I’m a big fan of Richard Bookstaber, the author of the important book A Demon of Our Own Design. And while I’m glad to see a rare new post from him, on how to deal with the matter of inequality (as in whether to deal with the problem ex ante, by creating more equal opportunities, or ex post, by trying to reduce disparities of outcomes), I found one of the core parts of his discussion, on merit and meritocracy, to be maddening. In fairness, this isn’t Bookstaber’s fault; he’s working within an established framework of thinking on this topic.
Repeat after me: in complex societies and organizations, merit is a complete illusion. We nevertheless pretend to achieve that for reasons of institutional legitimacy, and also, to the extent we can generally steer people who are fitter on some key axes towards more important or resource-intenisve activities, for reasons of efficiency. Note that this view is also likely to be more satisfying for individuals, since it will encourage those who may be less capable in certain ways that are considered important (intelligence, social skills, empathy) to apply themselves to do better in those areas. So motivated but less “talented” people have an avenue for their energies (il faut imaginer Sisyphe heureux…).
But let’s not kid ourselves that an idea that has all sort of upside as aspiration and ideology actually works. Consider what Bookstaber writes, which one can take as an reasonably orthodox view:
I have written various posts on social policy related to the question of whether and how we redistribute income….
I think of income redistribution as an ex post policy. Another approach is to make ex ante adjustments to level the playing field, and then step away and let the chips fall where they may. When properly executed the ex ante approach is consistent with a meritocracy, and indeed creates a better, deeper and more successful meritocracy than ignoring the differences in essential endowments.
Assume that there is an objective standard for merit, and a test that correctly ranks the subjects in terms of that standard. (For the record, though basing merit on a testing regime is common in many societies, I do not advocate it). Also assume that we can identify the factors that govern success on the test that are within the control of those taking the test, such as how hard they work, as well identify as the factors that are beyond their control. Given these two assumptions, one scheme for the redistribution, suggested by John Roemer (and in this short post I cannot do justice to his argument and stray from it in various respect), is first to define what constitutes the endowment of important characteristics that are outside a person’s control, and then assign people to cohorts based on their levels of this endowment. For example, if the endowment is parents’ wealth and parents’ education, we place people into cohorts based on the level of these two factors, with the cohorts made narrow enough so that we can take all those in each cohort as being the same with respect to the endowment.
The example he later uses is a tennis player, where a mediocre but highly trained and motivated individual beats someone with vastly greater native ability. Bookstaber regards this as a poor societal outcome and proposes ways of thinking about how much to invest in each person that are arguably fairer but also better in terms of overall results.
What bothers me about this level of abstraction is that it ignores the salient element of modern society: an extreme degree of role specialization in jobs. Emile Durkheim discussed this in his book The Organization of Religious Life. He called pre-modern societies “mechanical” because everyone was an interchangable part. Modern societies were “organic” because different people could do different things, based on their inclinations and skills. The community is richer because we have opera singers and sports players and other entertainers, as well as people who are good at their crafts or at running or being in a specialized field.
So what exactly is talent? Educated people like to think of it as intelligence, and that intelligence will be reflected in better educational attainment. But education in America has a lot of credentialing and is mixed in terms of substance (there’s a very strong argument to be made for the educational system that Bonaparte implemented in France, which has sadly decayed beyond recognition, where it made a systematic effort to find smart kids, no matter how poor their background, and track them so that they had as much opportunity to get into the Grandes Ecoles as children who grew up with highly educated parents. Bonaparte is arguably the father of meritocracy as a paramount organizational principle, and that meant uniform delivery of educational “product” throughout French schools. The same lesson would be taught to all fourth graders at 3:00 PM on a particular day all across the country). And “intelligence” is not all of a muchness; it has numerous components that are not well understood or analyzed (testing makes a stab at that on assessing verbal versus mathematical skills). And that’s before you get to the importance of social skills and emotional intelligence. James Heckman stresses the importance of socialization, that students who get GEDs (they pass a test that demonstrates they have mastered the material needed to get a high school degree) do markedly less well than students who complete high school.
So we have a huge range of things that people who have some ability and a reasonable self-discipline might aspire to (and that assumes young people know themselves well enough to gravitate to roles in society that they actually can perform well at). So how can you think about “merit” for jobs as different as computer programming versus writing ad copy versus selling heavy machinery versus being an office manager in corporate cube land?
