How is discrimination promoted and rationalized?

[Economist]

Here are 2 resources that analyze the Economics of Discrimination. I would like to state that this is not the only view on the Economics of Discrimination. However, I did choose these resources because I have heard these economic arguments multiple times, and I noticed that they are fairly different from the ways in which other fields and people analyze discrimination. In fact, the first time I heard such arguments were about 1 year ago, and I thought, "How come I haven't heard discrimination analyzed from this perspective before?" Furthermore, whether or not one agrees with this analysis, one cannot have a complete understanding of discrimination in society without understanding this point of view. I am hoping that some of you will watch this video and listen to this podcast, and then respond with your opinions (what do you agree with or disagree with, what do you think they might have missed, what confused you, etc).

Lastly, discrimination can be an emotional topic, so let's keep the discussion as analytical as possible. In other words, no personal attacks or innapropriate statements.

Video:

http://www.mises.org/media.aspx?action=category&ID=102

It's the 10th video down and is titled "The Economics and Ethics of Discrimination" by Walter Block.

Podcast:

http://www.econtalk.org/archives/2006/12/caplan_on_discr.html

 

[opus]

Yes, economics does not support discrimination. It is unproductive.

But given the reality that there is discrimination, how is it something to be "solved"? That is, take France for example, where unemployment is high among the minorities because employers (i.e. the market) does not want to hire minorities, what can you do? What would economists do?

 

[opus]

Also, give this article a good read, http://links.jstor.org/sici?sici=0895-3309(199821)12%3A2%3C91%3AWHETSA%3E2.0.CO%3B2-I

It is saying that one of the biggest factors of discrimination, in terms of economics, is social capital as the market being a place of "interaction". While social network analysis is a sociology field, it is of increasing interest to business and management schools.

 

[Economist]

But given the reality that there is discrimination, how is it something to be "solved"?

First of all, we don't know how much discrimination exists in labor markets. I just took a Labor Economics class and we talked about discrimination for a week, and seriously, you can't really say it does or it doesn't exist. It's way too difficult to measure. So I don't like to hear you say, "the reality is that it does exist" when you really don't know. I would rather you be up front when stating an opinion instead of acting like it was fact. Instead, say "I think there is discrimination." Just like in my opinion, I don't think there is currently a lot in economic activities.

I wish you would also watch the video, because the speaker even shows that with women and men, when they have never been married they earn identical amounts. It doesn't make sense that labor markets would discriminate against only people who have ever been married. He finds the same thing with young vs old, and it doesn't make sense that labor markets would discriminate only against women over 25, but not also discriminate against women from 18 - 25.

Lastly, even if we find some discrimination in the labor market, that doesn't mean that government intervention can solve the problem. Like so many other things, government involvement will probably just make it worse.

But seriously opus, I really hope you will watch the whole video and listen to the whole podcast.

 

[BobG]

It's hard to watch a 60 minute video, but I did read a couple of his articles:

http://www.walterblock.com/publications/compromising_uncompromisable_discrimination.pdf

http://www.lewrockwell.com/block/block13.html

His articles make an interesting thought experiment, but have no more relevance to reality than the brain teaser: The Missionary and the Native Wives.

If the world operated solely on logic, then a great number of things in the world would be drastically different than they are today. Human decisions are made for irrational reasons as often (or more often) as they are by logic - especially carrying on a habit that worked for past generations. Through most of human history, identification with your own group was a huge advantage towards survival. More recently, most of the great civilizations before the industrial revolution only became great because they exploited conquered nations for cheap labor - preferably cheap labor of a different race since that lessened the conflict between guilt and economic benefit. It might be true that free markets will eventually force adaptation by humanity as a whole, but he ignores the fact that entire civilizations become so entrenched in tradition and ritual that they fail to adapt to new environments and are surpassed by some other civilization that has adapted better.

His ideas are relevant only if we're entirely apathetic as to which nation is the world's economic superpower, just so long as some nation adapts.

 

[opus]

First of all, we don't know how much discrimination exists in labor markets. I just took a Labor Economics class and we talked about discrimination for a week, and seriously, you can't really say it does or it doesn't exist. It's way too difficult to measure. So I don't like to hear you say, "the reality is that it does exist" when you really don't know. I would rather you be up front when stating an opinion instead of acting like it was fact. Instead, say "I think there is discrimination." Just like in my opinion, I don't think there is currently a lot in economic activities.

I wish you would also watch the video, because the speaker even shows that with women and men, when they have never been married they earn identical amounts. It doesn't make sense that labor markets would discriminate against only people who have ever been married. He finds the same thing with young vs old, and it doesn't make sense that labor markets would discriminate only against women over 25, but not also discriminate against women from 18 - 25.

I know what the scientific consensus is, thank you very much. I would rather cohere with the top publications in all the social sciences, than agree with a video by the Ludwig Von Mises Austrian School claiming that there is no discrimination in the market.

