The Price of No | Market Learning in the Shadow of Rejection

A review of "Overcoming Discrimination: Harassment and Discrimination Dynamics" by Yi Chen, Adam Dearing, and Michael Waldman NBER Working Paper No. 33065. 42 pages.

In the spring of 1947, as Jackie Robinson stepped onto Ebbets Field in his Brooklyn Dodgers uniform, he carried more than a baseball bat. He bore the weight of what economists now call "path dependence"—the notion that history casts long shadows over markets' futures. A new study from Cornell University transforms Robinson's story from a tale of individual courage into something more profound: a mathematical blueprint of how markets remember their past.

The Ghost in the Machine

The paper begins with a puzzle worthy of Jorge Luis Borges: How do we explain why identical starting points lead to radically different outcomes? Baseball started its integration in 1947. In 1973, Sandra Forcier became the first female career firefighter. Today, baseball reflects America's demographics, while fire departments remain 95% male.

Chen, Dearing, and Waldman construct an elegant model that reads like a detective story. The culprit is not prejudice alone—the intricate dance between harassment, market structure, and what economists call "learning dynamics."

The Mathematics of Memory

At the heart of their analysis lies a mathematical representation of institutional memory. They demonstrate that markets exist in three states: integration, learning, and segregation. Like characters in a Greek tragedy, early pathbreakers' fates ripple through time, influencing decisions decades later.

Consider Branch Rickey's words to Robinson: "We have no army. There is virtually nobody on our side." What Rickey understood intuitively, the authors prove mathematically—the isolation of pathbreakers serves a strategic purpose. Their model reveals how harassers use aggravated harassment not merely as an expression but as a strategy, attempting to prevent the market from learning integration's viability.

Markets as Literature

The paper's most provocative insight emerges from its treatment of market structure. Like novelists who understand that structure shapes the story, the authors demonstrate how market architecture determines integration's narrative arc.

With mathematical precision, they prove that monopolistic markets—counterintuitively—may better foster integration than competitive ones. The Brooklyn Dodgers' relative market power allowed them to absorb short-term costs for long-term gains. Modern fire departments, fragmented across municipalities, lack this capacity.

The Digital Turning Point

The authors turn to our digital future in the paper's final act. Remote work and digital labor markets introduce new variables into their equations. Like Chekhov's gun, these variables promise to reshape the integration story in ways we are only beginning to understand.

The Persistence of Memory

What makes this paper remarkable is its mathematical rigor and how it transforms economic theory into a lens for viewing human experience. Through equations and proofs, we see Robinson's story anew. His success was not just a personal triumph; it shifted the mathematical properties of baseball's learning dynamics. This transformation of economic theory is both enlightening and inspiring.

The authors' achievement is significant. They show how markets, like societies, carry memories. Their equations capture how past successes and failures shape future possibilities, how structure determines destiny, and how change, when it comes, follows mathematical patterns we are only now beginning to decode. This work is valuable to our understanding of economic theory and social change.

Reading the Future

For readers seeking to understand why some integration efforts succeed while others falter, this paper offers more than answers—it provides a new way of asking questions. The authors have written not just an economic study but a mathematical explanation of how societies change—or do not. This contribution to understanding societal change is intellectually stimulating.

Ultimately, they leave us with a profound insight: the path to integration is not just about changing hearts and minds. It is about understanding the mathematics of memory, the architecture of opportunity, and how markets carry their histories into the future.

Like all great works that bridge science and human experience, this paper changes how we see the past and imagine the future. It reminds us that beneath the surface of social change lie patterns waiting to be understood—if only we had the courage and the mathematics to look for them.

This review explores NBER Working Paper No. 33065, released in October 2024. The reviewer specializes in socioeconomic theory and environmental policy change dynamics.

Reference ??

Chen, Y., Dearing, A., & Waldman, M. (2024). Overcoming discrimination: Harassment and discrimination dynamics (Working Paper No. 33065). National Bureau of Economic Research. Retrieved from: https://www.nber.org/papers/w33065