And achieving meritocratic outcomes within an organization is a hopeless task. As we wrote in The Conference Board Review in 2007:
Consider the experience of OaklandA’s general manager Billy Beane, the hero of Michael Lewis’s Moneyball: The Art of Winning an Unfair Game. The baseball industry has always measured players’ skill and achievements by a handful of well-known statistics, but in recent years researchers have questioned the value of those traditional measures. To make the most of a limited budget, Beane used the new principles to sign low-salaried players whom his analysis showed were dramatically undervalued. The result: The team, with one of baseball’s lowest payrolls, has placed first or second in its division each of the last eight seasons…
Here, then, you have a business where the recruiting is unusually transparent, the basic rules have remained unchanged for decades, competitive encounters are in full view, and the incentives for success are high. This would seem to be the perfect environment for developing good decision rules, yet the entire industry was largely wrong…
OK, so diversity programs may not serve the people they are designed to help. One of the reasons is that these initiatives are assumed to undermine merit-based hiring and promotion. Indeed, as [Stanford professor of neurobiology Ben] Barres points out, citing research, “When it comes to bias, it seems that the desire to believe in a meritocracy is so powerful that until a person has experienced sufficient career-harming bias themselves they simply do not believe it exists.” But the idea that an organization can be truly meritocratic is, alas, a fiction.
On a practical level, the best a company can hope for is that, taken as a whole, the people it hires and promotes are “better” — as defined by the company—than the people it rejects. On an individual level, the role of luck, combined with inherent shortcomings of performance-appraisal systems, make it impossible to have confidence in the fairness and accuracy of any particular staffing decision…
Other factors can thwart an organization’s meritocratic efforts (many of these observations derive from a 1992 paper by Patrick D. Larkey and Jonathan P. Caulkin, “All Above Average and Other Unintended Consequences of Performance Appraisal Systems”). Many people, for instance, run up against conflicts between individual and organizational interests. Implicitly, any employee’s job is to serve his boss, when his check is actually being cut by the company. If the employee views his role as being different than his boss sees it, the boss’s view prevails, whether or not it is correct. In an extreme case, if the boss wants the employee to run personal errands, and the employee refuses, he runs the risk of getting a negative review.
There’s the Peter Principle conundrum that the skill requirements at one level may bear little relationship to the demands of the next. You’ve heard the old chestnut, “Promote your best salesman, and you lose a good salesman and gain a lousy manager.” But this situation puts bosses in a real bind. If you promote the person who is best in a department, his skills may fall woefully short of the requirements of his new role. But if you promote the person you deem best suited for that job, and not the top performer at his current role, you will demoralize his former peers, create resentment against him (undermining his authority and effectiveness), and raise questions about your judgment.
And then there are difficulties in ranking employees across organizational units. Even though organizations want consistent ratings firmwide, it’s a practical impossibility. There are considerable barriers to a manager giving his staff member honest and useful feedback that lead to inflated ratings. They have an ongoing relationship; and thus both sides do not want the review process to create friction. Yet most employees have an inflated view of their achievements, which predisposes them to doubt, perhaps even resent, a truthful appraisal. And since the assessment of a job of any complexity is largely subjective, it’s difficult forthe boss to defend a rating that is at odds with the employee’s self-assessment. In addition, managers consider themselves at least partly responsible for their subordinate’s performance. Thus a low rating reflects badly on them.
The consequences are profound. It means that the typical defense against the failure to achieve diversity, that the company was in fact hiring and promoting based on achievement, is hollow. These systems not only are subjective (inherent to most ratings) but also often lead to capricious, even unfair results.
And there is evidence that subjective processes set a higher bar for minorities and women. For example, a 1997 Nature paper by Christine Wenneras and Agnes Wold, “Nepotism and Gender Bias in Peer-Review,” determined that women seeking research grants need to be 2.5 times more productive than men to receive the same competence score. In 1999, MIT published the results of a five-year, data-driven study that found that female faculty members in its School of Science experienced pervasive discrimination, which operated through “a pattern of powerful but unrecognized assumptions and attitudes that work systematically against female faculty even in the light of obvious good will.”
So here you have the worst of all pos sible worlds. You want to achieve diversity, if for no other reason than to forestall lawsuits and present a better face to your customers. Yet you have long believed the main reason is that you haven’t been able to find enough “talented” members of the various groups to fill out your managerial ranks. But your performance-appraisal system is subjective and probably unreliable, and the complex nature of organizations means that who rises is largely arbitrary, and it is likely that “out” groups are subject to higher performance standards. All this to say that women and minorities’ frustration at their failure to achieve reasonable representation may well be completely justified. Your organization may be guilty as charged.
One of the revealing things about this now-seven-year-old article how the big concern then about unfairness in hiring and promotion related to race and gender discrimination. It’s astonishing how the top income strata have so visibly pulled away in the wake of the crisis that economic mobility is now seen as at least as big a barrier to opportunity.
So while it makes sense for all sorts of reasons to aspire to meritocracy, the fact that it can’t even remotely be achieved even when people of good will make genuine efforts means that what Bookstaber called ex post solutions are critical. In other words, tax the rich. They don’t deserve it.