Implicit Race Bias on Decision Making

Implicit Race Bias on Decision Making

According to Chetty et al. (2019), racial bias has been used to systematically exclude, exploit, and create unequal economic outcomes for some minority groups. In some way, race has also been used to justify and normalize unequal economic outcomes. However, it is worth noting that racial bias affects the economic outcomes of both the target of the vice and its perpetrator. To that end, the impact of race on economic outcomes is felt throughout the economy.

One of the effects of implicit racial bias applies to interactive offers, which is core to daily economic and social life. Turning down a low offer is an irrational decision in a normal situation (Camm et al., 2020). However, the irrationality increases when a high offer is turned down due to racial biases. Based on a vast body of research, Kubota et al. (2013) suggest that offers from black people are likely to be turned down regardless of their value. This is due to the prejudice attached to black people, especially black males, including a perception of hostility and untrustworthiness. A white person may, therefore, turn down a big offer from a black due to racial prejudice. In this case, both the target and perpetrator of racism will have lost.

Also, some white participants are willing to forgo financial gain to punish black proposers. This happens when the participant is bent on fostering the self-interests of their race instead of striking a fair deal (Lang & Spitzer, 2020). Such discrimination is akin to what happens during some guilty, legal, political, and medical decisions where those in power favor people based on their race. However, there is a direct financial loss in this case since the perpetrator forgoes a negotiation that could benefit them financially.

There is a need for the parties in a negotiation to be strategic to avoid racial bias and discrimination. Racial bias is mainly caused by social conditioning that affects decision-making. Therefore, the best way is to act on proven strategies and avoid acting on gut feelings. Another way to minimize racial bias is by focusing on objective standards. For instance, in a business negotiation, both parties should rely on profit margins, value, professional opinion, and precedents to make a decision.

In summary, implicit racial bias has significant economic impacts on a diverse country like the US. The effects are particularly felt in interactions that involve negotiations. Guided by racial self-interests and prejudice, white participants in a negotiation are likely to turn down offers from black participants.

References

Camm, J. D., Cochran, J. J., Fry, M. J., & Ohlmann, J. W. (2020). Business analytics. South-Western.

Chetty, R., Hendren, N., Jones, M. R., & Porter, S. R. (2019). Race and economic opportunity in the United States: An intergenerational perspective. The Quarterly Journal of Economics, 135(2). https://doi.org/10.1093/qje/qjz042

Kubota, J. T., Li, J., Bar-David, E., Banaji, M. R., & Phelps, E. A. (2013). The Price of Racial Bias. Psychological Science, 24(12), 2498–2504. https://doi.org/10.1177/0956797613496435

Lang, K., & Spitzer, A. K.-L. (2020). Race Discrimination: An Economic Perspective. The Journal of Economic Perspectives, 34(2), 68–89. https://www.jstor.org/stable/26913185?seq=13

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Unit 7 DB: Implicit Race Bias on Decision MakingUnit 7 DB: Implicit Race Bias on Decision Making
Decision-making is a complex process of weighing various economic and societal factors.

Have you ever experienced or considered the impact of race, as outlined by Kubota, J. T., Li, J., Bar-David, E., Banaji, M. R., & Phelps, E. A. (2013)? The price of racial bias. Psychological Science, 24(12), 2498–2504 on economic outcomes? What recommendations would you have to overcome racial biases even if you have not experienced them?