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Tuesday, April 05, 2005

Thinking about discrimination

I was reading this recent dissertation, a chapter in it talks about how tipping a more attractive waitress a bigger amount is discrimination since the same service level of an unattractive server nets a lower tip. They got the data from a number of restaurants as customers leave the door. The customers were asked to rate the attractiveness of their servers and then together with other demographic variables it was matched with the amount of tip. I wonder though if this is really discrimination.

If we are willing to pay a little more for a red bicycle over a blue bicycle is it discrimination? Somehow in the dissertation, paying more for something that appears similar over an alternative is discrimination, the underlying belief here is the two goods/services are identical. But are they? Maybe a dining experience with an attractive server handing you your meal is a different bundle of goods than one were an unattractive server substitutes. It's not discrimination, its two different bundle of goods. As a consumer you should have the right to pay whatever it is you want to pay for it. Now having said that, how about employers discriminating (by paying a higher wage) among employees of the same skills and productivity? They lose money because they are unnecessarily paying extra for an input that is available cheaper. At the limit, market competition bids away input discrimination in the marketplace. This idea's been around for a while now.

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