Institutional Affiliation: Carnegie Mellon University and U. Pennsylvania
|Inaccurate Statistical Discrimination: An Identification Problem|
with , , : w25935
Discrimination has been widely studied in the social sciences. Economists often categorize the source of discrimination as either taste-based or statistical—a valuable distinction for policy design and welfare analysis. In this paper, we highlight that in many situations economic agents may have inaccurate beliefs, and demonstrate that the possibility of inaccurate statistical discrimination generates an identification problem for attempts to isolate the source of differential treatment. We introduce isodiscrimination curves—which represent the set of preferences and beliefs that generate the same level of discrimination—to formally outline the identification problem: when not accounted for, inaccurate statistical discrimination can be mistaken for taste-based discrimination, accura...