practicallotteries: mmu talk sept 2008 practical lotteries —just the job! fairness &...
TRANSCRIPT
PracticalLotteries: MMU talk Sept 2008
Practical Lotteries—just the job!
Fairness & Efficiency
in Market Democracies
PracticalLotteries: MMU talk Sept 2008
Action space ‘local’ ‘micro’
ORGANIZATIONindividual
Family
Community
Citizenry
Customers
PracticalLotteries: MMU talk Sept 2008
organisations
Public: govt., quango(Economists’ Theory of Public Choice)
Private: Free market (Heroes of Capitalism; don’t meddle)
agent
PracticalLotteries: MMU talk Sept 2008
‘prizes’
• Market• Merit• ‘Sortitiously’—
– Lottery, or some form of randomization.
Benefits
Burdens
PracticalLotteries: MMU talk Sept 2008
Housing by lottery: Stanford U
PracticalLotteries: MMU talk Sept 2008
Beach huts: Langland Bay, Swansea
PracticalLotteries: MMU talk Sept 2008
Nissan Figaro: special edition
100Langland hutsPC030106.JPG
PracticalLotteries: MMU talk Sept 2008
Wimbledon tennis
PracticalLotteries: MMU talk Sept 2008
Idaho: Whitewater rafting
PracticalLotteries: MMU talk Sept 2008
Huntin’ permits
PracticalLotteries: MMU talk Sept 2008
Netherlands medical school entry
Prof Piet. Drenth, who reported in 1996
PracticalLotteries: MMU talk Sept 2008
Scarce medical treatment
dialysis
PracticalLotteries: MMU talk Sept 2008
Brighton & Hove: school by lottery
PracticalLotteries: MMU talk Sept 2008
Military draft
Rep. Alexander Pirnie, R-NY, draws the first
capsule in the lottery drawing held on Dec. 1,
1969. The capsule contained the date, Sept.
14.
PracticalLotteries: MMU talk Sept 2008
Employment (jobs)
• We live in ‘market democracies’
• A job the most important prize– Money
– Status
– Contribution
– belonging
PracticalLotteries: MMU talk Sept 2008
ORGANIZATIONindividual
In a job
Training for a job
Retired from Job
Sub-contractor
Except, maybe:
Some self-employed
Independent income
Job = citizenship for majority
PracticalLotteries: MMU talk Sept 2008
Employment transitions
• Hiring
• Firing
• Promotion
And the role of lotteries in the process
PracticalLotteries: MMU talk Sept 2008
Hiring: short-listing by L• Examples:
– N Ireland: Court Ushers
– Gloucestershire Police (not, but could have!) Remember: lottery choice one-way, so must be openly done
OK for the proles?
PracticalLotteries: MMU talk Sept 2008
Firing: sack by lot• Major example from
China: the ‘luang-gang’
PracticalLotteries: MMU talk Sept 2008
Hiring: short-list of 6/3;spin a wheeel???
•
In Bermondsey we're in the process of selecting our prospective parliamentary candidate (Lab)
IS THIS HOW TO DO IT ?
PracticalLotteries: MMU talk Sept 2008
Is this a joke?
• uncertainty in choosing, but L adds extra uncertainty, so even worse! [technical]
•must always choose the best, but L almost certainly doesn’t [meritocratic]
•(why only from the short-list? Give everyone a chance) [egalitarian]
PracticalLotteries: MMU talk Sept 2008
Justifying Jobs-lotteries
• EFFICIENCY • FAIRNESS
PracticalLotteries: MMU talk Sept 2008
Efficient for whom?
• The Organization:– Duty to choose the ‘best’
• Agent must act to do so
• The Job-Seekers
– Chosen or rejected by the process
• Society
– from which the J-Ss come from, and
– in which the Organization is based
PracticalLotteries: MMU talk Sept 2008
The Organization selection process:
• Only the best will do– Agent to choose
Application form
interview
Who has most Merit gets the JOB
Screening, tests
PracticalLotteries: MMU talk Sept 2008
Signalling:
• Allow some secondary characteristic to decide show ‘commitment’ – good works– additional irrelevant qualifications– higher degree classification
PracticalLotteries: MMU talk Sept 2008
Identifying Merit: interviews
• Kline (1991) human judgement is very poor at separating sheep from goats. Even more scathing is Camerer (1995), who bluntly states that experts make the decision worse through application of their judgement.
• peer assessment of performance, where individuals in a group are ‘surprisingly good’ (Cook, 2003) evidence for jury selection?
PracticalLotteries: MMU talk Sept 2008
Problems with interviews
• Looks• Height• Gender• Weight• Hair (bald men)• Bearded• …..• ….
PracticalLotteries: MMU talk Sept 2008
Testing merit
• Kline (1991) reports a major study on 10,000 employees: This showed that the IQ score of employees correlates with job success, at an average figure of 0.3. ‘No other ability variable achieved an average correlation coefficient of this size’. (he means aptitude tests) (fits with Young’s 1958 idea of
‘Meritocracy’)
PracticalLotteries: MMU talk Sept 2008
So pick the top scorer (= best) every time?
Score
Merit
ABC
So always choose A?
