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.

Value of housework by gender, income, and race

In injury and death cases, the value of lost household work that would have been performed by the injuried or deceased is frequently an issue. In these cases, the value of the lost household work is determined by first calculating how many hours the person would have normally performed. Second, the market value of the lost household services experienced by the person is calculated. The market value of the household services is determined by the average hourly wage of individuals who perform similar services in the labor market. The total value is found by multiplying the value and number of hours performed.

The question is does the person's gender, income level, and race matter in the calculation?

The answer is yes, yes, yes.


In a Princenton working paper titled: Does Household Work Matter Anymore?
Comparisons of Household Production and the Distribution of Income in the United States
in 1965-66 and 2003' the authors, Cathleen D. Zick, Ph.D., W. Keith Bryant, Ph.D., and Sivithee Srisukhumbowornchai, M.S. provide some insights.

They find that the value of household production is:

* higher for women
* decreases as income goes up (less hours worked)
* African-American and Hispanic males have fewer household production hours
* Hispanic females work more household production hours

See also:


Bryant, W.K., C.D. Zick, and H. Kim. 1992. The dollar value of household work. Ithaca, NY:
Conrell University, College of Human Ecology.

Fluctuating work week method is endorsed by 10th circuit

The U.S. Court of Appeals for the 10th Circuit endorsed the fluctuating workweek method of calculating back pay awards for misclassified salaried employees in lawsuits arising under the Fair Labor Standards Act. In Clements v. Serco, Inc., 2008 U.S. App. LEXIS 13806 (10th Cir. July 1, 2008).

The 10th Circuit held that the district court properly used the fluctuating workweek method to calculate a back pay award for unpaid overtime, rather than the alternative time-and-a-half formula...

According to FLSA, 29 C.F.R. § 778.114(a):

When the number of hours worked in a week moves around:

"the regular rate of the employee will vary from week to week and is determined by dividing the number of hours worked in the workweek into the amount of the salary to obtain the applicable rate for the week."

For instance consider a person earning $1,500 a week who was was misclassified as exempt from recieving overtime. Assume that the court has determined that the person generally works 50 hours a week. Since it has been determined that they are misclassified, they are entitled to 10 hours of OT.


Under the fluctuating workweek calculation, the value of the OT that the employee is entitled to is:

Regular rate = 1,500/50 = $30.00

so the OT owed would be = 0.5* $10hours * $30.00 = $150.00

In contrast, under the usual FLSA calculation, the person would recieve a rate of one-and-one-half times the regular rate. Under the usual calculation it would be:

Regular rate = 1,500/50 = $30.00

so the OT owed would be = 1.5*$10hours*$30.00=$450.00

The underlying idea is that when the fluctuating workweek applies, employees receive overtime compensation at a rate of one-half their regular rate for the week – – "because such hours have already been compensated at the straight time regular rate, under the salary arrangement." Therefore, applying the fluctuating workweek approach typically reduces the amount of overtime compensation to which an employee is entitled.

At the end of the day, the value of the unpaid overtime for the misclassified worker will be lower.

Real games use real economists

Eveonline, a online space simulation, uses actual economist to develop realistic economy aspects into the game.

An economist, Dr. Guðmundsson, is responsible for compiling quarterly economic reports for the eve community and providing ongoing analysis of the economic facets of Eve, along with coordinating research with other interested parties.[28][29]


For more on the economy, go to:

A few snippets about the economy side:

There is a single currency unit in Eve Online, the Inter Stellar Kredit (ISK), which takes its name from the Icelandic króna, whose ISO code is ISK.

Players can barter between themselves for items, use the in-game market system for ISK-based transactions, place and accept contracts between players for assets and services or use a Loyalty Points store.[24]

A large proportion of the in-game economy is player driven; Non-player character merchants supply some basic blueprints, items and trade goods.

Pricing and availability of goods varies from region to region within the Eve universe. These aspects contribute to an economic environment influenced by factors like scarcity of resources, specialization of labor and supply/demand dynamics.[25]

The economy is closely tied with the (also player driven) political aspect of the game. Player corporations (the Eve equivalent of guilds) rise and fall as they struggle for market dominance as well as territorial control.

From a technical point of view, the economy in Eve is known as an open economy, that is there is no fixed amount of money or materials in the universe. CCP did attempt to implement a closed economy (that is an economy where there is a fixed amount of currency and therefore materials) early on in the game's existence; however, it proved too difficult to balance the effects of new players entering the game with the capabilities of older players able to earn more ISK or obtain more materials.

The current Open economy is automatically balanced by introducing extra materials in underpopulated areas to encourage an even spread of players.[26]
Eve's End User Licence Agreement forbids the exchange of ISK for real currency; however there is a secure in-game system for trading "Game Time Codes" (GTC) in exchange for in game currency. In a similar way selling and buying characters for in game currency is allowed.

2007 American Time Use Survey is released

The American Time Use Survey, which is used by economist to measure the amount of time spent on household services, was recently released by the BLS.

http://stats.bls.gov/news.release/pdf/atus.pdf

livingto100.com:New life expectancy calculator

This calculator can be used to provide lifestyle adjusted life expeactancy estimates. The problem is that it may be too detailed for forensic economics purposes. Some of the questions, like 'how do you deal with stress', would not answerable in many wrongful death suits. Liberal estimates could be made by assuming the best case. Still a helpful tool,