And since you're so stubborn about this, I shall link you to my post https://www.physicsforums.com/showpost.php?p=1546038&postcount=35 if you haven't read it, which has many articles for your perusing on "discrimination", which to you, "we don't know if it exists".

Lastly, even if we find some discrimination in the labor market, that doesn't mean that government intervention can solve the problem. Like so many other things, government involvement will probably just make it worse.

I never said anything about using the government. But since you love to make assumptions and jump the gun, it's clearly obvious that you see government as a total failure and everything should be left to the free market par usual. Such a simplistic worldview..

But seriously opus, I really hope you will watch the whole video and listen to the whole podcast.

I hope you read my article as well. It's published by an economics journal.

 

[Economist]

I know what the scientific consensus is, thank you very much. I would rather cohere with the top publications in all the social sciences, than agree with a video by the Ludwig Von Mises Austrian School claiming that there is no discrimination in the market.

In my Labor Economic textbook (Borjas 5th Edition) he says that the empirical evidence is too limited on both sides, and that we can't accurately speak about the degree to which it actually occurs (or doesn't) in the real world.

I never said anything about using the government. But since you love to make assumptions and jump the gun, it's clearly obvious that you see government as a total failure and everything should be left to the free market par usual. Such a simplistic worldview.

Well, it's not exactly jumping to conclusions since we've had a fair amount of discussions on this forum. Would it be jumping to conclusions if you predicted your mom's position on an issue? Probably not considering that you'd often be right.

I don't see government as a total failure, I just think there are many things they don't do as well as the private sector. Take things like police, fire departments, military, etc, I would say the government may do a better job there. However, when it comes to things like schooling, delivering mail, deciding what price something should cost (be it wages, food, etc) then I think the market does a much better job.

In terms of discrimination, government can't possibly solve the problem, because they can't possibly no if a problem exists, and if so, what's the best way to solve it. Secondly, even if they have the correct knowledge (which is rare) it's unlikely that they're incentives are great. It maybe better in terms of political strategy pursue another strategy that is less effective. Lastly, nothing the government ever does is free, and therefore tax payers are usually the ones who pay the administrative costs of such undertakings.

I hope you read my article as well. It's published by an economics journal.

I plan to. But in all fairness, I bet I am much more acquainted with your view, then you are with mine. We talked about them in Social Psychology, and you tend to hear them all over the place (school, TV, radio, etc).

 

[Economist]

And since you're so stubborn about this, I shall link you to my post https://www.physicsforums.com/showpost.php?p=1546038&postcount=35 if you haven't read it, which has many articles for your perusing on "discrimination", which to you, "we don't know if it exists".

How do they know discrimination is taking place? It is not discrimination unless the two people are equal in ability. So if you take a bunch of female CEOs and compare them to male CEOs you haven't controlled for ability. It's pretty much impossible to control for ability which is why it's so difficult to test empirically. Usually they use things like age, experience, years of schooling, which can all be very weak proxy variables. For example, a man and women with the same age might have took different years off (as is often the case that women take time of for children). Years experience might not be comparing the same type of work experience. Years schooling does not account for grades of the prestige of the college. This is the reason so many economists say, it's do difficult to measure. So explain to me how sociologists get around these measurement errors?

Also, how do explain the fact that women and men who have never been married earn the same amount? Are you implying that employers discriminate only to women who have ever been married? Watch the video, these facts are discussed at some length. Similarly, when you compare young men and women, they earn the same amount. So again, are you implying that employers only discriminate on women over 25?

Furthermore, when economist have done various empirical estimates of discrimination using a handful of variables (like the ones mentioned in paragraph 1 plus others) they might find that men earn more than women, or that whites earn more than blacks, and some people would say, it's probably discrimination. But then you look at the other variables, and find out that when controlling for these same variables Asian-Americans earn more than whites. So if you carry the results out to their logical conclusion, you'll conclude that there also must be discrimination in favor of whites over asians, yet this doesn't make any sense (which is another reason they think that the empirical measurements must be way off). Again, are you implying that in the US, employers discriminate in favor of Asians over whites?

Lastly, even in some cases where you may see discrimination, it may be statistical discrimination.

That is, take France for example, where unemployment is high among the minorities because employers (i.e. the market) does not want to hire minorities, what can you do? What would economists do?

You are assuming that minorities in France are equally as productive as non-minorities. This is a poor assumption. In fact, there is often many reasons to believe that minorities are not as productive as non-minorities.

Take the US for example. Some minorities are immigrants, and many immigrants are lower-skilled workers. Also, other minorities disproportionally live in poor areas and go to bad public schools, which again usually makes them lower-skilled. Minorities are also generally less likely to go to college, which again usually makes them lower-skilled.

France also has another problem, which is high minimum wage laws, strict labor market regulations, mandatory cushy (short) work weeks, many weeks paid vacation, etc. Many economists have pointed out that these sorts of regulations make it much more difficult for lower-skilled workers to get jobs in the first place. In other words, these regulations make unemployment rates much higher for lower-skilled workers. And if a disproportionate amount of your lower-skilled workers are minorities, then these regulations will have a disproportionate effect on minorities and non-minorities. Is it really a surprise that France has that problem given their labor market legislation?


