Absent Collusion, Can Micro Level Discrimination Aggregate into Macro Level Discrimination?

Abstract

The literature on `empathy' already has furnished empirical evidence, to wit, empathy can be a source of implicit discrimination that induces `disparate impacts' on economic agents. This study provides formal theoretical evidence as to the behavioral mechanism which induces empathy to be a source of implicit (subconscious) discrimination that results in disparate impacts. In stated respect, metrics for disparate impact - as induced by empathy - which compare `proportions of different stereotypes' are shown to amplify, rather than dampen the probability of incidences of discrimination within populations of economic agents. For concreteness, neither of university brands nor diversity initiatives have characterization as sufficient conditions for the mitigation of incidences of disparate impact. For additional concreteness, applied to ratings of candidates for either of jobs or promotions, none of means or variances of ratings, nor measures of ratings consistency, such as Cronbach Alpha are robust to the detection of incidences of disparate impact. Importantly, whereas disparate impact is a microeconomic phenomenon, in presence of the ubiquity with which decision making roles consist of certain stereotypes, absent collusion across organizations, discrimination becomes systemic. The formal theory arrives at necessary conditions which, applied to rating outcomes, facilitate inferences in respect of the feasibility of a disparate impact in the context of either of hiring or promotion processes of organizations. In aggregate, whereas the basis for the filing of charges of disparate impact remains rooted in `heterogeneity of stereotypes', there is arrival at scientifically formulated general equilibrium conditions - that are non-stereotypical - which facilitate inferences as to the feasibility of incidence of a disparate impact. Given it is the absence of such scientifically formulated non-stereotypical metrics that has resulted in the floundering of charges of disparate impact in U.S. courts, formal theoretical outcomes pragmatically are important. In preliminary tests of the robustness of the general equilibrium conditions, the conditions outperform any reasonable expectations.

Keywords: Disparate Impact; Empathy; Stereotypes; Brands; Diversity Initiatives; Organizational Relevance

JEL Classification: J7, J15, J16, K31, D63, D83