Bias and Productivity in Humans and Machines

Where should better learning technology (such as machine learning or AI) improve decisions? I develop a model of decision-making in which better learning technology is complementary with experimentation. Noisy, inconsistent decision-making introduces quasi-experimental variation into training datasets, which complements learning. The model makes heterogeneous predictions about when machine learning algorithms can improve human biases. These algorithms can remove human biases exhibited in historical training data, but only if the human training decisions are sufficiently noisy; otherwise, the algorithms will codify or exacerbate existing biases. Algorithms need only a small amount of noise to correct biases that cause large productivity distortions. As the amount of noise increases, the machine learning can correct both large and increasingly small productivity distortions. The theoretical conditions necessary to completely eliminate bias are extreme and unlikely to appear in real datasets. The model provides theoretical microfoundations for why learning from biased historical datasets may lead to a decrease (if not a full elimination) of bias, as has been documented in several empirical settings. The model makes heterogeneous predictions about the use of human expertise in machine learning. Expert-labeled training datasets may be suboptimal if experts are insufficiently noisy, as prior research suggests. I discuss implications for regulation, labor markets, and business strategy

Does online trade live up to the promise of a borderless world? Evidence from the EU Digital Single Market

An important EU Digital Single Market policy objective is to achieve an open and integrated market for online e-commerce in the EU, to make it easy for consumers to go outside their domestic market and shop online in other EU Member States. This study applies a standard gravity model of international trade to Google e-commerce data to estimate the prevalence of home bias in online shopping in the EU. It compares how much EU Member States trade domestically and with other Member States, and how much the EU trades with itself and with the rest of the world. The research confirms the findings of the (offline) international trade literature, according to which there is strong home bias. There is no unambiguous evidence about the strengths or weaknesses of the EU Digital Single Market. Strong intra-EU home bias suggests that online consumers have a tendency to stay in their home country market. Equally strong extra-EU home bias suggests that online consumers who do decide to shop abroad have a tendency to stay in the EU however, rather than going to a non-EU country. There are indications that online home bias is lower in a comparable cross-border trade setting in North America. Data and methodological limitations do not allow a more detailed analysis.JRC.J.3-Information Societ

Political Power and Market Power

We study the link between lobbying and industrial concentration. Using data for the past 20 years in the US, we show how lobbying increases when an industry becomes more concentrated, using mergers as shocks to concentration. This holds true both for expenditures on federal lobbying as well as expenditures on campaign contributions. Results are in line with the predictions of a model where lobbying is akin to a public good for incumbents, and thus typically underprovided, while a merger solves the coordination problem

Salary History and Employer Demand: Evidence from a Two-Sided Audit

We study how salary history disclosures affect employer demand, and how salary history bans shape hiring and wages. We show how these effects depend on the properties of the labor market, and we measure the key properties using a novel, two-sided field experiment. Our field experiment features hundreds of recruiters reviewing more than 2, 000 job applications. We randomize the presence of salary history questions as well as job candidates’ disclosures. We find that employers make negative inferences about nondisclosing candidates, and that they anticipate positive selection into disclosure. Recruiters view salary history as a stronger signal about competing options than about worker quality. Disclosures by men (and other highly paid candidates) yield higher salary offers; however, they are negative signals of the value (net of salary) that a worker brings to the firm, and thus they yield fewer callbacks. While disclosures (especially of high amounts) generally increase recruiter beliefs about quality and competing offers, male wage premiums are regarded as a weaker signal of quality than other sources (such as the premiums from working at higher-paying firms or being well paid compared to peers). Recruiters correctly anticipate that women are less likely to disclose salary history at any level, and thus they punish women less than men for silence. When we simulate the effect of salary history bans using our results, we find muted effects on callbacks. Gender inequality in salary offers is reduced; however, equality comes at the expense of lower salaries overall (and especially for men)

Worldwide Gravity in Online Commerce

Abstract This paper analyzes geographical patterns of cross-country Internet transactions using proprietary data from Google. Covering 146 countries from 2008-2011 and over 10 billion online transactions, the data allow us to examine a fast growing area of trade. The paper finds the effect of distance on trade to be around -0.53, indicating that distance has a negative effect on trade even in the virtual marketplace. The study also finds that cultural characteristics, such as shared languages or religions, have a large impact on e-commerce, while economic ties, such as a common currency, have an insignificant effect. The paper underlines the importance of accounting for selection into trade in worldwide gravity estimations and identifies two exclusion restrictions that can be used when examining online trade flows

Parents’ Disclosure of Their HIV Infection to Their Children in the Context of the Family

