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Amazing RacismA study that shows the true stupidity of discrimination.

By Tim HarfordPosted Saturday, Feb. 2, 2008, at 7:39 AM ET

Hillary Clinton and Barack Obama notwithstanding, the world still seems to be ruled by white men. Is this the result of racial and sexual discrimination in the workplace? Or are other factors more important—for instance, that too few black kids attend good schools, or that women usually interrupt their careers to have children? The answer is far from academic, because if we want to change a situation, it's a good idea to work out what might be behind it.

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Economists have been leading this investigation for longer than one might think. Contrary to popular belief, "the dismal science" did not acquire its name because of Thomas Malthus' gloomy predictions. The title was bestowed upon us in 1849 by Thomas Carlyle, who attacked John Stuart Mill and his fellow political economists for their "dismal" support for emancipation, and their insistence that former slaves, women, even the Irish, were all equal.

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Economist Steven E. Landsburg theorized about why blacks earn less than whites do. Herbert Stein discussed the disparity between men's and women's pay. Tim Harford asked whether societies are hard-wired to tolerate income equality and explained how fertility advances could allow women to take over the boardroom. Last month, Slate published excerpts from Richard Thompson Ford's The Race Card: How Bluffing About Bias Makes Race Relations Worse.

More recently, economists have turned their attention to the subtler question of how to detect discrimination in labor markets. That women or racial minorities are paid less suggests discrimination but does not prove it, even if the statisticians make every effort to adjust for other differences such as part-time work or different choices of jobs.

One solution to the ambiguity is a random audit. A recent example was carried out by economists Sendhil Mullainathan and Marianne Bertrand. They generated about 5,000 fake job applications and used a computer to add, at random, distinctively black or white names. The employers who received the applications systematically favored the Gregs and the Emilys over the LaTonyas and the Jamals. Perhaps even more perniciously, they paid attention to the qualifications of (apparently) white applicants, but did not notice the difference between mediocre black applicants and excellent ones.

But discrimination should also show up in another way. Employers who prefer not to employ workers because of their sex or the color of their skin are likely to lose money: Employing stupid white men when you could be employing smart black women is not a profitable human-resources policy. Employers might nevertheless do this, either because they do not realize that their prejudices are costing them money, or because they do not care. If so, discrimination is easy to detect in principle: Just note that the profitable firms will be the ones employing more women or workers from an ethnic minority.

Economist Stefan Szymanski realized that the English soccer league was a perfect testing ground for this hypothesis. There was excellent data available as to which clubs employed black players; soccer has a very clear measure of success, and unlike some sports leagues, the English game does not go in much for redistributing money from successful clubs to minnows.

Szymanski studied the game between 1978 and 1993, a time encapsulated by the image of Liverpool's Jamaican-born star, John Barnes, backheeling away a banana that had been hurled at him from the stands. But Szymanski's numbers suggest that it was the owners, not the fans, who were the worst offenders. Clubs that bucked the norm and fielded several black players did not suffer lower attendance or revenues as a result. But they did enjoy a higher league position with a lower wage bill than the typical club—clear evidence that black players were underpaid on racial grounds.

As soccer has become ever more competitive and the financial stakes have become higher, racial discrimination has become more expensive. I note that many more black players now play in the top division of British soccer. That is good news; it's also no coincidence.

If only competition was as fierce, and talent as undeniable, in the world outside the stadium gates.

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Tim Harford is a Financial Times columnist. His latest book, The Logic of Life, will be published in paperback on Feb. 10.

COMMENTS

Notes from the Fray Editor

It's all about the names. Cletus, Bebe, Malcolm, Xavier, Natalie--someone in the Fray was ready to pigeonhole each of them. Even "if someone were named 'Satan' they would likely also not be hired" Tundrayeti says, in the midst of a long thread. Patron002's question is "What about QBs in football?" Readers felt there were some touchy subjects here, but the arguments were mostly good-tempered and well-thought-out.

Comments from the Fray

Maybe this study has hit upon not so much a hidden form of racism as classism in corporate America. Were all African American candidates equally discriminated against, or did the ones that appeared to come from upper/middle class backgrounds have a distinct advantage. Perhaps names like LaToya or Antwon are seen as having come from lower income African American families. In that case, it would be less the color of one's skin as the perceived level of education/work ethic that is at play here. Did the researchers also send out resumes from Billy Bob and Norma Lou who graduated at the top of their class from West Virginia State U?

--Jdzappa

(To reply, click here)

Those running businesses today were educated at a time when

the FHA was legally OBLIGATED to discriminate based on race
Schools in many states were segregated or shut down rather than desegregate.
Jim Crow laws were not just still on the books, but actively enforced.

Those in senior positions waiting to run businesses were educated at a time when

A major candidate for the US Presidency ran on a Segregationist plank
Jim Crow laws were on the books and enforced with water cannon and attack dogs
racist teachers still openly treated minority and female students as lesser

so explain to me again how these two generations magically erased their upbringing?

--Degsme

(To reply, click here)

The "obvious black names" study is a dumb one because it doesn't factor in embarrassment. Very non-normal names can be difficult to pronounce, which means many people who are uncertain about how to say the name will put this in the back of the list. Asians--very clearly first generation Asians--will typically offer a nickname or a pronunciation key on their applications... those that do get called a hell of a lot more than those that DON'T. If racism played a role, then clearly both would see their calls come in a roughly equal rates…

When I was volunteer coordinator for the Dean campaign, I instructed the volunteers to skip a name they couldn't pronounce... We were calling registered democrats in South Carolina, which means half of the people we were INTENDING to call were African-Americans, and we'd skip a name that looked like some of the crazy things they had in their study. That's not racism, that's embarrassment over not knowing how to pronounce your weird… name.

--Tundrayeti

(To reply, click here)

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