Lies, Damned Lies, and Statistics (38): The Base-Rate Fallacy

When judging whether people engage in discrimination it’s important to make the right comparisons. Take the example of an American company X where 98 percent of employees are white and only 2 percent are black. If you compare to (“if your base is”) the entire US population – of which about 13 percent are African American – then you’ll conclude that company X is motivated by racism in its employment decisions.

However, in cases such as these, it’s probably better to use another base rate, namely the number of applicants rather than the total population. If only 0.1 percent of job applications where from blacks, then an employment rate of 2 percent blacks actually shows that company X has favored black applicants.

The accusation of racism betrays a failure to point to the real causes of discrimination. It’s a failure to go back far enough and to think hard enough. The fact that only 0.1 percent of applicants were black – instead of the expected 13 percent – may still be due to racism, but not racism in company X. Blacks may suffer from low quality education, which results in a skill deficit among blacks, which in turn leads to a low application rate for certain jobs.

The opposite error is also quite common: people point to the number of blacks in prison, compare this to the total number of blacks, and conclude that blacks must be more attracted to crime. However, they should probably compare incarceration rates to arrest rates (blacks are arrested at higher rates because of racial profiling). And they should take into account jury bias as well.

More about racism. More posts in this series.

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