Alternate title: “Fun and Frolic on the Beaches of the Just-So Land”
(from the Annals of Just-So Theories, May 2006)
Introduction: In this paper, we propose a simple (heck, it’s even simplistic!) model to show that quotas are economically efficient.
Model: Consider two students A-1 and A-20 who are about to enter college. Let their intellectual abilities be similar (that’s why we use the symbol A to designate them!). However, assume that A-1 comes from a disadvantaged group (compared to A-20), and possesses a smaller amout of ‘social capital’ (networks, support system, contacts, what have you) than A-20.
Consider now two colleges Q and Z. Let’s assume that Q has global brand equity, and Z is another one of those run-of-the-mill colleges. Let the cost per student borne by the society be $50,000 for College Q, and $10,000 for College Z.
Now, assume that education in College Q — somehow! — compensates students such as A-1 for any lack of social capital they start out with, while education in College Z does not possess this wonderful property.
Thus, both A-1 and A-20 will get the same benefit from College Q; let’s say it’s $70,000. On the other hand, A-1 (with lower social capital) benefits from College Z to the tune of $20,000, while A-20 gets $50,000 from his education in
College Q the same college (Z).
Results: It’s easy now to prove that the combination of A-1 studying at College Q and A-20 studying at College Z produces a higher net benefit to the society (for the same cost: after all, the society spends the same amount of $60,000). This combination produces a net gain to society of $60,000, while the reverse combination (of A-1 at Z and A-20 at Q) produces only $30,000. QED!
Discussion: I am sure some readers are wondering why we have made these specific assumptions. Why, they are ‘just so’! For one thing, they are not unreasonable, and are certainly plausible; more importantly, their virtue lies in the fact that they are less implausible than some of the other models (one of them can be found right at the end of this post by Atanu Dey) in the intellectual market for ‘just-so’ ideas.
Conclusion: Quotas are economically efficient!
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Update: Added the link to Atanu Dey’s post, following this post over at my main blog.