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Combining discrimination diagnostics to identify sources of statistical discrimination

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  • Domínguez, Patricio
  • Grau, Nicolás
  • Vergara, Damián

Abstract

Statistical discrimination is usually flagged by economists as a potential source of treatment disparities. The literature, however, lacks reduced-form tests that provide information about the relative importance of statistical discrimination in explaining aggregate patterns. This article explores whether combining three different diagnostics of aggregate discrimination – those being, unconditional treatment disparities, benchmark tests, and outcome tests – can provide insights into sources of statistical discrimination. We discuss the difficulties concomitant with this exercise and argue, using an identification result that relies on restrictive (and presumably implausible) assumptions, that the answer is most likely negative.

Suggested Citation

  • Domínguez, Patricio & Grau, Nicolás & Vergara, Damián, 2022. "Combining discrimination diagnostics to identify sources of statistical discrimination," Economics Letters, Elsevier, vol. 212(C).
    • Handle: RePEc:eee:ecolet:v:212:y:2022:i:c:s0165176522000131
    DOI: 10.1016/j.econlet.2022.110294
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    References listed on IDEAS

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    1. David Arnold & Will Dobbie & Crystal S Yang, 2018. "Racial Bias in Bail Decisions," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 133(4), pages 1885-1932.
    2. Nicolas Grau & Damian Vergara, 2021. "An Observational Implementation of the Outcome Test with an Application to Ethnic Prejudice in Pretrial Detentions," Working Papers wp514, University of Chile, Department of Economics.
    3. Kevin Lang & Ariella Kahn-Lang Spitzer, 2020. "Race Discrimination: An Economic Perspective," Journal of Economic Perspectives, American Economic Association, vol. 34(2), pages 68-89, Spring.
    4. Jonathan Guryan & Kerwin Kofi Charles, 2013. "Taste‐based or Statistical Discrimination: The Economics of Discrimination Returns to its Roots," Economic Journal, Royal Economic Society, vol. 123(11), pages 417-432, November.
    5. Peter Hull, 2021. "What Marginal Outcome Tests Can Tell Us About Racially Biased Decision-Making," NBER Working Papers 28503, National Bureau of Economic Research, Inc.
    6. M. Marit Rehavi & Sonja B. Starr, 2014. "Racial Disparity in Federal Criminal Sentences," Journal of Political Economy, University of Chicago Press, vol. 122(6), pages 1320-1354.
    7. John Knowles & Nicola Persico & Petra Todd, 2001. "Racial Bias in Motor Vehicle Searches: Theory and Evidence," Journal of Political Economy, University of Chicago Press, vol. 109(1), pages 203-232, February.
    8. David S. Abrams & Marianne Bertrand & Sendhil Mullainathan, 2012. "Do Judges Vary in Their Treatment of Race?," The Journal of Legal Studies, University of Chicago Press, vol. 41(2), pages 347-383.
    9. Phelps, Edmund S, 1972. "The Statistical Theory of Racism and Sexism," American Economic Review, American Economic Association, vol. 62(4), pages 659-661, September.
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    Cited by:

    1. Neil Bhutta & Aurel Hizmo & Daniel R. Ringo, 2022. "How Much Does Racial Bias Affect Mortgage Lending? Evidence from Human and Algorithmic Credit Decisions," Finance and Economics Discussion Series 2022-067, Board of Governors of the Federal Reserve System (U.S.).
    2. Patricio Dom'inguez & Nicol'as Grau & Dami'an Vergara, 2022. "Discrimination Against Immigrants in the Criminal Justice System: Evidence from Pretrial Detentions," Papers 2202.10685, arXiv.org.

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    More about this item

    Keywords

    Discrimination; Statistical discrimination; Benchmark test; Outcome test; Prejudice;
    All these keywords.

    JEL classification:

    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General
    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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