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The four-fifths rule (a.k.a. 4/5ths rule or 80%
rule) is the simplest and most common way of estimating adverse impact.
The Uniform Guidelines indicate that the 4/5ths rule is the preferred method for
determining adverse impact (see
Questions and Answers
#18, 23, and 24) unless samples are very small
(see
Questions and Answers
#20 and 21)
or very large (see 1) Calculate the selection rate for each protected group that makes up more than 2% of the applicant pool. The selection rate is equal to the total number or applicants within the group that are hired divided by the total number of applicants within that group. 2) Observe which group has the highest selection rate. This is not always the white, male, or "majority" group. 3) Calculate the impact ratio by dividing the selection rate for each group by the selection rate of the group with the highest selection rate. 4) Determine if the selection rates are substantially different. If the impact ratio is less than .8, there is a 4/5ths rule violation. The impact ratio could be considered a test of
practical significance because it focuses on an effect size (i.e., the ratio of
selection rates). The advantages of the impact ratio include (a) it is
easy to use and does not require statistical software or training in statistics,
(b) it describes the magnitude of the selection rate difference between the
groups that are being compared, and (c) it is more However, the most notable disadvantage of the
impact ratio is that it is subject to considerable sampling errors (especially
when the sample size and selection ratio are small) and is prone to making a Use |