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Culture War Roundup for the week of February 13, 2023

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Your link admits:

A vast body of research documents the relationship between diversity and improved financial performance. However, it is important to note that research can only establish correlations, not causations, between the two.

So WindeningGyre's suggestion of selection bias seems very plausible to me. (Another possibility: the most prestigious companies hire from elite schools, so they get employees who are already woke-aligned, and expect/implement these trainings). I'm not sure about the noise aspect, since in at least some cases there's both a large effect size and sample size (although maybe the effect size increases the chance of selection bias). For example:

A study from the International Monetary Fund reviewed over two million listed and non-listed firms across 34 countries in Europe. Their analysis revealed that having a higher number of women in senior positions contributes to a significantly higher ROA. By replacing just one man with one woman on the board or in senior management, firms could experience an 8–13 basis point increase in their ROA. This relationship is even more pronounced in industries that employ more women in their overall workforces: a firm in an industry in the top quartile for gender diversity on boards or in senior management is associated with a 20 basis points increase in ROA. In knowledge-intensive and high-tech industries, this relationship translates into an increase of approximately 30 basis points in ROA

That seems nearly impossible to generate from noise mining, but also too large to just be a result of having more women in leadership.

Some others seem to have more believable effect sizes. E.g.

Credit Suisse studied 30,000 senior executives at over 3,000 companies across the world. Among their findings: companies in which women held 20% or more management roles generated 2.04% higher cash flow returns on investment than companies with 15% or less women in management roles

2% more cash flow seems believable to me, and 3,000 companies is probably enough data that it isn't noise (although they could always have checked very many outcomes).

However, I think there are some plausible explanations that are at least somewhat favorable to "DEI."

I would not expect, a priori, interviewers and other people involved in the hiring process to be doing a particularly good job. As described in https://youtube.com/watch?v=5eW6Eagr9XA&ab_channel=Veritasium, interviewers don't have fast feedback and may be worse at predicting performance than a simple algorithm. Companies may also face principal-agent problems, where mid-level employees over-hire to make their own team seem more important. And individuals may very well be biased, even if the effect size for the whole market is much smaller than activists claim. So it wouldn't be particularly difficult to improve upon that.

Whether DEI actually does so depends on what it actually consists of. Just saying "hire more blacks and women no matter what" could maybe help if the company in question does engage in outright discrimination (or to be specific, its employees do), since it would correct a legitimately poor practice. More likely, a company might implement changes like having a longer interview process, having more people interview candidates, making the questions and the acceptable answers more consistent, etc. This would correct for some amount of individual bias, but would also improving the hiring pipeline more generally (something James Damore pointed out in his infamous memo). I know that many tech companies have extensive hiring processes for this reason; whether it does anything to increase female or minority representation I can only speculate.