Week 5 – discussion 2 | ECO 342 Principles of Econometrics | Ashford University

Review Problem 7.20: In Bazemore v. Friday, 478 U.S. 385 (1986), a case involving pay discrimination in the North Carolina Extension Service, the plaintiff, a group of black agents, submitted a multiple regression model showing that, on average, the black agents’ salary was lower than that of their white counterparts. When the case reached the court of appeals, it rejected the plaintiff’s case on the grounds that their regression had not included all the variables thought to have an effect on salary. The Supreme Court, however, reversed the appeals court. It stated:

The Court of Appeals erred in stating that petitioners’ regression analyses were “unacceptable as evidence of discrimination,” because they did not include all measurable variables thought to have an effect on salary level. The court’s view of the evidentiary value of the regression analysis was plainly incorrect. While the omission of variables from a regression analysis may render the analysis less probative than it otherwise might be, it can hardly be said, absent from infirmity, that an analysis which accounts for major factors “must be considered unacceptable as evidence of discrimination.” Ibid. Normally, a failure to include variables will affect the analysis’ probativeness, not its admissibility.

Explain why you agree or disagree with the Supreme Court decision. Respond to at least two of your classmates’ postings.

Tips & Hints:

This is another illustration of the practical intersection of econometrics (and dummy variables in particular!) with the world of the workplace and workplace justice.  There is a good deal of information on this case online, which you may find most interesting and profitable to research.  Last time I taught this course, I went back and read the actual text of the Supreme Court and Court of Appeals decisions.  This is not dry stuff but the stuff of which our legal system is made!

This Discussion 2 does not as you to summarize the case.  Background is helpful but does not address the assignment.  In the case of Discussion 2, you need to:

1)  Discuss the issue at hand — what specifically is the court’s argument and what exactly does it mean?  You must make your explanation in the vocabulary and concepts of our course and you must understand also the vocabulary used by the Court.  Make sure that you look up unfamiliar terms — there is a lot on the terminology, generally, and a lot on the case, specifically, available on the internet.  Be sure to do your research and to communicate that you are in command of what you are talking about.  Students who do not understand the vocabulary very often answer the wrong question!

2)  Explain why you agree or disagree with the Supreme Court decision — your discussion must be based upon application and interpretation of the tools of econometrics.  It is not sufficient to express righteous indignation.  Of course, there are areas of social justice involved, but your goal in this class is to learn how to apply the tools of econometrics and statistics, to social justice and to other things.  You must here demonstrate how means may be applied to ends. 

I think you’ll find this one to be very interesting indeed!

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