A comment from a horrible committee member years ago has been sticking with me for the last couple of weeks.

For those that didn’t read it, last week I posted an HR themed article that included one of my least favorite nonprofit memories: a firmly held belief by someone in a position of authority that nonprofit employees were just plain worth less than their for profit counterparts. Even if the jobs were identical.

At the time I was mostly irritated because it just seemed unfair. With the benefit of a little more experience, I’m positive it isn’t fair. It is, however, the state of things, which is probably what lent the weight to her words.

So why are nonprofit workers so content to do the same work for less pay? Do we deserve less because we’re less capable?

While not directly addressing the subject, the recent article by R.J. Oxoby in the Journal of Behavioral and Experimental Economics may give us a clue. It’s titled Social inference and occupational choice: Type-based beliefs in a Bayesian model of class formation. Yikes.

TL;DR: Sociological research tends to focus on the external forces that shape career choices. Economists generally focus on rational decision making by individuals to explain the same activities. The article explores a mechanism by which social hierarchies actually influence individuals, sometimes directly contradicting what the individual knows to be true.

Type-based beliefs

How about an example: Debbie enjoys math, but wouldn’t say that she’s good at it because her friends don’t think it’s a girl thing. In this case, external social forces are shaping the individual’s perception of her own abilities.

In the language of the article, type describes social class (e.g., race, gender), and type-based biases result in “occupational segregation” as individuals of a particular type “choose different sectors of the labor market regardless of … [their] own ability.”

Jumping a little bit ahead, do nonprofit workers qualify as a type? Perhaps. The causation arrow may be pointing the wrong way, though. How about: do certain types of people gravitate toward nonprofit work? Hold that thought.

Back to the article. Assume that people have two characteristics — observable type (which is known), and innate ability (which is harder to discern). Individuals may infer their particular innate ability by comparing themselves to observable types. In other words, if you are a deep sea diver, and most deep sea divers that you know are good at croquet, you would assume that you are also probably good at croquet.

The corollary is that if a type is under-represented in a particular field, individuals of that type will assume that they do not have the ability for those occupations.

The article then goes on to show that reinforcing information about type results in an inefficient labor market, as individuals discount (or over-value) their abilities. So even though someone has high ability for a particular occupation, they may select a different occupation because they are of a particular type.

The nonprofit perspective

Way, way, way back in 1909, Max Weber observed that social status (and perceived ability) are conferred by particular occupations. For example, doctors have higher social status than fast food workers, and are likely compensated accordingly. (I’m pretty sure Weber used that exact example.)

A board chair once commented, “this is my favorite charity because you run it like a business.” While she certainly meant it as a compliment (and we received it as such), there’s the unstated hypothesis that most nonprofits are not run like businesses.

Could lower compensation and the perception that nonprofits are generally unbusinesslike be a type-based bias? Could that bias cause individuals who have chosen the nonprofit profession to assume they are of lower ability?

Read it yourselfOxoby, R. J. (2014). Social inference and occupational choice: Type-based beliefs in a Bayesian model of class formation. Journal of Behavioral and Experimental Economics, 51, 30–37. 

Image by Jean Marc Cote [Public domain], via Wikimedia Commons