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480. How Much Does Discrimination Hurt the Economy? (Replay)
Freakonomics Radio
Forced vs Organic Diversity Performance Impact
In randomly assigned diverse teams, a one standard deviation increase in diversity leads to about 15% performance degradation, while in organically formed teams, the performance degradation is only about 3% to 5%. The significant difference of 3 to 5 times shows that when people choose their diverse team members, performance remains unaffected. The term 'forced diversity' is coined to illustrate the negative impact seen in randomly assigned diverse teams compared to the positive or neutral impact in organically formed teams. Despite the common belief that diversity enhances performance, this study suggests that the forced nature of diversity in teams can lead to decreased performance, highlighting the importance of organic team formation for better outcomes.
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