A few years ago, I was teaching a microeconomics course in Kansas State University’s MBA program. One day, during a discussion of affirmative action, a student posed an interesting and provocative question. The college of business was recruiting a new department head, and both female and black faculty members were underrepresented in the department. The student inquired whether the college of business should hire a black female for this position even if she isn’t the most qualified applicant based on objective metrics.

An uneasy silence fell over the classroom in anticipation of my response to the question. If the students were expecting a “yes” or “no” response from me, they were sorely disappointed.

To answer this question, I enlisted the students’ participation in a classroom experiment of sorts. Specifically, I informed them that each applicant brought forth a set of objective metrics to the application process that included the reputation of the university from which the candidate received her doctorate, class ranking, grade point average, quantity and quality of publications, teaching evaluations, and strength of external recommendation letters.

I then asked how many students would support hiring the minority candidate if she ranked first in terms of these objective metrics? It’s probably not surprising that 100 percent of the students agreed she should be hired. I then asked how many students would support hiring her if she was objectively ranked second in the applicant pool? This time 85 percent of the students were in support of hiring her. I asked the same question of the students if she was objectively ranked third, fourth, and finally fifth among the applicants. The support for hiring this candidate was 65 percent, 35 percent and less than 10 percent, respectively.

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Upon posting the results of the classroom experiment on the whiteboard, I asked the class to interpret the results from an economic perspective. At first, there was no reaction from the students. Finally, a hand went up ever so tentatively in the back of the classroom. This student observed that as the price of diversity, as measured in terms of objective qualifications forgone, increased, the percentage of students supporting the diversity hire declines. This suggests that there is an inverse relationship between the price of diversity and the corresponding demand for diversity (as measured in terms of support for it). Most students were willing to pay the price for diversity as long as the minority candidate ranked in the top three in the qualified applicant pool, but support for the minority applicant decreased rapidly thereafter.

This was precisely the answer I was hoping for. It forced the class to recognize that the question, as posed, did not warrant a “yes” or “no” response, but one framed in terms of price. In other words, the question is not whether diversity is desirable or undesirable. Most of us can appreciate that there is value in diversity. The real question is what price we are willing to pay for it. When it comes to diversity, the price we often have to pay for it is the objective qualifications. There’s also the evaluative question: how much should we be willing to pay for diversity?

Diversity is presently center stage at the U.S. Supreme Court—in terms of both the court’s composition and its docket. Thinking about diversity in terms of price and demand can help us better see how the questions facing the court fit within a broader framework of competing goods.

The question is not whether diversity is desirable or undesirable. Most of us can appreciate that there is value in diversity. The real question is what price we are willing to pay for it.


Supreme Court Nominations

A veritable political firestorm erupted in January when President Biden announced that he would fill the Supreme Court vacancy created by Justice Breyer’s resignation with a black woman—and continued when he announced Ketanji Brown Jackson as his pick last month. The promise of a black woman was reportedly the result of a deal struck between candidate Biden and Representative James Clyburn (D-South Carolina) in return for delivering the black vote in the South Carolina presidential primary.

Decisions invariably involve tradeoffs, and Supreme Court justices are no exception. Suppose there are both objective qualifications and another attribute deemed desirable for Supreme Court justices. The objective qualifications in this case include the reputation of the law school from which the nominee graduated, class ranking, quality of judicial decisions, infrequency of decisions overturned, scholarship reflected in law review articles, and American Bar Association ratings. The other desirable attribute is whether the nominee contributes to diversity on the court. (Diversity, by the way, need not be defined exclusively in terms of race, gender, and sexual orientation. It may, for example, also include diversity of thought, socioeconomic background, and life experiences.)

Assume that President Biden’s nominee ranks first in the pool of candidates in terms of objective qualifications. The overwhelming majority of the American people are likely to agree that putting a black woman on the high court would add an important perspective to the court’s deliberations that it does not have presently. Disagreements over judicial philosophy aside (originalism versus living constitutionalism, for example), there would be no tradeoff between objective qualifications and diversity in this case. The choice is without controversy, at least among fair-minded individuals.

Assume now that President Biden’s nominee ranks second in terms of objective qualifications, and the individual who ranks first is a white heterosexual male. The majority of Americans would probably still concur with the president’s choice even though it entails a tradeoff between objective qualifications and diversity. This tradeoff is the price that many Americans are willing to pay for greater diversity on the court. It is conceivable, although less likely, that the same sentiment would prevail if the president’s nominee ranked third in terms of objective qualifications.

The real controversy is likely to arise if the president’s nominee is ranked farther down the objective qualifications ranking. In that case, diversity’s cost is the even greater loss of other important qualifications. Yet President Biden’s statement that he would nominate a black woman to the Supreme Court suggests that he is willing to pay any price for increased diversity—a choice that only 23 percent of those surveyed in a recent ABC/Ipsos poll agree with.

If we stipulate that diversity among the justices on the Supreme Court is an important consideration, then the “optimal” nominee will always be contingent on the court’s composition at the time. If women of color compose the majority of the court, then a white male who is most qualified according to objective metrics would probably qualify as the “optimal” nominee. But if the court is composed of all white men, then it is less likely (though not impossible, depending on the candidates) that another white man would be the “optimal” nominee. In this case, it might be worth paying a higher price to place a black woman on the court. In other words, placing a black woman on the high court is desirable provided that the price of doing so is not inordinately high.

