Innacurate Statistical Discrimination

62 Pages Posted: 11 Jun 2019

See all articles by J. Aislinn Bohren

J. Aislinn Bohren

Carnegie Mellon University, Tepper School of Business; University of Pennsylvania; Centre for Economic Policy Research

Kareem Haggag

Carnegie Mellon University - Department of Social and Decision Sciences

Alex Imas

Carnegie Mellon University - Department of Social and Decision Sciences

Devin G. Pope

University of Chicago - Booth School of Business

Date Written: June 2019

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.

JEL Classification: D90, J71

Suggested Citation

Bohren, J. Aislinn and Haggag, Kareem and Imas, Alex and Pope, Devin G., Innacurate Statistical Discrimination (June 2019). University of Chicago, Becker Friedman Institute for Economics Working Paper No. 2019-86. Available at SSRN: https://ssrn.com/abstract=3402134 or http://dx.doi.org/10.2139/ssrn.3402134

J. Aislinn Bohren

Carnegie Mellon University, Tepper School of Business ( email )

5000 Forbes Avenue
Pittsburgh, PA 15213-3890
United States

HOME PAGE: http://www.aislinnbohren.com

University of Pennsylvania ( email )

133 South 36th Street
The Ronald O. Perelman Center
Philadelphia, PA 19104
United States

Centre for Economic Policy Research ( email )

London
United Kingdom

Kareem Haggag

Carnegie Mellon University - Department of Social and Decision Sciences ( email )

Pittsburgh, PA 15213-3890
United States

Alex Imas

Carnegie Mellon University - Department of Social and Decision Sciences ( email )

Pittsburgh, PA 15213-3890
United States

Devin G. Pope (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
5
Abstract Views
78
PlumX Metrics
!

Under construction: SSRN citations will be offline until July when we will launch a brand new and improved citations service, check here for more details.

For more information