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American Economic Journal: Economic Policy: Vol. 3 No. 3 (August 2011)

AEJ: Policy Volume. 3, Issue 3 | leftPrevious Article

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Implementing Anti-discrimination Policies in Statistical Profiling Models

Article Citation

Pope, Devin G., and Justin R. Sydnor. 2011. "Implementing Anti-discrimination Policies in Statistical Profiling Models." American Economic Journal: Economic Policy, 3(3): 206-31.

DOI: 10.1257/pol.3.3.206

Abstract

How should statistical models used for assigning prices or eligibility be implemented when there is concern about discrimination? In many settings, factors such as race, gender, and age are prohibited. However, the use of variables that correlate with these omitted characteristics (e.g., zip codes, credit scores) is often contentious. We provide a framework to address these issues and propose a method that can eliminate proxy effects while maintaining predictive accuracy relative to an approach that restricts the use of contentious variables outright. We illustrate the value of our proposed method using data from the Worker Profiling and Reemployment Services system. (JEL C53, J15, J65, J71)

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Authors

Pope, Devin G. (U Chicago)
Sydnor, Justin R. (U WI)

JEL Classifications

C53: Forecasting Methods; Simulation Methods
J15: Economics of Minorities and Races; Non-labor Discrimination
J65: Unemployment Insurance; Severance Pay; Plant Closings
J71: Labor Discrimination

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