Relative v. Absolute Risk employment discrimination cases

bbThe recent foreclosures in the housing market provides a very interesting example of relative versus absolute risk. The AP recently reported that 'Foreclosure filings up 121 percent from last year'. Dig a little further and it is clear that the AP is discussing relative and not absolute risk.

The story goes on and says that this year 1 out of every 171 homes is being foreclosed. This foreclosure risk number equates to approximately 0.005 or 0.5% of homes. Last year approximately 1 in 342 homes were being foreclosed or about 0.0025 or 0.25%.

Relatively speaking there was a big spike but in absolute terms, not many homes were in foreclosure.


In employment cases where statistical analysis comes into play it is also important to keep it in mind the difference between relative and absolute risk.

For instance in a wrongful termination case where there are allegations that the defendant/employer discriminated against older workers, statistical experts will typical evaluate the chance probability that a given employer would have been terminated had the employer been using a age neutral employee selection process. If the chance probability is small then it is viewed as suggestive of a discriminatory selection process.

The chance probability in an employment case that is typically a relative risk.

In other words, the chance probability measures the likelihood that one group, i.e. older workers, would have been terminated versus the likelihood that another group of workers, i.e. younger workers, would have been terminated if all factors were equal.

Accordingly, just like the case of foreclosures above, the actual number of individuals 'at risk' of being selected at any given time may be quite small. For instance, the relative risk may say that the older workers are 75% less likely to be promoted as younger workers. However in practice this relative risk of promotion may translate into an actual (absolute) gap of only 1 or 2 persons (out of many hundreds) that arguably should have been promoted. In this type of situation, a claim of class wide discrimination against older workers would be a little dubiuos to say the least.