We interviewed 33 HIV-infected parents from the HIV Cost and Services Utilization Study (HCSUS), 27 of their minor children, 19 adult children, and 15 caregivers about the process of children learning that their parents were HIV positive. We summarize the retrospective descriptions of parents’ disclosure of their HIV status to their children, from the perspective of multiple family members. We analyzed transcripts of these interviews with systematic qualitative methods. Both parents and children reported unplanned disclosure experiences with positive and negative outcomes. Parents sometimes reported that disclosure was not as negative as they feared. However, within-household analysis showed disagreement between parents and children from the same household regarding disclosure outcomes. These findings suggest that disclosure should be addressed within a family context to facilitate communication and children’s coping. Parents should consider negative and positive outcomes, unplanned disclosure and children’s capacity to adapt after disclosure when deciding whether to disclose

HIV Disease Impact on Mothers: What They Miss During Their Children’s Developmental Years

Adjusting to chronic illness is very complicated for families with children, as they are already faced with the challenge of development and childrearing. In this study, qualitative interviews were conducted with HIV positive mothers on a number of issues related to being an HIV positive mother raising young children. One topic of the interview was whether or not they felt that HIV had caused them to miss activities with their children while the children were growing up, what types of activities they had missed, the age of the child for each example, and how HIV had led to missing these activities. Interviews were conducted in 2008 with a random sample of 57 mothers being followed in a longitudinal assessment study. All study participants were English or Spanish speaking. Mean age was 44.1 (SD = 5.6) years; 47% were Latina; 35% African American; 11% White; and 7% other race. About 60% of the mothers disclosed that their HIV status had caused them to miss out on activities with their children while their children were growing up, ranging from daily care activities to major school and extra-curricular activities. Some mothers missed significant amounts of time with their children due to hospitalizations. In some cases mothers felt forced into a choice between mothering ability and their own health, including adherence to medications. Implications for the mothers and the children are discussed

Exdpf Is a Key Regulator of Exocrine Pancreas Development Controlled by Retinoic Acid and ptf1a in Zebrafish

Both endocrine and exocrine pancreatic cells arise from pancreatic-duodenal homeobox 1 (pdx1)-positive progenitors. The molecular mechanisms controlling cell fate determination and subsequent proliferation, however, are poorly understood. Unlike endocrine cells, less is known about exocrine cell specification. We report here the identification and characterization of a novel exocrine cell determinant gene, exocrine differentiation and proliferation factor (exdpf), which is highly expressed in the exocrine cell progenitors and differentiated cells of the developing pancreas in zebrafish. Knockdown of exdpf by antisense morpholino caused loss or significant reduction of exocrine cells due to lineage-specific cell cycle arrest but not apoptosis, whereas the endocrine cell mass appeared normal. Real-time PCR results demonstrated that the cell cycle arrest is mediated by up-regulation of cell cycle inhibitor genes p21Cip, p27Kip, and cyclin G1 in the exdpf morphants. Conversely, overexpression of exdpf resulted in an overgrowth of the exocrine pancreas and a severe reduction of the endocrine cell mass, suggesting an inhibitory role for exdpf in endocrine cell progenitors. We show that exdpf is a direct target gene of pancreas-specific transcription factor 1a (Ptf1a), a transcription factor critical for exocrine formation. Three consensus Ptf1a binding sites have been identified in the exdpf promoter region. Luciferase assay demonstrated that Ptf1a promotes transcription of the exdpf promoter. Furthermore, exdpf expression in the exocrine pancreas was lost in ptf1a morphants, and overexpression of exdpf successfully rescued exocrine formation in ptf1a-deficient embryos. Genetic evidence places expdf downstream of retinoic acid (RA), an instructive signal for pancreas development. Knocking down exdpf by morpholino abolished ectopic carboxypeptidase A (cpa) expression induced by RA. On the other hand, exdpf mRNA injection rescued endogenous cpa expression in embryos treated with diethylaminobenzaldehyde, an inhibitor of RA signaling. Moreover, exogenous RA treatment induced anterior ectopic expression of exdpf and trypsin in a similar pattern. Our study provides a new understanding of the molecular mechanisms controlling exocrine cell specification and proliferation by a novel gene, exdpf. Highly conserved in mammals, the expression level of exdpf appears elevated in several human tumors, suggesting a possible role in tumor pathogenesis

How Do Employers Use Compensation History?: Evidence from a Field Experiment

We report the results of a field experiment in which treated employers could not observe the compensation history of their job applicants. Treated employers responded by evaluating more applicants, and evaluating those applicants more intensively. They also responded by changing what kind of workers they evaluated: treated employers evaluated workers with 7% lower past average wages and hired workers with 16% lower past average wages. Conditional upon bargaining, workers hired by treated employers struck better wage bargains for themselves. Using a structural model of bidding and hiring, we find that the selection effects we observe would also occur in equilibrium