How to Think About Affirmative Action Like an Economist

Does affirmative action cheat hard-working white students? Does it hurt minorities? Does it even work? That's the high-stakes debate happening now at the Supreme Court. Here's how a stoic economist might think about it.

If you're hoping today's affirmative action case at the Supreme Court will finally settle the issue of whether race should play a role in college admissions ... tough luck. Justice Anthony Kennedy is widely considered the swing vote this time around, so chances are we're looking at a mushy compromise decision. And that means we're also bound to keep on having the same visceral arguments about skin color and academic opportunity that have been raging in this country for half a century.

So let's do a bit of debate prep. Below are six controversial and familiar questions about affirmative action. You've probably heard how lawyers or politicians think about some of them. How about an economist? In 2005, Harvard's Roland Fryer and Brown University's Glenn Loury published a paper titled "Affirmative Action and Its Mythologies," which serves as a wonderful roadmap for considering the costs and benefits of letting schools factor race into their selection criteria. The way they engage these issues can help us all form our opinions about them a little more clearly, whether we agree with their conclusions or not. 

(1) Does affirmative action discourage minorities from studying hard? 

Legally speaking, modern affirmative action programs at universities are supposed to be about creating diversity -- and only diversity. Fixing the damage done by America's history of discrimination isn't technically part of the rationale. But get affirmative action supporters away from a courtroom, and they'll probably admit they're interested in righting past wrongs by giving minority students a helping hand in college admissions.

Some argue, though, that affirmative action actually does a disservice to black, Hispanic, and other minority students because it lowers standards. By giving kids easier entry onto campus, the argument goes, we're creating incentives for them not to study, and thereby doing more harm than good.

Fryer and Loury allow that, at least in corporate affirmative action programs, giving minority job applicants a leg up might convince them they don't need to invest in job skills. But they also suggest that the promise of affirmative action could encourage some applicants to get a good education and apply for positions that might have otherwise seemed closed off to them.

The same goes for potential college students. Some teenagers could theoretically decide they only need a B average, instead of an A-, to get into a solid university and slack off as a result. Or, knowing they'd probably be rewarded for their efforts, they might be encouraged to do the extra work to get into the school of their dreams.

In short, we can't just reason our way to an easy answer.

University of Chicago economist Brent Hickman has attempted to use SAT scores to investigate these issues, and his findings provide an equally complicated answer. He concludes:

AA practices in US college admissions narrow the gap between median SAT scores among minorities and non-minorities by 14%. They discourage achievement among minority students at the upper and lower extremes of the score distribution, while encouraging students in the middle to score higher. The two effects balance each other out, so that virtually no change occurs for average minority SAT scores. [My emphasis]

This is just one working paper, but it offers a sense of the dynamics at play. Does affirmative action encourage minority students to work more or less? Possibly both.

(2) Can we really have affirmative action without quotas? 

Quota. It's a word everybody hates. In the seminal affirmative action case Regents of the University of California v. Bakke, the Supreme Court struck down the use of concrete quotas for admitting minorities into school. Today, colleges instead argue that they're looking for a "critical mass" of minority applicants to ensure a certain baseline level of diversity on campus. The way they frame it, the number is just a goal.

Quota, goal ... it's a distinction without much difference in practice, argue Fryer and Loury. It comes down to how college administrators enforce their own policies. If a school has a "quota," but doesn't hand serious punishments to the admissions office for failing to meet it, then they're really using a more flexible system. But if a school sets a fuzzy "goal," then fires the admissions director who fails to hit the target, then they've essentially created a quota. These sorts of internal machinations are impossible for most outsiders to observe in action. Moreover, they may all just be implicit understandings. And the semantics used to describe a University's official MO certainly doesn't change them.

(3) Can "color-blind" affirmative action work?

As race-based affirmative action has become increasingly controversial, some states have tried to find workarounds that achieve similar goals. In 1997, Texas passed a bill that guarantees every student who finishes in the top 10 percent of their high school class admission to one of the state's flagship campuses (e.g. UT-Austin and Texas A&M), no matter what their SAT scores, extra-curriculars, or ethnicity might be. In today's Supreme Court case, the state university system is defending a separate part of its affirmative action program, which explicitly takes race into account for students who don't make the 10 percent cut.

This is one example of what Fryer and Loury call "color-blind affirmative action." In Texas, it works because communities tend to be extremely segregated, so taking the best students from each school district yields a decent amount of diversity. In a state that is 38 percent Hispanic and 12 percent black, the students admitted under the 10 percent rule are 26 percent Hispanic and 6 percent black, a somewhat reasonable result. Other colleges take different approaches, such as letting applicants skip sending in standardized test scores, or focusing more on extra-curricular activities.

