Affirmative action policy regulates the allocation of scarce positions in education, employment, or business contracting so as to increase the representation in those positions of persons belonging to certain population subgroups. Such policies are highly controversial. For more than three decades, critics and supporters of affirmative action have fought for the moral high ground through ballot initiatives and lawsuits, in state legislatures, and in varied courts of public opinion. The goal of this paper is to show the clarifying power of economic reasoning, when it is used with a healthy dose of common sense, to dispel some myths and misconceptions in the racial affirmative action debates...

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Whom to hire, promote, admit into elite universities, elect, or issue government contracts to are all determined in a tournament-like (winner-take-all) structure. This paper constructs a simple model of pair-wise tournament competition to investigate affirmative action in these markets. We consider two forms of affirmative action: group-sighted, where employers are allowed to use group identity in pursuit of their diversity goals; and group-blind, where they are not. It is shown that the equilibrium group-sighted affirmative action scheme involves a constant handicap given to agents in the disadvantaged group. Equilibrium group-blind affirmative action creates a unique semi-separating equilibrium in which a large pool of contestants exerts zero effort, and this pool is increasing in the aggresiveness of the affirmative action mandate.

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Affirmative action policies are practiced around the world. This paper explores the welfare economics of such policies. A model is proposed where heterogeneous agents, distinguished by skill level and social identity, compete for access to scarce positions. The problem of designing an efficient policy to raise the success rate in this competition of a disadvantaged identity group is considered. We show that: (i) when agent identity is fully visible and contractible (sightedness), efficient policy grants preferred access to positions, but offers no direct assistance for acquiring skills; and, (ii) when identity is not contractible (blindness), efficient policy lowers productivity requirements across the board, randomly rations access to positions and, under plausible conditions, entails a universal skills subsidy.

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The United States Supreme Court has long recognized compactness as an important principle in assessing the constitutionality of political districting plans. We propose a measure of compactness based on the distance between voters within the same district relative to the minimum distance achievable which we coin the relative proximity index. We prove that any compactness measure which satisfies three desirable properties (anonymity of voters, efficient clustering, and invariance to scale, population density, and number of districts) ranks districting plans identically to our index. We then calculate the relative proximity index for the 106th Congress, requiring us to solve for each state's maximal compactness; an NP-hard problem. Using two properties of maximally compact districts, we prove they are power diagrams and develop an algorithm based on these insights. The correlation between our index and the commonly-used measures of dispersion and perimeter is -.37 and -.29, respectively. We conclude by estimating seat-vote curves under maximally compact districts for several large states. The fraction of additional seats a party obtains when their average vote increases is significantly greater under maximally compact districting plans, relative to the existing plans.

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