And just for the record, I never said that discrimination is non-existent in labor markets. All I said, was that in my opinion, I don't believe there is a whole lot of it.

 

[opus]

In my Labor Economic textbook (Borjas 5th Edition) he says that the empirical evidence is too limited on both sides, and that we can't accurately speak about the degree to which it actually occurs (or doesn't) in the real world.

This is the extent of your rebuttal against all the peer-reviewed articles I linked to?

Well, it's not exactly jumping to conclusions since we've had a fair amount of discussions on this forum. Would it be jumping to conclusions if you predicted your mom's position on an issue? Probably not considering that you'd often be right.

Um, yes, it would be, because you're making an http://en.wikipedia.org/wiki/Ecological_fallacy" .

I don't see government as a total failure, I just think there are many things they don't do as well as the private sector. Take things like police, fire departments, military, etc, I would say the government may do a better job there. However, when it comes to things like schooling, delivering mail, deciding what price something should cost (be it wages, food, etc) then I think the market does a much better job.

Yes, it's a neoliberal position, that government should provide the most basic of needs. Usually neoliberals emphasize the importance of negative freedoms, such as antitrust laws, rule of law, freedom of speech, contract enforcement, security, etc.

In terms of discrimination, government can't possibly solve the problem, because they can't possibly no if a problem exists, and if so, what's the best way to solve it. Secondly, even if they have the correct knowledge (which is rare) it's unlikely that they're incentives are great. It maybe better in terms of political strategy pursue another strategy that is less effective. Lastly, nothing the government ever does is free, and therefore tax payers are usually the ones who pay the administrative costs of such undertakings.

Let's leave the public policy debate aside, because I haven't even mentioned government in this thread once but you've done it twice.

I plan to. But in all fairness, I bet I am much more acquainted with your view, then you are with mine. We talked about them in Social Psychology, and you tend to hear them all over the place (school, TV, radio, etc).

I beg to differ. Western culture and society is heavily influenced by liberalism (and that is an understatement). Everything is always regarded as an individual matter and seen through the lens of individuals. I am talking about classical liberalism, by the way. Our entire judicial system is based on the notion of the individual - property rights, contract rights, etc.. The second thing is that liberalism shares a very strong affinity with the free market. It is much easier to see the world through the lens of homo economicus than homo sociologicus (lol). We are all taught that we are "unique" and "special" like a snowflake.

That of course, means self-interest and believing that your ideas are yours - none of this culture fluff, or things like socialization. The success of the free market shares with this notion of individualism: consumerism, brand identity, marketing, advertisements..

That is, if people saw themselves as social before individuals, there'd be socialism instead.

 

[Economist]

This is the extent of your rebuttal against all the peer-reviewed articles I linked to?

Buy the book and read the chapter. He (obviously) reviews all the economics literature on the topic. He goes over numerous empirical studies on both sides of the debate.

 

[opus]

Buy the book and read the chapter. He (obviously) reviews all the economics literature on the topic. He goes over numerous empirical studies on both sides of the debate.

I am not going to buy a textbook just to validate a claim you made. That's obviously going too far. I will, however, send Borjas an email asking for his opinion.

 

[Economist]

His articles make an interesting thought experiment, but have no more relevance to reality than the brain teaser:

What about the data on women vs men, ever married vs never married? That's not simply a thought experiment or brain teaser but rather data. That data is hardly consistent with the discrimination view.

 

[Economist]

I am not going to buy a textbook just to validate a claim you made. That's obviously going too far. I will, however, send Borjas an email asking for his opinion.

Would you prefer for me to find the quote? I feel like that will be more credible than an email, especially considering that we won't know whether he actually wrote it. A quote from a textbook will be much more valid, because it is easy for someone to check.

By the way, don't forget to read my other posts above. I get the feeling you may have missed one, since they were posted right next to each other.

 

[BobG]

What about the data on women vs men, ever married vs never married? That's not simply a thought experiment or brain teaser but rather data. That data is hardly consistent with the discrimination view.

I have more of a problem with Block himself than any particular piece of data he cites.

However, how about the data on single parents? Both should face the same problems in balancing work and children, yet a male single parent with children under 18 averages about $587 a week while female single parents with children under 18 averages about $476 a week. That's a pretty serious discrepancy in spite of both sexes facing similar challenges. (http://www.bls.gov/cps/cpswom2003.pdf

One reason for the discrepancy could be that there aren't many single fathers. With so few single fathers, they're compared to male employees in general while employers expect to have problems with single mothers. In fact, there's at least 3.3 times more female single mother employees than there are male single employees (I've also seen numbers where the ratio is up to 6:1, but one thing is definite - the percentage of male single parents is increasing a lot faster than the percentage of female single parents; and a lot faster than employers can begin to prejudge single fathers). That certainly supports the idea that the wage discrepancy is based more on perception than the actual impact single parent-hood has on the workplace doesn't it?

