Types of Discrimination
Types of Discrimination. The online version of the American Heritage Dictionary of the English Language (2000) defines discrimination as, “Treatment or consideration based on class or category rather than individual merit; partiality or prejudice.” Discrimination is a broad and multidimensional concept that covers all acts of preferring one thing, person, or situation over another (Block and Walker 1982, p. 6). trigger text In this broad sense, discriminatory behavior can occur within many economic or social activities of daily life. For example, the preference of a high school basketball coach for a taller player over a shorter one in selecting a team or an employer paying an African American worker less than a white worker for the same work would both fall under the heading of discrimination. While the latter act carries an unambiguously negative connotation, few people would consider the former act to be malevolent. Thus, discriminatory behavior does not always imply injustice or prejudice. While understanding this distinction is important, a more relevant discussion of discrimination should emphasize the types of discriminatory acts that are socially and economically unjust, the type of acts that have caused the word discrimination to gain an unambiguously negative meaning. Denying or restricting equal opportunity in housing, education, and employment to members of a certain demographic group, such as African Americans, women, or other minority groups, constitutes an act of discrimination that violates common notions of social and economic justice and points to a need for policy intervention.
In this broad sense, discriminatory behavior can occur within many economic or social activities of daily life. For example, the preference of a high school basketball coach for a taller player over a shorter one in selecting a team or an employer paying an African American worker less than a white worker for the same work would both fall under the heading of discrimination. While the latter act carries an unambiguously negative connotation, few people would consider the former act to be malevolent. Thus, discriminatory behavior does not always imply injustice or prejudice. While understanding this distinction is important, a more relevant discussion of discrimination should emphasize the types of discriminatory acts that are socially and economically unjust, the type of acts that have caused the word discrimination to gain an unambiguously negative meaning. Denying or restricting equal opportunity in housing, education, and employment to members of a certain demographic group, such as African Americans, women, or other minority groups, constitutes an act of discrimination that violates common notions of social and economic justice and points to a need for policy intervention.
One of the most common forms of discrimination, labor-market discrimination refers to differential treatment of workers within the labor market. It occurs when individual workers with identical productivity characteristics are treated differently with respect to hiring, occupational access, promotion, wage rate, or working conditions because of the demographic groups to which they belong.
Taste for Discrimination
Gary Becker, the 1992 Nobel Prize recipient in economics, laid the groundwork for the mainstream economic approach to the analysis of discrimination in The Economics of Discrimination (1957). Becker’s theory of discrimination represents an example of the neoclassical economics approach. He introduces the concept of taste for discrimination to translate the notion of discrimination into the language of economics. According to Becker:
If an individual has a “taste for discrimination,” he must act as if he were willing to pay something, either directly or in the form of reduced income, to be associated with some persons instead of others. When actual discrimination occurs, he must, in fact, either pay or forfeit income for this privilege. This simple way of looking at the matter gets at the essence of prejudice and discrimination. (Becker 1957, p. 14)
In cases of employer discrimination, employers with a taste for discrimination act as if employing, for example, African American workers imposes psychological costs that they are willing to pay. The measure of their willingness to pay can be translated into monetary terms by the discrimination coefficient. To illustrate, suppose that the costs to an employer of employing an African American worker and a white worker are Waa and Ww , respectively. If the employer possesses a taste for discrimination against the African American worker, he will act as if the actual cost were Waa (1 + d), where d, a positive number, is the discrimination coefficient. The prejudiced employer will be indifferent when choosing between a white worker and an African American worker when the cost of hiring each worker is, to him, equal—that is, Ww = Waa (1 + d). A clear implication is that the African American worker will be hired by the discriminating employer only if his wage rate is below that of a white worker. More precisely, the African American worker will only be hired if his wage rate is less than that of a white worker by at least the amount of the discrimination coefficient.
The source of discrimination may also be the prejudice of fellow employees. For instance, white workers may possess discriminatory preferences against African American workers and avoid situations where they have to work alongside them. The extent of employee prejudice can be monetized by the discrimination coefficient, using an analogy parallel to employer discrimination. A white worker who is offered a wage Ww for a job will act as if this wage rate is only Ww (1 – d), where d is the white worker’s discrimination coefficient. The white worker will agree to work with African Americans only if he or she is paid a premium equal to Wwd.
Another source of discrimination in the labor market results from the prejudice of customers. For example, white customers may prefer to be erved by white workers, which would reduce the demand for goods and services sold or served by African American workers. More formally, suppose the actual price of a good or a service is p. Then a white customer would act as if the price of this good or service were p(1 + d) when faced with an African American worker. One of the implications of customer discrimination is that it would result in a segregated workforce within a firm, with white workers being placed in positions with high customer contact and African Americans working in positions with minimal customer interaction.
Discriminatory behavior can also occur because employers have limited information about the productivity characteristics of potential employees. Therefore, employers’ hiring decisions may rely on average group characteristics based on factors such as race and gender. As a result, individuals with identical productivity characteristics will have different labor-market outcomes because of the average quality of the group to which they belong. Judging individuals on the basis of their average group characteristics is referred to as statistical discrimination.
For example, suppose an employer has to choose between a male and female job applicant. Assume further that the observable personal characteristics of these two applicants, such as age, years of education, previous work experience, test scores, and recommendation letters, are identical and that both of them performed equally well at the job interview. An employer, having to make a hiring decision between the two applicants, may decide to offer the job to the male applicant based on the employer’s belief that female workers are more likely to quit their jobs than their male counterparts because women are likely to engage in childrearing. The employer makes a decision using statistics about the average group characteristics of the applicants. It is important to note that the statistical information used by the employer may or may not be accurate. In this example, whether or not women actually have higher quit rates than men is not relevant to the hiring outcome. While the behavior of some employers engaging in statistical discrimination could be rooted in prejudice, it is also possible that these actions are based purely on non-malicious grounds. Statistical discrimination can result from decisions that may be correct, profitable, and rational on average.
Statistical discrimination helps explain how racial and gender differences between workers of equal productivity can exist in the labor market. It also explains how discrimination can persist over time. Unlike Becker’s taste-for-discrimination model, the employer does not suffer monetarily from practicing statistical discrimination. On the contrary, the discriminating employer can benefit from this behavior by minimizing hiring costs. Therefore, there is no compelling reason for discrimination, and wage differentials between males and females or African Americans and whites tend to disappear in the long run in the presence of statistical discrimination.
While much of the focus on statistical discrimination concerns the labor market, such practices can be observed in different sectors of society as well. One nonmarket example of statistical discrimination is the observed racial differentials in policing patterns. John Knowles, Nicola Persico, and Petra Todd (2001) found that police search vehicles driven by African American motorists for illegal drugs and other contraband far more frequently than those of white motorists. If the motive behind this police behavior is the belief that African Americans are more likely to commit the types of traffic violations that police use as pretexts for vehicle searches, this type of behavior is an example of statistical discrimination.
However, William Darity and Patrick Mason (1998, p. 83) argue that statistical discrimination cannot be a plausible explanation for long-lasting discrimination. They assert that employers should realize that their beliefs are incorrect if average group differences are perceived but not real. If, on the other hand, these differences are real, then employers should develop methods to measure future performance accurately rather than engaging in discriminatory behavior, especially in a world with strict antidiscrimination laws.
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