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Economists Examine Potential Bias in the Navy

Minority and female sailors are less likely to be promoted in the U.S. Navy than white, male sailors, according to an independent study released by a group of economists earlier this year (Golan, Amos, Greene, William H. and Perloff, Jeffrey M., "U.S. Navy Promotion and Retention by Race and Sex," January 1, 2010).

The researchers use two words to sum up the importance of this study: equity and efficiency. “We want all sailors treated equally. We don't want the Navy to lose sailors due to unequal treatment, which impairs national readiness,” says economist Perloff.

The data, provided by the U.S. Navy, range from January 1997 to May 2008. The researchers had two primary goals. The first was to investigate the possibility of promotion bias in the Navy. They aimed to do this by estimating differences in the probability of promotion for sailors of different race and sex, accounting for differences in economic conditions and individual characteristics. Their second goal was to investigate retention rates across race and sex, taking into account economic conditions of the time.

One of three researchers was economics Professor and AU’s Info-Metrics Institute Director Amos Golan. Golan and his colleagues at the Info-Metrics Institute —William Greene of New York University and Jeffrey M. Perloff of University of California, Berkeley—examined data on factors such as sailors’ educational background and standardized test scores. Other determining factors include their race and sex and whether they were promoted and decided to stay in the service.

After 9/11, it took African American and Hispanic sailors nearly two to four years longer than white sailors to be promoted to the highest middle rank from the lowest middle rank. Before 9/11, this difference was about a year. The Navy data were separated by pre-9/11 and post-9/11, because attitudes changed during these times. “People behave differently in different times,” Golan says, “pre-9/11 was an economic boom; post 9/11 was a time of war and economic hardship.” Sailors stayed longer and retention rates remained high in post-9/11.

Golan stresses that one must take into account the separate evaluation stages that decide whether a sailor is promoted, retained, or not: First, the Navy decides whether or not to promote a sailor, and then the sailor decides whether or not to stay.

Promotion simulations charted the advancement of African American, Hispanic, and white sailors, both female and male. They found racial and gender disparities in promotion rates among sailors who had similar characteristics and qualifications such as educational background, skills, length of service, and training. Between white and nonwhite, female and male sailors with the same qualifications, the white, male sailor has a higher probability of being promoted. (See table seven within the full report.) "Our results indicate that Hispanics may face more unequal treatment than other groups," says Perloff.

The only hypothesis that the paper presents for why the promotion bias occurs is that ranking bias stems from prejudice in the supervisor’s evaluation. This causes “patterns in potential biases in promotion across race and sex,” according to the executive summary of the study.” However, the report continues: The Navy takes “many steps to prevent discrimination or unequal treatment in promotion and retention across race and sex.”

Golan says instances of promotion bias based on race or sex can have seriously negative implications for individual sailors. “They can receive a lower wage, retire at a lower rank, or get a lower pension for life,” he says.

Table four shows how many years it would take a sailor to be promoted through ranks, coded E4, E5, and E6. In these calculations, they assume that the sailor remains in the Navy. Because African Americans and Hispanics are less likely to be promoted than whites at every rank, the difference in the number of years it takes to reach a given rank increases with each successive rank. The race differences have increased in the post-9/11 world. The figure also shows promotion by sex.

The data also show that differences in promotion across sex exist, but these differences vary for different pay grades. For example, males were more likely to be promoted than females in the pay grades E4 and E5 (two of nine total pay grades). However, during the Iraq war, the difference between men’s and women’s promotion rates increased with men being promoted faster (and receiving higher compensation). “In wartime, there’s a higher demand for men’s combat training,” says Golan.

Retention rates revealed a few conclusions. For one, lower rates of promotion decreased the chance of a sailor remaining in the Navy; second, higher promotion increased the chance of a sailor remaining in the Navy. “However, all else the same, African Americans, Hispanics, and other races were more likely to stay in the Navy than whites over the period analyzed,” according to the study. “This result is likely driven by the relative lack of opportunities for minorities in the civilian labor market and the relative increase in the Navy pay relative to civilian wages.”

In the study’s conclusion, the economists say, “We have very clear-cut results concerning race. Despite the Navy’s elaborate controls to ensure fairness, the probability of promotion varies statistically and significantly across races and by sex. Blacks, Hispanics, and other races were less likely to be promoted and more likely to stay in the Navy than whites. Though we provide [in the study] detailed analysis of only one basic skill group, our results are robust and qualitatively similar across many of the skills groups.”

Since little is known about promotions and retentions within organizations due to a lack of data, Perloff says that having access to an unusually rich data base for the Navy made this study possible. "We hope that the Navy will use the study in pursuing equal treatment for all sailors and guaranteeing readiness by maintaining a corps of sailors efficiently. Academics will find the study useful as a new model of analyzing promotions and retentions,” says Perloff.