Well, not really. That's looking at a couple statistics, coming to a conclusion, and cherry picking evidence to support that idea. I think the statistics in these tables suggests that the conclusion is at least reasonable and it shouldn't be tossed out. In other words, as you narrow possibilities, this is one possibility you'd want to investigate further. But it's certainly not an analysis of why male single parents make so much more than female single parents.

I also don't see anything wrong with citing those two stats (wage difference and ratio of women to men single parents) when you're posting on a forum. I'm not necessarily looking to be persuaded or dissuaded or to become an expert on discrimination. I'm an orbital analyst, I take classes in the evening, and any spare time is more likely to be spent outdoors in the mountains than becoming an expert in economics. Still, I'm eventually going to have to vote for someone who claims to be an expert and I'd like to be able to tell the difference between intelligence and total bs.

In other words, if you said the things Block said, you'd probably have better luck convincing me than Block. The fact of the matter is is that you're probably as qualified as Block, if not more so.

 

[Economist]

However, how about the data on single parents? Both should face the same problems in balancing work and children, yet a male single parent with children under 18 averages about $587 a week while female single parents with children under 18 averages about $476 a week. That's a pretty serious discrepancy in spite of both sexes facing similar challenges. (http://www.bls.gov/cps/cpswom2003.pdf.

Well, one issue with the data is that maybe a lot of single parents were married at one point. The data seems to discriminate between ever married and never married (not against single and currently married, but rather whether one has been touched by the institution of marriage ever). The hypothesis is that marriage effects the earnings of men and women differently (marriage increases men's earnings while it decreases women's earnings). Another issue with that data is that women are usually favored by the court to get custody, so maybe in the cases were the men get the kid, the men are much more likely to have their stuff really together. In other words, if you have two similar parents the child will go to the mom, and even if the men is more qualified the women will still get custody. And the only chance the dad really has getting custody is if he can provide much better for the children (which would really distort what you're trying to measure with the data). In other words, the dads' that get custody are not a random sample of the population of single fathers, but rather highly educated, good job, etc.

One reason for the discrepancy could be that there aren't many single fathers. With so few single fathers, they're compared to male employees in general while employers expect to have problems with single mothers. In fact, there's at least 3.3 times more female single mother employees than there are male single employees (I've also seen numbers where the ratio is up to 6:1, but one thing is definite - the percentage of male single parents is increasing a lot faster than the percentage of female single parents; and a lot faster than employers can begin to prejudge single fathers). That certainly supports the idea that the wage discrepancy is based more on perception than the actual impact single parent-hood has on the workplace doesn't it?.

Maybe. I think my explanations above are more likely, but I could be wrong.

Well, not really. That's looking at a couple statistics, coming to a conclusion, and cherry picking evidence to support that idea. I think the statistics in these tables suggests that the conclusion is at least reasonable and it shouldn't be tossed out. In other words, as you narrow possibilities, this is one possibility you'd want to investigate further. But it's certainly not an analysis of why male single parents make so much more than female single parents.

I don't know if Block cherry picked that data. I could be wrong, but I am under the impression that there is actually a "marriage asymetry hypothesis" that he was already aware of which is why he looked at the data on ever married vs never married men and women. I mean don't get me wrong, as I am not saying he was trying to lay out both sides of the case. What I'm saying is that he had a good idea of how the data would come out given he was previously aware of the marriage assymetry hpothesis.

I also don't see anything wrong with citing those two stats (wage difference and ratio of women to men single parents) when you're posting on a forum. I'm not necessarily looking to be persuaded or dissuaded or to become an expert on discrimination. I'm an orbital analyst, I take classes in the evening, and any spare time is more likely to be spent outdoors in the mountains than becoming an expert in economics. Still, I'm eventually going to have to vote for someone who claims to be an expert and I'd like to be able to tell the difference between intelligence and total bs.

LOL. Fair enough. I think that's a good attitude.

In other words, if you said the things Block said, you'd probably have better luck convincing me than Block. The fact of the matter is is that you're probably as qualified as Block, if not more so.

That's understandable. I just learned of Block from watching that video. In my own personal opinion, I think he's a smart guy, but I don't know that he's the best speaker. I think there are others who could have gave pretty much the same presentation, but better.

Also, I was never trying to say there is only one side of the story on the economics of discrimination (in fact, I think it's like the second sentence in my original post). I just wanted to present a side that less people are aware of. Namely, that there may be much less discrimination in the real world than previously thought due to economic factors that few understand and most people rarely consider.

 

[BobG]

Another issue with that data is that women are usually favored by the court to get custody, so maybe in the cases were the men get the kid, the men are much more likely to have their stuff really together. In other words, if you have two similar parents the child will go to the mom, and even if the men is more qualified the women will still get custody. And the only chance the dad really has getting custody is if he can provide much better for the children (which would really distort what you're trying to measure with the data). In other words, the dads' that get custody are not a random sample of the population of single fathers, but rather highly educated, good job, etc.

