On the Use of Outcome Tests for Detecting Bias in Decision Making
Abstract/Contents
- Abstract
- The decisions of judges, lenders, journal editors, and other gatekeepers often lead to disparities in outcomes across affected groups. An important question is whether, and to what extent, these group-level disparities are driven by relevant differences in underlying individual characteristics, or by biased decision makers. Becker (1957) proposed an outcome test for bias leading to a large body of related empirical work, with recent innovations in settings where decision makers are exogenously assigned to cases and vary progressively in their decision tendencies. We carefully examine what can be learned about bias in decision making in such settings. Our results call into question recent conclusions about racial bias among bail judges, and, more broadly, yield four lessons for researchers considering the use of outcome tests of bias. First, the so-called generalized Roy model, which is a workhorse of applied economics, does not deliver a logically valid outcome test without further restrictions, since it does not require an unbiased decision maker to equalize marginal outcomes across groups. Second, the more restrictive "extended" Roy model, which isolates potential outcomes as the sole admissible source of analyst-unobserved variation driving decisions, delivers both a logically valid and econometrically viable outcome test. Third, this extended Roy model places strong restrictions on behavior and the data generating process, so detailed institutional knowledge is essential for justifying such restrictions. Finally, because the extended Roy model imposes restrictions beyond those required to identify marginal outcomes across groups, it has testable implications that may help assess its suitability across empirical settings.
Description
| Type of resource | text |
|---|---|
| Date created | July 13, 2021 |
Creators/Contributors
| Author | Canay, Ivan A. |
|---|---|
| Author | Mogstad, Magne |
| Author | Mountjoy, Jack |
| Organizer of meeting | Santos, Andres |
| Organizer of meeting | Shaikh, Azeem |
| Organizer of meeting | Wolak, Frank |
Subjects
| Subject | economics |
|---|---|
| Genre | Text |
| Genre | Working paper |
| Genre | Grey literature |
Bibliographic information
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- User agrees that, where applicable, content will not be used to identify or to otherwise infringe the privacy or confidentiality rights of individuals. Content distributed via the Stanford Digital Repository may be subject to additional license and use restrictions applied by the depositor.
- License
- This work is licensed under a Creative Commons Attribution 4.0 International license (CC BY).
Preferred citation
- Preferred citation
- Canay, I., Mogstad, M., and Mountjoy, J. (2022). On the Use of Outcome Tests for Detecting Bias in Decision Making. Stanford Digital Repository. Available at https://purl.stanford.edu/ht787cj6190
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SITE Conference 2021
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