference (advantaged) or comparison (disadvantaged) group, while keeping the other group's distribution unchanged. Furthermore, a corresponding summary index is derived. This index provides a complete ordering to rank discrimination patterns and also satisfies the principles of SSD.

Suggested Citation

  • Hoy, Michael & Huang, Rachel J., 2017. "Measuring discrimination using principles of stochastic dominance," Journal of Economic Theory, Elsevier, vol. 167(C), pages 39-52.
  • Handle: RePEc:eee:jetheo:v:167:y:2017:i:c:p:39-52
    DOI: 10.1016/j.jet.2016.07.005
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    More about this item

    Keywords

    Discrimination; Stochastic dominance;

    JEL classification:

    • D30 - Microeconomics - - Distribution - - - General
    • J70 - Labor and Demographic Economics - - Labor Discrimination - - - General

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