Another perfect example of irrational thought trumping logical thought. Women usually get custody because women usually get custody. The father usually feels like he'd be an idiot to throw money at an effort that's unlikely to succeed.

And it's an example that you're right that reality eventually trumps decisions based on unsupported biases. As more men get custody, the option of trying for custody seems more realistic and even more men try for custody, hence the rising rates.

When it comes to discrimination, the issue is how long could discrimination last if nothing were actively done to stop it. I think discrimination is less of a problem than it was in the 60's or 70's, and I think we should be thinking about transitioning from affirmative action plans. You don't have to completely fix the problem - you only need to make equal opportunity a realistic option in order for the problem to correct itself. But it only dropped as fast as it did because active steps were taken to end it. Discrimination would take a lot longer to drop on its own with no guarantee it even would drop within a particular region or country.

I think Block disagrees with the whole idea of government trying to influence social norms. Like I said in my first post, that idea is true if you don't care who wins. If you have a favorite team (like your own city or state or country), you'd like to take active steps to ensure your team is more educated and more productive than the other guys.

At least in theory. Getting a lot of people to commit to a single goal winds up being kind of a tough job (kind of an ironic blessing in a way, since if government policies changed as fast as current ideological fads we'd have constant chaos). Government winds up being capable of solving only the few problems where the solution is fairly obvious - they do a lot better job of focusing efforts than creating exciting new ideas.

 

[Evo]

In other words, the dads' that get custody are not a random sample of the population of single fathers, but rather highly educated, good job, etc.

Actually it is a question of which parent the court deems more fit, education & "good job" are not the deciding factors.

My ex boss is gay and he won sole custody of his 3 children because he was able to convince the court that his ex-wife was unfit. He was openly gay for years, so it was known to the court. Luckily the court ruled to award custody to the parent that would provide the most nurturing, emotionally healthy environment for the children. I worked for him for 8 years and watched the kids grow up, they were among the happiest, most well adjusted children I've known. He and his partner were great parents.

 

[BoomBoom]

Actually it is a question of which parent the court deems more fit, education & "good job" are not the deciding factors.

My ex boss is gay and he won sole custody of his 3 children because he was able to convince the court that his ex-wife was unfit. He was openly gay for years, so it was known to the court. Luckily the court ruled to award custody to the parent that would provide the most nurturing, emotionally healthy environment for the children. I worked for him for 8 years and watched the kids grow up, they were among the happiest, most well adjusted children I've known. He and his partner were great parents.

I would assume your boss has a good job, does he not? I believe it to be somewhat naive to believe custody is distributed equally. For a woman to lose custody to a man, generally speaking, she really has to be a total "screw-up"...OR the man has a good lawyer, job, and $$.

 

[Evo]

I would assume your boss has a good job, does he not? I believe it to be somewhat naive to believe custody is distributed equally. For a woman to lose custody to a man, generally speaking, she really has to be a total "screw-up"...OR the man has a good lawyer, job, and $$.

I didn't say custody was distributed equally, I said custody wasn't granted based on job or education.

 

[Economist]

Another perfect example of irrational thought trumping logical thought. Women usually get custody because women usually get custody. The father usually feels like he'd be an idiot to throw money at an effort that's unlikely to succeed.

And it's an example that you're right that reality eventually trumps decisions based on unsupported biases. As more men get custody, the option of trying for custody seems more realistic and even more men try for custody, hence the rising rates.

Why are you assuming this is irrational? Maybe it is rational (in other words the best strategy) for judges to generally give custody to the mom (instead of the dad)?

Actually it is a question of which parent the court deems more fit, education & "good job" are not the deciding factors.

True. But I would say the women generally gets the overwhelming benefit of the doubt. Besides, what I was really trying to say, is that the situation which men/dads are deemed more fit, is probably not uncorrelated with income, education, etc. I am not saying it is casual (in other words, I am not saying the income and education necessarily causes them to get custody) just that these various important variables are correlated with one another.

 

[BobG]

Why are you assuming this is irrational? Maybe it is rational (in other words the best strategy) for judges to generally give custody to the mom (instead of the dad)?



True. But I would say the women generally gets the overwhelming benefit of the doubt. Besides, what I was really trying to say, is that the situation which men/dads are deemed more fit, is probably not uncorrelated with income, education, etc. I am not saying it is casual (in other words, I am not saying the income and education necessarily causes them to get custody) just that these various important variables are correlated with one another.

I doubt the decision has to do with the education level of the father. A single father is less likely to be college educated than a married father (of course that's true of single mothers, too). They also have less income, but less income is a result of single parenthood, so it's hard to say whether they had less income before they became single parents. (Divorce is a bad economic decision just about any way you cut it).

If the decision is mother or father, the mother usually gets custody. The reason the number of single fathers is rising so fast while the number of single mothers is rising slowly is that shared custody is more common - where the children split time living in both households. Both are then counted as single parents for census purposes even though you're talking about the same set of kids.

