
Empirical Evidence on Impact of CA SB826: Gender Quotas for Boards of Directors - MagicPropmaker
https://www.professorbainbridge.com/professorbainbridgecom/2018/10/empirical-evidence-on-the-im-pact-of-sb-826-gender-quota-mandate-for-boards-of-directors.html
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CryoLogic
I mean it makes perfect sense right, I thought this was basic economics.

Market dictates to maximize shareholder value you need optimal board members
x,y,z. A law like this makes you replace z with e.

It's not that a woman can't do the job, but instead that the supply of women
capable is much lower. As a result, with a shortage and a mandate for women
board members some companies will get sub-optimal picks which result in sub-
optimal results.

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zorpner
They are not less "capable". They are systematically discriminated against at
every stage of their career.

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swampthinker
Because they have been systematically discriminated against at every stage,
most female executives are less capable. They haven't been given the same
opportunities and experience that their male counterparts have.

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zackbloom
It's worth pointing out we as a society are allowed to optimize for more than
just shareholder value and the growth of our GDP.

~~~
gizmo686
And doing so should still be informed with evidence and knowledge of what
trade offs we are making.

Having said that, I think the much more informative way of looking at this is
as if it was the result of an experiment. If your hypothesis is that the
previous inbalance was due to bias in hiring boards of directors, then you
would expect shareholder value to increase when that bias is countered
(thereby moving towards more optimal behavior). Those of us who have been
arguing that that hypothesis would be extraordinary if true are gratified that
the evidence does not seem to support it [0].

Now, returning to the original law, what is our justification for it? There
seems to be no evidence of an economic justification, and (as I mentioned
above) claims that it is to counter a direct bias also appears to be
contradicted by the evidence.

The only "reasonable" justification I can see is that it is an attempt at
social engineering. In my judgement, it is a very crude and ill considered
attempt. Additionally, it is an attempt that necessitates dismantlementing
many of the legal protections that its proponents [1] fought so hard for.

The unreasonable justification (which is the one I actually think to be most
accurate), is that law is an attempt to garner support from a political base
by politicians who have realized that effective governing is bad politics. [2]

[0] Of course, there are still plenty of explanations for that hypothesis
which is consistent with the reported data. For instance "shareholder value"
is not an entirely objective quantity. "Shareholder value" also does not claim
to be a complete measure of economic health.

EDIT: Perhaps more damning for looking at this as an experiment is how far
beyond the margins it went. Maybe a forced 10% increase in women board members
would have been imidietly beneficial and the results we are seeing here are
from overcorrecting against the bias. Or maybe the results are from the sudden
_change_ in board makeup irrespective of the quality at either end of the
change; or from the influx of less experienced board members (if there were
enough experienced women, there would have been no need for this law); or from
the disproportionate stupidity of applying such a strict quota on groups as
small as boards of directors.

As it turns out, not only are these bad properties for experiments to have;
they are bad properties for public policy as well.

[1] Broadly considered as the social movements behind them. At the individual
level, many of the individuals in said movements are from a new generation who
were not part of the fight for said rights.

[2] A more scary variant of this is that that nature of our politics is such
that it selects for people who believe this is what good governing looks like.
There is probably more truth to this than I would like to admit; but until I
am force not to, I am going to keep believing that our lawmakers secretly know
what they are doing.

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TomMckenny
>...social engineering...

Like joint tax returns, mortgage deductions, tax exemption for churches, child
tax credits, and narrow definitions of marriage?

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gizmo686
I would say like a narrow definition of marriage [0].

However, the prejoritive I attempted to convey was not actually that it is
social engineering, but rather that it is a "crude and ill considered attempt
[at social engineering]".

Notice that all of your other examples are taxes, which are a well established
and effective mechanism for social engineering. I would probably still
disagree with it, but I would not be calling the policy stupid if it was a
subsidy for women in boards of directors, instead of being an unfunded
mandate.

[0] Actually, I would say the entire legal institution of marriage is, but I
digress.

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TomMckenny
Perhaps not your intent, but the labels "social engineering" vs "traditional
values" are so widely used by pundits to replace inquiry with highly emotional
obedience that they have become suspect.

For incentive vs mandate, much of the country has restrictions on alcohol
sales. Often just on Sunday, obviously an attempt to encourage a particular
religious practice. Some limit sales to government run companies. These are
not incentive systems but direct prohibition. Yet there is no huge outcry of
"social engineering" or "socialism" from those who condemn other policies with
those terms, instead theses practices are frequently defended as "traditional
values" or "community values".

For California, an incentive system might have been better received or perhaps
more efficient, if slower, toward reform. But in practice, a tax cut is a tax
increase to those who don't get it but must pick up the revenue slack. For
example, if we look at it honestly, the mortgage deduction is little more than
a transfer of wealth from the poor to the middle class.

It's worth noting the study cited, taken in narrow time window, reporting
effects on the level of 1.5% during a period of large market fluctuations,
should probably be taken with a grain of salt. And even if accurate, could be
due to things such as uncertainty caused by any shuffle of board members
regardless of gender. But even if their cause is correct, the California
public seems willing to endure a small short term loss to share holders if the
result is a disruption to discrimination networks both known and unknown. It
is also reasonable to believe that when irrelevant barriers to promotion
(including gender) are reduced, over all efficiency will increase with the
larger pool of candidates. And that this will take more than three months.
Judging from California's overall prosperity, their often criticized
techniques do seem to work well even if measured just solely on wealth.

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slezakattack
Maybe I'm missing something but I'm not understanding how one reaches
statistical significance when this bill was signed into law only 3 months ago?
Do board members have so much of an impact that one fiscal quarter can prove
that this gender quota is responsible for a -1.4% return as stated in the
paper?

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gizmo686
A large enough sample size can find statistical significance in anything.

Also, this is a question will well understood theoretical backing. If you
consider the entire law as an experiment, it is probably best to view this as
a preliminary report, not a final result. Similarly to how no one thinks twice
when CERN gets excited about a bump in their data, only to find out later that
it turned out to be a statistical fluke.

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cimmanom
But there’s also an assumption here that 3 months is long enough to have a
measurable impact, rather than that quarter’s results being largely dictated
by decisions made earlier.

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itsdrewmiller
The paper could actually demonstrate the precise opposite - the firms that had
the fewest women made the worst economic decisions leading up to this quarter.

