Using biased statistics in hiring makes it more difficult to predict job performance. Photo via Getty Images

The Latin phrase scientia potentia est translates to “knowledge is power.”

In the world of business, there’s a school of thought that takes “knowledge is power” to an extreme. It’s called statistical discrimination theory. This framework suggests that companies should use all available information to make decisions and maximize profits, including the group characteristics of potential hires — such as race and gender — that correlate with (but do not cause) productivity.

Statistical discrimination theory suggests that if there's a choice between equally qualified candidates — let's say, a man and a woman — the hiring manager should use gender-based statistics to the company's benefit. If there's data showing that male employees typically have larger networks and more access to professional development opportunities, the hiring manager should select the male candidate, believing such information points to a more productive employee.

Recent research suggests otherwise.

A peer-reviewed study out of Rice Business and Michigan Ross undercuts the premise of statistical discrimination theory. According to researchers Diana Jue-Rajasingh (Rice Business), Felipe A. Csaszar (Michigan) and Michael Jensen (Michigan), hiring outcomes actually improve when decision-makers ignore statistics that correlate employee productivity with characteristics like race and gender.

Here's Why “Less is More”

Statistical discrimination theory assumes a correlation between individual productivity and group characteristics (e.g., race and gender). But Jue-Rajasingh and her colleagues highlight three factors that undercut that assumption:

  • Environmental uncertainty
  • Biased interpretations of productivity
  • Decision-maker inconsistency

This third factor plays the biggest role in the researchers' model. “For statistical discrimination theory to work,” Jue-Rajasingh says, “it must assume that managers are infallible and decision-making conditions are optimal.”

Indeed, when accounting for uncertainty, inconsistency and interpretive bias, the researchers found that using information about group characteristics actually reduces the accuracy of job performance predictions.

That’s because the more information you include in the decision-making process, the more complex that process becomes. Complex processes make it more difficult to navigate uncertain environments and create more space for managers to make mistakes. It seems counterintuitive, but when firms use less information and keep their processes simple, they are more accurate in predicting the productivity of their hires.

The less-is-more strategy is known as a “heuristic.” Heuristics are simple, efficient rules or mental shortcuts that help decision-makers navigate complex environments and make judgments more quickly and with less information. In the context of this study, published by Organization Science, the heuristic approach suggests that by focusing on fewer, more relevant cues, managers can make better hiring decisions.

Two Types of Information "Cues"

The “less is more” heuristic works better than statistical discrimination theory largely because decision makers are inconsistent in how they weight the available information. To factor for inconsistency, Jue-Rajasingh and her colleagues created a model that reflects the “noise” of external factors, such as a decision maker’s mood or the ambiguity of certain information.

The model breaks the decision-making process into two main components: the environment and the decision maker.

In the environment component, there are two types of information, or “cues,” about job candidates. First, there’s the unobservable, causal cue (e.g., programming ability), which directly relates to job performance. Second, there's the observable, discriminatory cue (e.g., race or gender), which doesn't affect how well someone can do the job but, because of how society has historically worked, might statistically seem connected to job skills.

Even if the decision maker knows they shouldn't rely too much on information like race or gender, they might still use it to predict productivity. But job descriptions change, contexts are unstable, and people don’t consistently consider all variables. Between the inconsistency of decision-makers and the environmental noise created by discriminatory cues, it’s ultimately counterproductive to consider this information.

The Bottom Line

Jue-Rajasingh and her colleagues find that avoiding gender- and race-based statistics improves the accuracy of job performance predictions. The fewer discriminatory cues decision-makers rely on, the less likely their process will lead to errors.

That said: With the advent of AI, it could become easier to justify statistical discrimination theory. The element of human inconsistency would be removed from the equation. But because AI is often rooted in biased data, its use in hiring must be carefully examined to prevent worsening inequity.

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This article originally ran on Rice Business Wisdom based on research by Rice University's Diana Jue-Rajasingh, Felipe A. Csaszar (Michigan) and Michael Jensen (Michigan). For more, see Csaszar, et al. “When Less is More: How Statistical Discrimination Can Decrease Predictive Accuracy.”

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Houston humanoid robotics startup Persona AI hires new strategy leader

new hire

Houston-based Persona AI, a two-year-old startup that develops robots for heavy industry, has hired an automation and robotics professional as its head of commercial strategy.

In his new position, Michael Perry will focus on building Persona AI’s business development operations, coordinating with strategic partners and helping early adopters of the company’s humanoids. Target customers include offshore platforms, shipyards, steel mills and construction sites.

Perry previously served as vice president of business development at Boston Dynamics, where he led market identification for robotics, and as an executive at DJI. He holds a bachelor’s degree in Chinese and government studies from the University of Texas at Austin.

“Now is the perfect time to join Persona AI as we rapidly close the gap between what’s possible in the lab versus what’s driving real commercial value,” Perry says. “Building industry-hardened humanoid hardware and production-deployable AI is only one piece of the puzzle.”

