Missing today's Paduano seminar and an interesting presentation by Stern school prof Dolly Chugh on how fictional graduate students with female names and names associated with minority groups did better compared to those with names associated with white males when they asked for immediate appointments rather than appointments a week away. (Here's a related paper of hers from AER.)
After reading the paper and moving away from thoughts directly related to the study (e.g., it would be interesting to see what would happen if the white male and for that matter the white female names had a less tony, subcultural sound--e.g., Billy Bob Anderson instead of Brad Anderson or Penny Sue Roberts instead of Meredith Roberts), I got to thinking about how social preference modeling could be applied to hiring and positive and negative discrimination...
Suppose employers fall into three types. Type 1 is egoistic. Type 2 has positive social preferences for a weaker group W, meaning that it is willing to incur some costs on behalf of members of that group that are not recaptured by the employer. Type 3 has negative social preferences for the weaker group, meaning that it is willing to incur some costs against members of that group that are not recaptured by the employer.
Now suppose employers are deciding whether to hire W job candidates for a job with a standard wage and benefits and a number of incumbents in the firm already performing the job. All three types of employer share a prior that members of the stronger group S are superior in terms of their average job skills. Information about the individual quality of S and W candidates relative to incumbent employees can be acquired, but doing so costs the employer more than the return from knowing the information.
If all employers are Type 1 egoists, no W candidates will be hired. The result is socially suboptimal, assuming that some of the rejected W applicants are in fact more qualified than some of the accepted S ones and that the social cost of determining the identity of some or all of these W applicants is less than the corresponding social benefit of hiring tham.
The analysis is exactly the same is true if all the employers are Type 3 negative discriminators. That result of this simple model gets us to a perhaps key point: One reason for stigmatizing negative social preferences against a weaker group as racism is that such negative preferences may well not have any positive social value, compared to simple neutrality with respect to that group.
Finally, if all employees are Type 2 positive discriminators, W employees may be hired, depending on the strength of the social preferences for them. This may produce a social welfare improvement, depending on whether the social benefits exceed the Type 3 employers’ costs.