Fryer and Loury's qualm with these methods isn't whether they may or may not work at getting minority students in the door. Rather, the pair think they simply aren't efficient. Affirmative action, by definition, requires schools to ease up on their admissions criteria. That makes the overall class less academically prepared by standard measures. If the ultimate goal is to create a racially diverse campus, then colleges may be dropping their standards more than necessary for the sake of looking race-neutral. They cast a wider net than they have to, and catch more marginally qualified students than they need.

If your goal is to move the focus off race and onto socioeconomic status, all of this isn't really a problem. And that may be a fair goal. One of the criticisms of race-based affirmative action is that it too often assists upper-middle-class and upper-class African Americans, or wealthy black students from Africa or the Caribbean, instead of truly disadvantaged students. But if your policy amounts to making schools go through an elaborate charade in order to keep minorities on campus, that comes with consequences.

(4) Can affirmative action hurt minority students in the long run? And does it matter?

There's an obvious draw-back to taking marginal students and putting them in elite universities: some of them won't be able to handle it. A number will flounder, and a number will simply drop out. This problem, known as "mismatch," has drawn the attention of a growing group of researchers and writers, including UCLA Law Professor Richard Sander and legal journalist Stuart Taylor, Jr., who recently published an excerpt of their book on the topic in The Atlantic.

Loury and Fryer acknowledged that if this problem truly turns out to be severe, it should give everyone pause. But they wondered themselves: If some minorities fail, could an affirmative action program still be worth it? Take, for instance, law schools. Sander's research has suggested the black law students often underperform their white peers, and drop out at higher rates, because they tend to end at schools they're ill-prepared to attend. But from society's perspective, those casualties might be justified by the overall goal of producing more black lawyers. One might retort that making sure black students are in suitable schools will lead more to graduate and take the bar. In the end, it's a very cold, cost-benefit analysis, but one that should still be made.

(5) Will giving students "equal opportunity" lead to an equal society?

When affirmative action was born in the 1960s, American universities had a long history of discrimination against African Americans and other minorities. Today, with campuses desperately battling to keep their diversity programs in tact, nobody would seriously suggest that's still a widespread problem. And so it's worth asking: if we just keep giving everyone an equal shot at college, will that one day be enough to get equal results?

Loury and Fryer say no, it won't be enough. Neighborhoods tend to segregate by race, and our own success in life is not only profoundly affected by the success of our parents, but also the behavior of the people we grow up around, and the public resources we have in reach, including good schools and safe streets. Minority communities start at a disadvantage on all these measures, and the reality is that means they'll probably end at a disadvantage too.

It's possible that may be too bleak an assessment, that things like public school reform, universal pre-K, and better law enforcement could help overcome those problems well before kids apply for college. But it's an issue that has to be contended with.

(6) Are lots of white students getting cheated by affirmative action?

More than any other, this is the question that probably fuels all the acrimony over affirmative action. Fryer and Loury note some 40 percent of whites older than 18 "believe it likely they or someone they know were rejected from a college due to an unqualified black applicant being admitted." That sense of grievance, they argue, is probably overwrought.

Research has shown that only the top 20 percent of colleges actually bother with racial preferences. This makes sense, since those are the schools with high enough standards that they need to make occasional exceptions to them. Assuming that 15 percent of students selected at these schools are black or Hispanic, and absolutely all of them were taken based on their race, that would make affirmative action just 3 percent of all selective college admissions in a year. Chicago's Hickman had a similar estimate. He found affirmative action reduces non-minority enrollment at the top quarter of schools by 4.2 percent a year.

So why do so many white students feel cheated by a relatively small phenomenon? Loury and Fryer use a parking metaphor:

Suppose a single unused parking space in front of a popular restaurant is reserved for disabled drivers. Non-disabled drivers who observe the unused space while trying to park might resent this policy, imagining that it prolongs their parking search. But when parking is tight it is likely that, even if the disabled space were not reserved, it would already have been taken by the time a given driver comes along. When many non-disabled drivers overestimate their chance of getting the unreserved space, the perceived cost of a policy favoring the disabled could be large, despite fact that the policy has a negligible effect on the mean duration of a parking search. So too, it would seem, with racial affirmative action in higher education. [My emphasis]

To some, though, the precise percentage may not matter. One student, two students, or twenty students losing out to a numerically less qualified candidate might be too much. But focusing on them would mean thinking like an ethicist, not an economist.