To explain income differences across various societal demographic groups, statistical discrimination is a method that depends on risk and information costs rather than preferences for discrimination or market power. One instance is when two groups are, on average, equally productive, but one group's productivity signal, say, test results, is noisier than the other group.
When economic actors'
consumers, employees, employers, etc., have incomplete knowledge about the
people they contact, statistical discrimination is a postulated behavior that
leads to racial or gender inequity. Now a student can take the help of a
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What Are The Different Types Of Statistical Discrimination?
The Two-Source Statistical Discrimination
The initial statistical discrimination, sometimes referred to as the "first moment," takes place when the discrimination is thought to represent the decision maker's effective reaction to asymmetric beliefs and prejudices. Women may experience first-moment statistical discrimination if they are paid less than their male counterparts because they are seen to be, on average, less productive.The self-reinforcing
cycle of prejudice results in second-moment statistical discrimination, which is
the second cause of inequality. According to the idea, the existence of such a
first moment," statistical discrimination ultimately dissuades members of
the discriminated group from achieving greater performance on those
outcome-relevant attributes.
Statistical Evidence Of Discrimination
In lawsuits claiming
discrimination in employment practices, educational opportunities, jury
selection, and criminal prosecutions, among other things, statistical evidence
has been employed. The United States Supreme Court has shown ambivalence on the
necessity of significance testing in certain situations, and it has not yet
given the employment of formal inferential procedures careful consideration.
Two jury-selection discrimination instances are used to illustrate various
methods for informing a court about the inferential usefulness of sample data.
In some job discrimination instances, the use of statistical evidence is also
taken into consideration. It is stated that the Supreme Court's traditional
approach to hypothesis testing is ineffective for determining whether a
particular defendant engaged in discrimination. P values, prediction or
confidence intervals, and likelihood functions are shown.
According to the hypothesis of taste-based discrimination, interethnic sentiments play a significant part in employment choices. For instance, Gary Becker maintained that "tastes for discrimination" are the most significant direct source of real prejudice in his landmark work The Economics of Discrimination. According to Becker, employers who discriminate against minority applicants do so in order to avoid the psychological and non-financial costs associated with hiring a member of a minority group.
Whereas, in reaction
to taste-based discrimination theory, statistical discrimination theory was
created. Academics in the tradition of statistical discrimination disagreed
with the premise that emotional, irrational motives underlie ethnic
discrimination, arguing that unfair treatment of ethnic minorities can be the
result of rational actions carried out by profit-maximizing performers who are
approached with the variables influencing decision-making.
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