Most people feel that stereotyping is wrong and unfair.
Why should one person be affected by the actions or qualities of the rest of his or her demographic? Of course, people are individuals with their own moral values (or lack of), intelligence, and talents. Stereotyping is, however, a method that people use, consciously or subconsciously, as an efficient way of economizing on information costs.
For example, if somebody offered you $1 million to solve a complex mathematical problem and, furthermore, you could choose anybody on a university campus to help you, I doubt you would choose the Paris Hilton–type sorority girl or the Abercrombie and Fitch–wearing fraternity boy. Now consider the young man wearing glasses and a pocket protector in his short-sleeve, button-down shirt: would you not think that he is a better bet?
If you were a soccer coach and had to draft a player for your team and the only information you had was that Player A is from Brazil and Player B is from the United States, who would you choose?
Finally, assume that you are walking down the street and you have only two choices — either walk on the left side of the street or the right side of the street. Before you choose, you notice that on the left side there are ten tattooed, muscular men with shaved heads walking and talking together, while on the right side you see ten "clean-cut" men wearing dress shirts and ties carrying Bibles. Now, what would you do?
If you chose the "nerdy" student with the pocket protector in the first scenario, the Brazilian player in the second scenario, and the right side of the street in the third scenario, are you being immoral or "prejudiced"? In fact, what does the word "prejudice" really mean? One of the definitions that is normally overlooked is "a preconceived preference or idea." In other words, prejudice simply means pre-judging.
Of course you may not be correct in your judgment, and your later judgments will be affected by the success or failure of the accuracy of your forecasts. But the alternative is to use a completely random basis on which to make pre-judgments, which is very silly and probably impossible.
In his article "Non Politically Correct Thinking", my former professor and economist Dr. Walter Williams argued
"… that going to the word's Latin root, to pre-judge simply means: making decisions on the basis of incomplete information. Here's an example. Suppose leaving your workplace you see a full-grown tiger standing outside the door. Most people would endeavor to leave the area in great dispatch. That prediction isn't all that interesting but the question is why. Is your decision to run based on any detailed information about that particular tiger or is it based on tiger folklore and how you've seen other tigers behaving? It's probably the latter. You simply pre-judge that tiger; you stereotype him. If you didn't pre-judge and stereotype that tiger, you'd endeavor to obtain more information, like petting him on the head and doing other friendly things to determine whether he's dangerous. Most people quickly calculate that the likely cost of an additional unit of information about the tiger exceeded any benefit and wouldn't bother to seek additional information. In other words, all they need to know is he's a tiger."
Acquiring information is costly. Moreover, we assume that rational people economize. As beings who want to get the "biggest bang for their buck," people will apply this rational behavior to information as well. Assuming that I am that person who, when he sees a tiger running at him, gets scared and tries to run to safety, am I being unfair or prejudiced? If I hear there is a murderer in my neighborhood, am I prejudiced if I start looking around the neighborhood for a suspicious looking male rather than a female?
This topic of course has implications when it comes to social policy. After 9/11, the Transportation Security Administration agents at airports, to show that they were impartial, would pull aside old ladies and little children to make sure that they were not carrying dangerous items that could lead to terrorism.
I can recall that one time when I was traveling, a TSA agent pulled aside a young blonde girl for additional screening rather than checking the adult men that were going on that flight. Did it make me feel safer to know that politics and not security was foremost on the mind of the screeners? Not particularly.
Providing security requires the use of scarce means. In a world of imperfect knowledge, economizing on information is a tool that should not have to be defended.
In another important area, government's interventionist policies in the labor market can make the bad kind of discrimination we normally think about more prevalent. For example, European Union countries have very strict laws on firing people compared to the United States. Because of this, it is more costly for a firm to hire somebody.
Now, if I am an employer and I know that I am stuck with a worker once I hire him, don't you think I will be more likely to economize on information (i.e., discriminate) before I hire him? Conversely, in a free-market, I will be more likely to take a risk on somebody and give him a chance (and not indulge my initial "prejudices") because I know if he ends up being a poor selection, I can easily fire him. Those who advocate "fair labor laws" had better be careful what they ask for.
Economics affects our everyday lives. Economics can be viewed as the study of individual human actors making choices. Of course, people should not be rude to others based on looks, race, or gender. I also know that there are a lot of ignorant, mean-spirited people who assume things about others that are completely baseless. But in the market economy, they also pay a price for being wrong.
Let us remember that we live in a world of scarcity, that economizing on information can be efficient, and that sometimes the reason stereotypes exist is because, well, they're true.
By the way, I am half-Hispanic and half-Middle Eastern. I am not your "stereotypical" WASP — but I'm sure you didn't think that while reading my article … right?