College Admissions and the Supreme Court

Coinciding with diversity debates over Justice Breyer’s replacement are affirmative action cases awaiting adjudication. The Supreme Court recently agreed to hear two cases involving the use of racial preference in college admissions at Harvard and the University of North Carolina. Both cases were brought by Students for Fair Admissions (SFFA), a nonprofit organization led by the conservative activist Edward Blum, who has spearheaded efforts over the last decade to end affirmative action in higher education. The high court will once again have an opportunity to weigh in on the proper use of racial preferences in admission decisions to achieve a diverse student body.

The Supreme Court has ruled on the constitutionality of racial preferences in college admissions in cases involving the University of Michigan (Gratz v. Bollinger, 2003; Grutter v. Bollinger, 2003) and the University of Texas (Fisher v. University of Texas at Austin, 2013, 2016). It has identified one compelling governmental interest: diversity in higher education. With respect to the latter, the seminal question concerns whether racial preferences should be eliminated and, if not, how should they be circumscribed? The court has ruled that colleges are permitted to place some, but not too much, weight on race in admission decisions. This suggests that it is constitutional to pay a price for diversity (as measured by the objective qualifications that are sacrificed in order to achieve it) provided that the price is not too high. The current affirmative action litigation before the court seeks clarity on these previous court rulings. In essence, what is an acceptable price to pay for diversity?

Proponents of race-based preferences contend that colleges should have considerable discretion over admissions to enhance the educational experience of their students. Whereas some students who would otherwise qualify for admission will be rejected, the best of those students will still be accepted. As Glenn Loury observes, “selective institutions will naturally try to reject the least qualified of the otherwise admissible non-black applicants while admitting the most qualified of those black applicants who would otherwise have been rejected.” The costs to the university measured in terms of objective qualifications forgone may be small, while the benefits of a more diverse student body may be large.

Justice O’Connor reasoned in Grutter that a diverse student body “promotes learning outcomes and better prepares students for an increasingly diverse work force, for society and for the legal profession.” This is an endorsement of Justice Powell’s observation in the 1978 Bakke decision that “the attainment of a diverse student body . . . is a constitutionally permissible goal for an institution of higher education.” Like hiring, admissions processes that consider race perceive social benefits that cannot be gained otherwise. Other more objective qualifying academic metrics can be sacrificed to some degree—and this is a fair price for diversity, according to the court’s previous rulings. But where, exactly, the price becomes unfair (too high) remains to be determined.

Those who oppose the use of racial preferences in college admissions contend they are inherently discriminatory in violation of the Equal Protection Clause of the Fourteenth Amendment. Specifically, because the merit-based applicant that was rejected had stronger academic credentials than the race-based applicant that was accepted, the former was subject to disparate treatment. And yet, the race-based applicant brings diversity to the university whereas the merit-based applicant may not.

It is noteworthy that the court’s examination in the extant cases is limited to the use of racial preferences in college admissions. Legacy and athletic preferences are not in play, even though both these factors also weigh against objective qualifications in the same way that racial diversity does. Legacy and athletic admission advantages also have their own price. This means that there is the real possibility that the court will find racial preferences to be unlawful, while preferences based on whether family members (generous benefactors) attended the university or whether a student is a gifted athlete remain lawful. But as University of Virginia law professor Glen Robinson and I observed, “In a system in which other non-meritocratic elements other than race play an important role there is no reason to think that the slot filled by the race-preferred candidate will be filled by another candidate of higher ‘quality.’” To wit, if universities respond to the elimination of racial preferences with an increase in legacy admissions, the result may be the opposite of what is expected—a less able student body.

In framing the diversity issue in terms of tradeoffs, we task the courts and policymakers with placing a valuation on diversity that accords with how much society is willing to sacrifice for it.


But while the court determines what is lawful, the market determines what is sustainable. A university that exchanges too much academic talent for diversity would lose standing to other universities that do not. This suggests that there may be a self-limiting property to the diversity pursuit. Nonetheless, the fact that Harvard consistently ranks first or second in national surveys of universities suggests that its aggressive pursuit of diversity in its admission’s policies has yet to inflict serious damage on its reputation. It may be the case that Harvard’s competitors are all equally committed to a diverse student body, but the possibility of coordinated actions (collusion) between universities cannot be ruled out in light of previous conduct. If top universities are coordinating diversity quotas, then they are creating a sort of elite admissions cartel that hoards talent, ignores the real demand levels for diversity, and keeps quotas artificially high.

Diversity is one of the most provocative issues of our time that affects virtually every aspect of society. We can stipulate that diversity is desirable, but the question of what price we should pay for it remains unanswered. In framing the diversity issue in terms of tradeoffs, we task the courts and policymakers with placing a valuation on diversity that accords with how much society is willing to sacrifice for it. This framework is certainly not the only lens through which to examine the diversity issue. But by better understanding that diversity sometimes comes at a price, we can begin to think more clearly about when that price becomes too high.