( but if A drops out, and only B and C remain — too close,
so toss for it?)
PracticalLotteries: MMU talk Sept 2008
Two glitches on the linear relationship1. fuzziness
‘merit’ – IQ score
performance- as predicted
understood, but not appreciated –
a linear relationship with
fuzziness
understood, but not appreciated – a linear relationship with fuzziness
PracticalLotteries: MMU talk Sept 2008
Two glitches on the linear relationship2. Non-linearity
‘merit’ – IQ score
performance- as predicted
the situation as found – a kinked
and fuzzy relationship
:
PracticalLotteries: MMU talk Sept 2008
Percentage of the population achieving that score
SCORE
0%25%50%
PracticalLotteries: MMU talk Sept 2008
Ranking: Football Managers
‘mediocre’
Managerial spells of top 50 ranked:
—by win ratio
—by adjusted win ratio
Result: No 1 becomes No 4, No 37 becomes No 1.
Dawson P M & Dobson S (2002)Managerial Efficiency and Human Capital: An Application to English Association Football, Managerial and Decision Economics (2002), 23, 471-486
PracticalLotteries: MMU talk Sept 2008
Possible selection mechanism
1. ‘agent’ sets relevant minimum criteria for the job
2. Eliminate all job-seekers who are lacking
3. (Reduce field by lottery to ~12)
4. Interviews by (random) peer-group, who each rank ~6
5. Roll dice to pick winner
PracticalLotteries: MMU talk Sept 2008
Efficient for the Organization?
Chosen candidate just as good as ‘best’
Doesn’t waste time/money on futile selection rituals
Complies with all discrimination legislation
‘grit-in-oyster’: ensure a few mavericks re-invigorate the organization
PracticalLotteries: MMU talk Sept 2008
Efficient for Society?
• No ‘token’ employees taken on
• employees feel no need to complain about discrimination (esp if untrue)
• But, teamwork compromised?
PracticalLotteries: MMU talk Sept 2008
But a lost payoff: less Social Control?
• Maybe rent-seeking is good. Encourages learning, good works. Keeps kids off the streets?!
PracticalLotteries: MMU talk Sept 2008
Efficient for Job-Seekers?
No more ‘signalling’ or ‘rent-seeking’
- so no need for extra time/effort on pointless qualifications, activities
(not trivial: eg Swansea Econ students spent an avg. 2 months extra study to get better grades)
PracticalLotteries: MMU talk Sept 2008
FAIRNESS
PracticalLotteries: MMU talk Sept 2008
Minimal FAIRNESS
• F = treat all who are equal in an equal way
• discriminate when X’s merits < Y’s
PracticalLotteries: MMU talk Sept 2008
more FAIRNESS
• Fairness when awarding jobs: – Measure relevant merit (and be able to show why)– All job-seekers who show merit which is not
significantly* less than the top scorer should then in all fairness be treated equally.
* statistically speaking at 90% (say) confidence level
PracticalLotteries: MMU talk Sept 2008
SUPER-FAIRNESS
• ALL qualified JobSeekers be given a chance proportional to their merits.
*Qualified with validated, relevant and necessary qualifications;
*Merit, as measured above
PracticalLotteries: MMU talk Sept 2008
An industrial example: FAIRNESS between equals
• Supplier delivers batch of widgets;
• Customer tests a few (random sample), finds a faulty widget
• —rejects the lot?
PracticalLotteries: MMU talk Sept 2008
Acceptance Sampling
• Take a random sample of n widgets, test: – If 2 or more bad: rejectable;
– otherwise accept
PracticalLotteries: MMU talk Sept 2008
Balancing the Risks
Customer’s Risk vs. Producer’s Risk
50%
PracticalLotteries: MMU talk Sept 2008
Combining ‘risks’ for both
100
60
0%
10%50%
Percentage of the population achieving that score
SCORE
PracticalLotteries: MMU talk Sept 2008
Fairness: Equality of Risk
• ‘economic reform’ = risk-shedding• rent-seeking, signalling risky for job-seeker• Employer’s risk: once in job difficult to sack
‘Aleatopia’: risks shared equally by both parties
Defend the weak against the strong
PracticalLotteries: MMU talk Sept 2008
Objection 1 to jobs-by-lottery
• Not legal to force Corps or quangos to do this?
• But….state hugely interferes eg in anti-discrimination laws
• NR shows Corporate Socialism• Corporate shills influencing the elected govt
to featherbed them? Case for Sortition maybe!!
PracticalLotteries: MMU talk Sept 2008
Objection 2 to jobs-by-lottery
• Forcing less than the ‘best’ (as in Acceptance Scheme above) creates inefficiency?
• a reasonable price to pay for Fairness?
• recover the progress of Happiness in Market Economies
• Jobs freed from rent-seeking, discrimination
PracticalLotteries: MMU talk Sept 2008
Benefits of jobs-by-lottery
• less need for job security. If you leave one, realistic chance of another soon;
• can take on a wide variety of roles, leading to a more interesting, varied life;
• can accept only men builders, only Jewish lawyers.(but most unlikely)
PracticalLotteries: MMU talk Sept 2008
And ROTATION?