THE ECONOMICS OF ‘PROFILING'

A collection of research reports published in the November 2006 issue of the Economic Journal shows how new economic research is illustrating controversial issues of public policy involving the phenomenon of ‘profiling' – in which people may be distinguished by their fundamental or superficial characteristics.

The feature, edited by Professor Charles Manski of Northwestern University, includes explorations of the motivation for police searches, the impact of means-tested benefit programmes, and university admissions systems.

What is profiling ? Profiling is not a formal term of economic science but rather an expression of recent public discourse. Indeed, the modern usages of the term do not appear in the Oxford English Dictionary (OED) until March 2004, when these draft entries were added to its online edition:

profiling : (a) The recording, itemisation, or analysis of a person's known psychological, intellectual, and behavioural characteristics, especially as documentation used (in schools, businesses, etc.) in the assessment of an individual's capabilities. (b) Selection for scrutiny by law enforcement officials, etc., based on superficial characteristics (as ethnic background or race) rather than on evidentiary criteria.

The two OED definitions indicate why profiling is a subject of controversy. Definition (a) is a broad neutral statement about the recording and analysis of a person's observable covariates, especially for use in assessing his capabilities.

Definition (b) is a focused statement about the use of observable covariates such as ethnicity or race as the sole basis for scrutiny in law enforcement. The definition is normatively charged through its use of the phrase ‘superficial characteristics' and through its conjecture that scrutiny may be based solely on these characteristics, with no regard for evidence of wrongdoing.

Economists have long studied the broad definition (a) of profiling. They simply have used other terms to describe the idea, such as statistical discrimination and conditional prediction. Although economists have largely not been concerned with the precise OED form of definition (b), they have studied the related problem of empirical detection of discrimination, particularly the problem of distinguishing statistical discrimination from preference discrimination.

The reports in this feature demonstrate how basic economic thinking about the interaction of profilers and profilees who respond rationally to incentives can illuminate controversial issues of public policy and contribute to their resolution.

Four articles carry forward a nascent programme of economic research on search profiling by police. The articles by Nicola Persico and Petra Todd and by Jeff Dominitz and John Knowles shed new light on the validity of the ‘hit rate' test for racial discrimination originally proposed in 2001 by Knowles, Persico, and Todd. Articles by Charles Manski and by Steven Durlauf are concerned with normative aspects of search profiling policy.

Four articles consider profiling problems that arise in lending, means-tested transfer programmes, college admissions and the operation of labour markets. William Brock and Robert Moffitt examine social planning problems. Dennis Epple and colleagues and Lawrence Blume show how economic analysis can illuminate the version of profiling emphasised in definition (a) of the Oxford English Dictionary; that is, the use of data on a person's attributes to assess his or her capabilities.

ENDS

Notes for editors : ‘Profiling', a feature edited by Charles Manski is published in the November 2006 issue of the Economic Journal .

Charles Manski is at Northwestern University.

For further information : contact Charles Manski on +1-847-491-8223 (email: cfmanski@northwestern.edu); or Romesh Vaitilingam on 07768-661095 (email: romesh@compuserve.com).