6 Mar 2018

Gender quotas in the boardroom

The Economist published an update on gender quotas in corporations. Here's my comment:
Economists since at least the 1960s have claimed that gender and other discrimination would fall in profit-seeking firms in proportion to the gains from diverse opinions and experiences. Your article (The old girls network, 17 Feb) supports this theory by showing how gender quotas have not brought gains in market share or capitalization. The key element in economists’ theory — competitive markets — explains why such quotas might be useless or counterproductive: many factors besides the ratio of XX/XY chromosomes in management contribute to success. Sadly, the article failed to point out how competition is likely to render quotas irrelevant. Had it done so, then it could have linked to a later article in the issue (Battle of the Xs’), which discusses the impact of male domination in the economics profession, a profession that lacks the corrective power of market forces due to tenure, narrow specialization, and dense personal networks. It is clear from the second article that gender quotas might bring more diversity into the “market for economic ideas.”

Should economists worry about quotas arriving in the near future? Perhaps not, as the policy makers most able to introduce such quotas will need to face their own reality of gender imbalances in the political sphere. Indeed, if we are to talk quotas, then surely it should be in the surreal world of politics, where representatives make decisions on behalf of constituents who cannot escape the consequences. Quotas in politics (and representative legislatures in particular) would give citizens at least a better chance at policies that recognize their presence in society, unlike the policies they are forced to accept today, without the option to escape that is available in competitive markets. We economists are eager to have this discussion with politicians. Do they have the balls to take it on?