Shared custody usually is the more rational decision for the judge, once you consider human nature. If the mother has custody and the father rarely sees his kids, the child support comes to be seen as just a financial burden vs support for his kids. If the custody decision maintains a relationship between the parent and kids, the parent paying child support is more likely to meet their obligation without putting up resistance*. As far as the judge is concerned, the arrangement that results in less future court involvement looks pretty attractive.

*That part hasn't seemed to work seamlessly. 46% of single parents get all of the child support due to them and the percentage is about the same regardless of which parent has to pay child support. That's an increase from the 90's where the percentage of single parents receiving all of their child support was in the mid 30's.

http://www.census.gov/Press-Release/www/releases/archives/facts_for_features_special_editions/000776.html
http://www.census.gov/Press-Release/www/releases/archives/facts_for_features_special_editions/009879.html

 

[Dale]

Video:

http://www.mises.org/media.aspx?action=category&ID=102

It's the 10th video down and is titled "The Economics and Ethics of Discrimination" by Walter Block.

Podcast:

http://www.econtalk.org/archives/2006/12/caplan_on_discr.html

I generally like what you have to say, but you cannot realistically expect most people on this forum to listen to 2 separate 1 hour feeds just to get your point. Summarize please!

Also, give this article a good read, http://links.jstor.org/sici?sici=0895-3309(199821)12%3A2%3C91%3AWHETSA%3E2.0.CO%3B2-I

It is saying that one of the biggest factors of discrimination, in terms of economics, is social capital as the market being a place of "interaction". While social network analysis is a sociology field, it is of increasing interest to business and management schools.

The JSTOR article costs $10 to read, so I am not going to read it either. But thanks for the summary!

 

[Dale]

It is saying that one of the biggest factors of discrimination, in terms of economics, is social capital as the market being a place of "interaction". While social network analysis is a sociology field, it is of increasing interest to business and management schools.

What is "social capital"? I would think that if you were talking about gender discrimination that women would, on average, have more "social capital" than men, but that wouldn't fit well with the wage data.

 

[Economist]

I generally like what you have to say, but you cannot realistically expect most people on this forum to listen to 2 separate 1 hour feeds just to get your point. Summarize please!

I wasn't hoping people would listen just to get my point, but rather I was hoping people would listen to further educate themselves a bit on this topic (especially considering people usually have strong opinions on it). I understand what you're saying though as some people don't have time, and they can't listen. If I was them, I'd probably listen to just one (I'd choose the podcast as it is more interesting and I like Bryan Caplan better than Walter Block) or just scratch the whole thing and not listen to either.

I doubt the decision has to do with the education level of the father. A single father is less likely to be college educated than a married father (of course that's true of single mothers, too). They also have less income, but less income is a result of single parenthood, so it's hard to say whether they had less income before they became single parents. (Divorce is a bad economic decision just about any way you cut it).

I'm not saying the decision has to be based on a fathers education level, just that they're probably highly correlated (or at least moderately correlated). I haven't looked for the data, but I seriously imagine that the likelyhood of a father getting custody and his education level and income are correlated (again this doesn't mean that it's causal). Haven't you guys ever taking statistics (or econometrics) and learned how to do regression analysis?

Shared custody usually is the more rational decision for the judge, once you consider human nature. If the mother has custody and the father rarely sees his kids, the child support comes to be seen as just a financial burden vs support for his kids. If the custody decision maintains a relationship between the parent and kids, the parent paying child support is more likely to meet their obligation without putting up resistance*. As far as the judge is concerned, the arrangement that results in less future court involvement looks pretty attractive.

I agree. That's what I was saying above, why would anyone assume that choosing mothers more often then fathers is irrational? I see no proof that it is, and as far as I am concerned it's probably a fairly rational decision.

 

[opus]

The JSTOR article costs $10 to read, so I am not going to read it either. But thanks for the summary!

Most students have access to JSTOR, so I figured my links are usually not a problem. Anyways, I here is the final section of the article that I am referring to.

