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In many cases it's where merit is difficult to measure up front. If you are looking at job applications, you can't literally perceive merit until you've already hired someone, and thus excluded the other candidates. If you're trying to avoid rapists, you can't perceive merit until they've literally attempted or succeeded at raping someone. If you're looking for romantic partners, a 1 minute analysis based on group membership is 120 times cheaper than going on a 2 hour date, and thus potentially worthwhile if the amount of information you can extract from it is 1% as much.
The optimal Bayesian thing to from a purely selfishly rational perspective seems to be using immediately identifiable group membership as a first screening pass (establishing the prior) and then update with more direct merit measures as/if they become available.
...And yet I don't think it's as hard as people make it out to be. To use the hiring example just last week I was in the position of vetting a bunch of potential new hires. Our organization uses the abbreviated (30 question) Wonderlic in conjunction with an internally generated field-specific aptitude/skill test. I feel like between the test scores and simply talking to each candidate individually for 15 - 20 minutes we were able to get a pretty good sense of each one's "vibe" and sort the ones we wanted to call back, from the ones we don't.
While I will grant that this method may not be practical for the sort of "all we need is a warm body" job that @FarNearEverywhere refers to I can't help but wonder how much of that is a product of the attitude that "all we need is a warm body". I recognize that I am fortunate to have a dozen applicants for 3 open slots. I can afford to be picky. At the same time there is price to be paid for not being picky. I'd rather be in the field myself with my guys collecting overtime because we're shorthanded than hire some shit-wit who's going to make a mess of things and potentially get someone killed.
Okay but you don't seem to be arguing against categorizing people, you're mostly just suggesting that accurate categories are superior to inaccurate categories. I'm not especially familiar with Wonderlic, but some quick Googling suggests it's an employment-specific intelligence test. Which means it's is not literally measuring merit at a job, it's categorizing people based on questions that it thinks are a proxy for job skill (unless the job literally consists of answering Wonderlic questions). People don't go around politically identifying with in discrete groups based on their intelligence, but screening out unintelligent people is still a form of grouping people up and discriminating based on something that isn't directly merit, but is strongly correlated with it.
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