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Inaccurate Statistical Discrimination

Author

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  • Bohren, Aislinn
  • Haggag, Kareem
  • Imas, Alex
  • Pope, Devin G.

Abstract

Discrimination has been widely studied in economics and other disciplines. In addition to identifying evidence of discrimination, economists often categorize the source of discrimination as either taste-based or statistical. Categorizing discrimination in this way can be valuable for policy design and welfare analysis. We argue that a further categorization is important and needed. Specifically, in many situations economic agents may have inaccurate beliefs about the expected productivity or performance of a social group. This motivates our proposed distinction between accurate (based on correct beliefs) and inaccurate (based on incorrect beliefs) statistical discrimination. We do a thorough review of the discrimination literature and argue that this distinction is rarely discussed. Using an online experiment, we illustrate how to identify accurate versus inaccurate statistical discrimination. We show that ignoring this distinction -- as is often the case in the discrimination literature -- can lead to erroneous interpretations of the motives and implications of discriminatory behavior. In particular, when not explicitly accounted for, inaccurate statistical discrimination can be mistaken for taste-based discrimination, accurate statistical discrimination, or a combination of the two.

Suggested Citation

  • Bohren, Aislinn & Haggag, Kareem & Imas, Alex & Pope, Devin G., 2019. "Inaccurate Statistical Discrimination," CEPR Discussion Papers 13790, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:13790
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    References listed on IDEAS

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    4. Nayoung Rim & Roman Rivera & Andrea Kiss & Bocar Ba, 2020. "The Black-White Recognition Gap in Award Nominations," Working Papers 2020-065, Human Capital and Economic Opportunity Working Group.
    5. Bindra, Parampreet Christopher & Glätzle-Rützler, Daniela & Lergetporer, Philipp, 2020. "Discrimination at young age: Experimental evidence from preschool children," Journal of Economic Behavior & Organization, Elsevier, vol. 175(C), pages 55-70.
    6. Jeremy Horpedahl & Arnold Kling, 2020. "Gender, Race and Ethnicity, and Inequality Research in the American Economic Review and the American Economic Association’s Conference Papers," Econ Journal Watch, Econ Journal Watch, vol. 17(2), pages 338–349-3, September.
    7. Adair Morse & Karen Pence, 2021. "Technological Innovation and Discrimination in Household Finance," Springer Books, in: Raghavendra Rau & Robert Wardrop & Luigi Zingales (ed.), The Palgrave Handbook of Technological Finance, pages 783-808, Springer.
    8. Gallen, Yana & Wasserman, Melanie, 2022. "Does Information Affect Homophily?," IZA Discussion Papers 15362, Institute of Labor Economics (IZA).
    9. D'Acunto, Francesco & Ghosh, Pulak & Jain, Rajiv & Rossi, Alberto G., 2022. "How costly are cultural biases?," LawFin Working Paper Series 34, Goethe University, Center for Advanced Studies on the Foundations of Law and Finance (LawFin).
    10. Felipe Goncalves & Steven Mello, 2021. "A Few Bad Apples? Racial Bias in Policing," American Economic Review, American Economic Association, vol. 111(5), pages 1406-1441, May.
    11. Nikoloz Kudashvili & Philipp Lergetporer, 2019. "Do Minorities Misrepresent Their Ethnicity to Avoid Discrimination?," CERGE-EI Working Papers wp644, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    12. Polipciuc, Maria, 2022. "Group identity and betrayal: decomposing trust," Research Memorandum 005, Maastricht University, Graduate School of Business and Economics (GSBE).
    13. Bo Cowgill & Fabrizio Dell'Acqua & Samuel Deng & Daniel Hsu & Nakul Verma & Augustin Chaintreau, 2020. "Biased Programmers? Or Biased Data? A Field Experiment in Operationalizing AI Ethics," Papers 2012.02394, arXiv.org.
    14. Talia Gillis & Bryce McLaughlin & Jann Spiess, 2021. "On the Fairness of Machine-Assisted Human Decisions," Papers 2110.15310, arXiv.org.
    15. Broockman, David E. & Soltas, Evan J., 2020. "A natural experiment on discrimination in elections," Journal of Public Economics, Elsevier, vol. 188(C).
    16. Elisa Macchi, 2022. "Worth your weight: experimental evidence on the benefits of obesity in low-income countries," ECON - Working Papers 401, Department of Economics - University of Zurich.
    17. Darya Korlyakova, 2022. "Do Pessimistic Expectations About Discrimination Make Minorities Withdraw Their Effort? Causal Evidence," CERGE-EI Working Papers wp731, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    18. Georgiou, Georgios, 2022. "Do correctional authorities treat all offenders equally? Evaluating the use of a risk assessment instrument," International Review of Law and Economics, Elsevier, vol. 69(C).
    19. Kudashvili, Nikoloz & Lergetporer, Philipp, 2022. "Minorities’ strategic response to discrimination: Experimental evidence," Journal of Public Economics, Elsevier, vol. 208(C).
    20. Dustan, Andrew & Koutout, Kristine & Leo, Greg, 2022. "Second-order beliefs and gender," Journal of Economic Behavior & Organization, Elsevier, vol. 200(C), pages 752-781.
    21. Makofske, Matthew, 2020. "Pretextual Traffic Stops and Racial Disparities in their Use," MPRA Paper 100792, University Library of Munich, Germany.
    22. Ayaita, Adam, 2023. "Ethnic Minority Background and Personality Characteristics: Evidence from a Representative Sample of the Adult Population," EconStor Preprints 251745, ZBW - Leibniz Information Centre for Economics.
    23. Polipciuc, Maria, 2022. "Group identity and betrayal: decomposing trust," ROA Research Memorandum 002, Maastricht University, Research Centre for Education and the Labour Market (ROA).
    24. Cordoba, Juan C. & Isojärvi, Anni & Li, Haoran, 2020. "Equilibrium Unemployment: The Role Of Discrimination," ISU General Staff Papers 202011140800001116, Iowa State University, Department of Economics.

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    More about this item

    Keywords

    discrimination; Inaccurate Beliefs;

    JEL classification:

    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing

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