Social Interactions and Networks
Enough has been said to suggest that market-based theories give an inadequate
account of the effects of racial discrimination on economic magnitudes and the
effects of the economic system on racial discrimination. It is increasingly recognized
that many social interactions with economic implications are not mediated through
a depersonalized market, but rather through the cumulative effect of individual
choices. An early example is Schelling's (1971) analysis of residential segregation.
He started with preferences towards the races of neighbors but pointed out that
even mild discriminatory attitudes, if widespread, might lead to a very segregated
equilibrium. Implicitly, he assumed that it was not possible to have discriminatory
prices in a given location, for example, lower rents for whites in predominantly
black neighborhoods.
The hypothesis that prices do not reflect every kind of social interaction, even
those of economic importance, is used in many contexts. Every now and then,
economists studying the labor market have found it important to postulate some
kind of rigidity of relative wages. For example, Dunlop's (1957) study showed that
the wages of the same occupation, truck drivers, varied with the general wage levels
of the different industries which employed them. Similarly, a frequently-maintained
hypothesis about unemployment is that there is some fair level of wages which must
be maintained (for example, Hahn and Solow, 1995, ch. 5).
I intend these points as an illustration of a more general principle-that beliefs
and preferences may themselves be the product of social interactions unmediated
by prices and markets. This concept has been the object of significant theoretical
research recently (for example, Blume, 1997; Durlauf, 1997a, b) and empirical
application to the frequency of criminal activity (Glaeser, Sacerdote, and Scheinkman,
1996).
Another variation of the theme that social linkages alter resource allocation
processes is found in the concept of social capital that was introduced by Loury
(1977), developed by Coleman (1990, ch. 12) and used empirically, among others,
by Putnam (1993) and Borjas (1992). These scholars have hypothesized that a dense
98 Journal of Economic Perspectives
network of social connections, even though developed for noneconomic purposes,
will enhance both political and economic efficiency. Admittedly, the concept of
social capital is very hard to pin down in an explicit model, but enough has been
done to show its importance.
I want to conclude by concentrating on one particular type of social structure
which has already shown its applicability to the labor market, the network of acquaintances
and friends. Sociologists and some economists who have worked in this
area have shown by careful empirical work that a very large fraction of the jobs are
filled by referrals by current employees. There are many such studies; for especially
careful and definitive ones, see Rees and Shultz (1970, ch. 13) and Granovetter
(1974). The network concept of labor allocation differs considerably from a market.
It is indeed very easy to say how social segregation can give rise to labor market
segregation through network referrals. Discrimination no longer has any cost to
the discriminator; indeed, it has social rewards. Profit maximization is overcome by
the values inherent in the maintenance of the network or other social interaction.
The methodological demands which are satisfied by a network approach have been
outlined by Granovetter (1988) and White (1995). More definite modeling of networks
in the labor market still needs to be done. Clearly, the anonymous market,
in which in effect every seller is connected with every buyer, is one extreme of a
network. Intuitively, it is clear that a sufficiently dense network will mimic a market
(Kranton and Minehart, 1997). But the empirical accounts of employment suggest
instead a network with relatively few links compared with all those possible.
The main point is that personal interactions occur throughout this process,
and therefore there is plenty of room for discriminatory beliefs and preferences to
play a role which would be much less likely in a market subject to competitive
pressures. The network model seems most appropriate for the labor market, and
perhaps less so for the housing, automobile, and credit markets. But in all of these,
each transaction is a social event. The transactors bring to it a whole set of social
attitudes which would be irrelevant in the market model.
Models of racial discrimination in which all racial attitudes are expressed
through the market will get at only part of the story. At each stage, direct social
transactions unmediated by a market play a role. Even the market manifestations
will be altered by these direct social influences.

What is "social capital"? I would think that if you were talking about gender discrimination that women would, on average, have more "social capital" than men, but that wouldn't fit well with the wage data.

I'm not sure what you mean by women having more "social capital" than men and not fitting in well with wage data. The argument is that "social capital", or essentially a measure of one's connectedness to others in a community, has a strong role in determining employment. Essentially, the whole recent bandwagon in business schools on the importance of "networking" is postulated on this notion. It was popularized by Robert Putnam's "Bowling Alone". There's a book called "The Strength of Weak Ties" which quite brilliantly explains this. The whole concept is related to social networks and recent Web 2.0 stuff given Facebook and popularity of "social networking" these days. Books like Wikinomics have been written on the subject.

 

[Economist]

The argument is that "social capital", or essentially a measure of one's connectedness to others in a community, has a strong role in determining employment.

Well, this is probably true, but it's not that suprising. Besides, I don't get why this is supposed to be such a big deal. Obviously, knowing many people and being a people person will open some doors. Furthermore, it's not like "social capital" should be expected to be uncorrelated with "intellectual capital." In other words, maybe "social capital" is a good signal or indicator of skills, ability, intelligence, etc.

You mentioned business schools, because they definitely do try to hook people up with networking connections. However, you are also forgetting that they already try to weed people out who don't meet a certain intellectual standard through GMAT scores, GPAs, etc. Once you get into and MBA program though, it is often times more about helping you meet a lot of people then it is about educating you in the classroom. There is also another theory about what business schools are doing. Essentially, getting a MBA provides a signal to employees that one is intelligent, hard-working, driven, ambitious, etc.

If you are not aware of the economic theories of signalling, you should look into them because I think it's pretty fascinating stuff. Here's an example of what signalling is all about. Does going to college increase someones earnings because you learn so much useful stuff in 4 years? Or is it just that going to college is correlated with ability, skills, etc, and therefore, it's more about the people who go to college? In other words, if nobody went to college, would we still tend to find the same people doing well financially? Essentially, employers, admissions committees, etc can use these things (signals) to see how qualified someone is. For example, testing scores, GPAs, etc may be useful because it says something (sends a signal) about your ability, skills, etc.

One good example of a paper done on signalling compared the earnings of two groups of people. The first group went to great colleges (Harvard, MIT, Yale, etc) and the second group was admitted to great colleges, but decided to go to less prestigous schools. The interesting finding was that the two groups had the same incomes when they were older.

