Back to The Undercover Economist homepageBryan Caplan has an excellent post criticising the discussion of racial discrimination in "The Logic of Life". I’m going to read it a few more times but I think I’m sticking to my guns for the most part. But it is well worth reading:
Tim could object that I’ve overlooked a subtler way for statistical discrimination to harm a group. After all, he heavily emphasizes a few experiments showing that statistical discrimination could be a "self-fulfilling prophesy." For example, he describes a resume experiment where otherwise identical fake resumes with "black names" were less likely to get a response. "High-quality applicants were more likely to be invited for an interview, but only if they were white. Employers didn’t seem to notice whether black applicants had extra skills or experience." If that is how employers treat black applicants, what’s the point of trying? As Tim asks, "Why bother to get a degree or work experience if you are young, gifted, and black?"
But is it really true that the market fails to reward blacks for getting more education? Is it even true that the market rewards them less? I tested these claims using one of the world’s best labor data sets, the NLSY. The results directly contradict Tim’s self-fulfilling prophesy story. Blacks actually get a substantially larger return to education than non-blacks! The same goes for experience, though the result is not statistically significant. The real lesson of the data is that if you are young, gifted, and black, you should get a ton of education, because it has an exceptionally large pay-off.
Why would this be so? I’m not sure, but one simple story is that counter-stereotypical behavior stands out. When my sons were young, my wife was working a lot, so I often took my kids places on my own. Funny thing: Time and again, strangers came up and said, "Wow, you’re such a great dad!" But there were moms of young kids doing the same thing in plain sight, and the strangers rarely praised them. Why not? Because a dad taking care of two babies is counter-stereotypical, which grabs people’s attention.
Purely anecdotal, yes. But it is consistent with the small academic literature on counter-stereotypical behavior. If you clearly violate expectations, people not only notice; they often over-react.
The upshot is that stereotypes may actually be self-reversing rather than self-fulfilling. The marginal payoff of distinguishing yourself from the pack is high if people think poorly of the typical member of the pack.
I agree with the last paragraph, and discrimination against women seems to have this quality: educated women are paid something much closer to educated men, while uneducated women seem to be paid substantially less than uneducated men. Rational response: women should go to college. Actual response: women now outnumber men at college 4 to 3 in the US. (I think this discussion made the final edit and stayed in the book, but I’ll forgive Bryan because it was in chapter three anyway, not the chapter he’s currently discussing.)
I also suspect that one reason Bryan is complaining is that he expected a full chapter on statistical discrimination, a subject which he has studied quite closely, and read it in that light. My aims were broader (and therefore, yes, less focussed). What looks to an academic like "sugar coating" or digression looks to me (and I hope, most of my readers) like a wide-ranging treatment of a complex subject.
All that said, I’ll be re-reading Bryan’s post and thinking hard.
Tim writes about the economics of everyday life. His 