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I am delighted to host another student guest post, this time by Woo Chul Ro. This is the 9th student guest post of this semester. You can see all the student guest posts from my “Monetary and Financial Theory” class at this link.

Affirmative action in the US colleges is inefficient to the economy and yet necessary for economic equality and social justice.

What is justice? A famous Korean law professor once told me “justice is something one cannot justify.” I was reminded of this saying after reading the article from the Economist called The Model Minority is Losing Patience. The article argues that Asian Americans are the most successful and hard working minority, but they are also the most discriminated in academia. As an example, an Asian American student from California is introduced. Being second in his class of over 1000, having perfect ACT scores, singing in President Obama’s inauguration, getting into third place in the national piano contest, being in the national debate finals multiple times was not good enough for him to get accepted into six of the seven ivy league schools he applied for. Many candidates, of a different race and much more under qualified than himself, got into the schools that he could not get into. Because of this, around 60 candidates like the student from California (Asian American & qualified) got together to sue Harvard for racial discrimination. The charge was denied by the Department of Education. Harvard practices affirmative action, and therefore the charge against them is invalid.

At first, as an Asian American myself, I definitely considered this an injustice to my ethnicity and inefficient to the economy. Through affirmative action, many Asian Americans are losing the opportunities they might have had if they were a different race. However, if they were a different race, would they have had the same opportunities? The article states that Asian Americans are the most “successful” race. As a matter of fact, Asian Americans have the highest average wage among any other category of race. This means that many Asian Americans were probably raised in a decent socioeconomic environment, where education is not scarce. And then there is the cultural side. Most Asian American parenting is considered to be much different from other races. Asian American parents tend to prioritize education more, and they also train their children to work very hard. As an Asian American, a lot of children are taught to work harder for education, and a lot of Asian American families are thought to invest more of their income on the children’s education.

So is this an unforgivable injustice? It definitely is discrimination; this is probably why affirmative action is also termed “positive discrimination.” In the Wall Street Journal article Poverty or Prosperity – Different Paths After College, the article shows a study of colleges in New York, which suggests that wages after colleges are indeed predictable through the college one attends. Although causality is hard to fully demonstrate, this suggests that prestigious colleges give students a return for their investment of time and money. Assuming this statement is true, it means that the rate of return on their investment in education before college for Asian Americans is indeed hurt by their greater difficulty in getting into prestigious colleges. But the high wages of Asian Americans suggest that they are still doing well despite that handicap. 

Could it be that the return to attending a prestigious college is greater for those who were initially disadvantaged?  A study by Stacy Dale and Alan Krueger suggested that the answer is yes: conditional on where students applied, there is little evidence that attending a prestigious college had high returns unless a student was initially disadvantaged. If this true, then affirmative action in college admissions would benefit those initially disadvantaged more than it hurt Asian Americans and raise social welfare. Some policies for welfare can be considered injustice, but it may be injustice for a larger justice.

Update: On Miles’s Facebook page, Robert Flood recommends this Journal of Economic Perspectives article on affirmative action:

• “The Impact of Affirmative Action Regulation and Equal Employment Law on Black Employment” by Jonathan Leonard