Critical Mass in Group Proportionality as Remediation for Demographic Inequality

Abstract

Companies led by women and ethnic minorities consistently receive less funding compared to those led by white men. A common remediation technique to reduce this demographic inequality has been to increase the representation of minority group members, though in some cases, this appears to exacerbate bias. Drawing on Critical Mass Theory, we examine whether and how shifts in group proportionality affect the emergence of a critical mass that remediates demographic inequality. We propose a nonlinear “Goldilocks” effect: demographic inequality dips for median levels of proportionality but increases as the proportion of an underrepresented group increases. We suggest that this effect arises because of homophily preferences in social interactions, which at low levels of proportionality favor the majority group, and at high levels of proportionality favor the minority group, but in the middle result in decreased salience of difference. We examine the evidence for the Goldilocks effect using data from 27,082 participants in a live-play simulation of fundraising in Silicon Valley, where players were randomly assigned to one of two roles: investors or founders of early-stage companies. We found that achieving critical mass in the underrepresented group remediated demographic inequality at median thresholds of proportionality but exacerbated it at higher thresholds.