 

[Economist]

I urge some of you to read this (it will be much quicker than watching the video or listening to the podcast).

http://www.econlib.org/library/Enc/Discrimination.html

I thought this part was interesting

The resistance of southern streetcar companies to ordinances requiring them to segregate black passengers vividly illustrates how the market motivates businesses to avoid unfair discrimination. Before the segregation laws most streetcar companies voluntarily segregated tobacco users, not blacks. Nonsmokers of either race were free to ride where they wished, but smokers were relegated to the rear of the car or to the outside platform. The revenue gains from pleased nonsmokers apparently outweighed any losses from disgruntled smokers.

Streetcar companies refused, however, to discriminate against blacks because separate cars would have reduced their profits. They resisted even after the passage of turn-of-the-century laws requiring that they segregate blacks. One railroad manager complained that racial discrimination increased costs because it required that the company "haul around a good deal of empty space that is assigned to the colored people and not available to both races." Racial discrimination also upset some paying customers. Black customers boycotted the streetcar lines and formed competing hack (horse-drawn carriage) companies, and white customers often refused to move to the white section.

In Augusta, Savannah, Atlanta, Mobile, and Jacksonville, streetcar companies responded by refusing to enforce segregation laws for as long as fifteen years after their passage. The Memphis Street Railway "contested bitterly," and the Houston Electric Railway petitioned the Houston City Council for repeal. A black attorney leading a court battle against the laws provided an ironic measure of the strength of the streetcar companies' resistance by publicly denying that his group "was in cahoots with the railroad lines in Jacksonville." As pressure from the government grew, however, the cost of defiance began to outweigh the market penalty on profits. One by one, the streetcar companies succumbed, and the United States stumbled further into the infamous morass of racial segregation.

 

[mulp]

Yes, economics does not support discrimination. It is unproductive.

That is an absurd statement. If economics is the science of explaining human behavior based on trade with others, clearly people engage in discriminatory behavior because they perceive that it benefits them, so economic theory needs to explain why people do discriminate.

Or are you imposing a normative view of what should be instead of a positive description of what is?

From a liberal point of view, discrimination is unproductive because it decreases the general welfare of society, but in doing so, that places the "top dogs" at a relative disadvantage to their position in a society where power rather than law, whether political or moral, govern. But that is a normative view of what should be, not a positive description of what is.

Perhaps you take the view that discrimination is only economically advantageous, only if the economy is considered fixed in size, and thus ones gain must come at the cost of another, a view that you reject. But that requires that you reject the laws of physics which holds mere humans to conservation of matter and energy which are bounded.

I will note that as humans are animals that have evolved to our present state, we must share the traits of other animals and other animals clearly discriminate, and social biologists have theories that explain the different kinds of discrimination. If you look at the relationships between males and females and between males and males and females and females in the animal world, you will observe rankings that are comparable to those we see in human relationships.

Women do not have a lower economic rank because they are inferior factors of production in the economic sense, but because they have lower social rank. And that lower social rank might have made sense when roles and rank were determined by innate programming, but human society has developed to the point where the evolutionary roles no longer dictate their social status. If "economics does not support discrimination" then the economic distinction between men and women would have vanished.

Clearly men have reason to perpetuate the lower social and thereby economic status of women, so the job of economic theory is to explain why that is. Or else economists must argue that men are not only irrational because they don't act in their own self interest in the sense that Adam Smith saw it, but instead out of greed as the people who wear Adam Smith ties see it.

 

[mulp]

Most students have access to JSTOR, so I figured my links are usually not a problem.

Most students do NOT have access to JSTOR. You have engaged in the kind of discrimination that is inherent in the structure of "capitalistic" societies. You have assumed that:
- people who are engaging in intellectual pursuits characteristic of students are enrolled in some institute of education
- all students are like you because all schools are like your school in paying for access to JSTOR

Of course, I doubt you really believe that all schools are like your school, because if you did, you would be "buying" your education at a very much lower priced community college that lacks all the extraneous irrelevant facilities of the school you attend.

So, there is an inherent social structure for students, and society implements mechanisms that discriminate between students, and that promote stratification of students into classes of relative economic advantage.

The most elite institutions are certainly the leaders in arguing on the one hand that they provide great benefit to society by the knowledge they spread and create, as they seek funding of all sorts, while on the other hand seeking to maintain exclusivity, arguing that they need to be able to discriminate between those deserving of their special gift of knowledge and those who aren't. If they were truly commited to benefiting society at large, they would be doing everything they could to spread their special sauce far and wide to everyone, seeking to eliminate all discrimination where possible. For example, all the texts, course work, and lectures could be freely accessible on the internet. However, the counter argument is that this would undermine the economic system that supports the institution that provides all the benefits to society which justifies society giving it support.

My point is two fold:
1) we promote discrimination without realizing it
2) we rationalize discrimination because we believe it is economically necessary