“Getting humanoids into operations for heavy industry will require the systematic commercial and operational work that makes enterprises humanoid-ready and defining the business case, solving the integration challenges, and building the playbook for safe, scalable adoption,” he adds. “That’s what I’m here to build.”

Rice to lead Space Force tech institute under $8.1M agreement

space deal

Rice University has signed an $8.1 million cooperative agreement to lead the U.S. Space Force University Consortium/Space Strategic Technology Institute 4 (SSTI).

The new entity will be known as the Center for Advanced Space Sensing Technologies (CASST) at Rice and will focus on developing innovative remote sensing technologies.

“This investment positions Rice at the forefront of the technologies that will define how we see, understand and operate in space,” Amy Dittmar, Howard R. Hughes Provost and executive vice president for academic affairs, said in a news release. “By bringing together advanced remote sensing, AI-driven analysis and cross-institutional expertise, CASST will help transform raw space data into real-time insight and expand the frontiers of scientific discovery.

The news comes shortly after the Texas Space Commission approved a nearly $14.2 million grant for the newly created Center for Space Technologies at Rice.

David Alexander, director of the Rice Space Institute, will lead CASST. Alexander is also an inaugural member of the Texas Aerospace Research and Space Economy Consortium and he serves on the boards of the Houston Spaceport Development Corporation, SpaceCom and the Sasakawa International Center for Space Architecture. The team also includes Rice professors and staff Kevin Kelly, Tomasz Tkaczyk, Kenny Evans, Kaden Hazzard, Mark Jernigan and Vinod Veedu, and collaborators from Houston-based Aegis Aerospace, University of California, Los Angeles, University of California, Santa Barbara and Georgia Institute of Technology.

In addition to bringing new space sensor innovation, the team will also work to miniaturize sensors while developing and implementing low-resource fabrication techniques, according to Rice. The researchers will also utilize AI and machine learning to analyze sensor data.

The U.S. Space Force uses space sensors to provide real-time information about space environments and assess potential threats. CASST is the fourth Space Strategic Technology Institute established by the USSF.

“Rice has helped shape the modern era of space research, and CASST marks a bold step into what comes next,” David Sholl, executive vice president for research at Rice, said in a news release. “As space becomes more contested and more essential to daily life, the ability to rapidly sense, interpret and act on what’s happening beyond Earth is critical. This center brings together the materials, engineering and data science innovations needed to deliver that capability."

The USSF University Consortium works with academic teams to develop breakthrough technologies and speed their transition into real-world applications for the U.S. Space Force.

The recent Rice award is part of $16 million over about three years. The USSF also signed a cooperative agreement with the University of Arizona in February.

The consortium has also helped facilitate several technological and commercial transitions over the last two years, including a $36 million commercial contract awarded to Axiom by Texas A&M University's in-space operations team and a follow-on $6 million contract to Axiom to build on technology developed by the University of Texas.

Leading Houston energy ecosystem rebrands for next phase

new look

Houston-based Energytech Nexus has rebranded.

The cleantech founders community will now be known as Energytech Cypher. Organizers say the new name was inspired by the Arabic roots of the word cypher, ṣifr, which is also the root of the word zero.

"A cypher is a key that unlocks what's hidden," Nada Ahmed, co-founder and chief revenue officer of Energytech Cypher, said in a news release. "And zero? Zero is where every transformation begins, the leap from 0 to 1, from idea to reality, from potential to power. We decode the energy transition by connecting the right founders, the right capital, and the right corporate partners at the right time, because the most important journey in energy is the one that takes you from nothing to something."

Energytech Nexus has rebranded to Energytech Cypher.

Co-founder and CEO Jason Ethier says that the name change better reflects the organization's mission.

"The energy transition doesn't have a technology problem. It has a connection problem," Ehtier added in the release. "The right founders exist. The right investors exist. The right partners exist. What's been missing is the infrastructure to bring them together—to decode the complexity, remove the friction, and make sure the best technologies find the markets that need them. That's what this community has always done. Energytech Cypher is the name that finally says it."

Energytech Cypher, previously known as Energytech Nexus, was first launched in 2023 and has grown from a podcast to a 130-member ecosystem. It has supported startups including Capwell Services, Resollant, Syzygy Plasmonics, Hertha Metals, Solidec and many others.

It is known for its flagship programs like the Pilotathon, which connects founders with industry partners for pilot opportunities. The event debuted in 2024.

Energytech Cypher also launched its COPILOT Accelerator last year. The accelerator partners with Browning the Green Space, a nonprofit that promotes diversity, equity and inclusion (DEI) in the clean energy and climatech sectors. The inaugural cohort included two Houston-based startups and 12 others from around the U.S.

It also hosts programs like Liftoff, Energy Tech Market, lunch and learns, CEO roundtables, investor workshops and international partnership initiatives.

Last year, Energytech Cypher also announced a new strategic ecosystem partnership with Greentown Labs, aimed at accelerating growth for clean energy startups. It also named its global founding partners, including Houston-based operations such as Chevron Technology Ventures, Collide, Oxy Technology Ventures, and others from around the world.

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This article originally appeared on our sister site, EnergyCapitalHTX.com.