Human decision-makers frequently override the recommendations generated by predictive algorithms, but it is unclear whether these discretionary overrides add valuable private information or reintroduce human biases and mistakes. We develop new quasi-experimental tools to measure the impact of human discretion over an algorithm on the accuracy of decisions, even when the outcome of interest is only selectively observed, in the context of bail decisions. We find that 90% of the judges in our setting underperform the algorithm when they make a discretionary override, with most making override decisions that are no better than random. Yet the remaining 10% of judges outperform the algorithm in terms of both accuracy and fairness when they make a discretionary override. We provide suggestive evidence on the behaviour underlying these differences in judge performance, showing that the high-performing judges are more likely to use relevant private information and are less likely to overreact to highly salient events compared to the low-performing judges.

We show that intergenerational mobility changed rapidly by race and class in recent decades in the United States and study the causal mechanisms underlying those changes. Between the 1978 and 1992 birth cohorts, earnings increased for white children from high-income families relative to white children from low-income families, increasing earnings gaps by parental income (class) by 30%. Earnings increased for Black children at all parental income levels, reducing white-Black earnings gaps for children from low-income families by 30%. Class gaps grew and race gaps shrank similarly for nonmonetary outcomes such as educational attainment, standardized test scores, and mortality rates. Using a quasi-experimental design, we show that the divergent trends in economic mobility were caused by differential changes in childhood environments, as proxied by parental employment rates, in local communities defined by race, class, and childhood county. Outcomes improve across birth cohorts for children who grow up in communities with increasing parental employment rates, with larger effects for children who move to such communities at younger ages. Children’s outcomes are most strongly related to the parental employment rates of peers they are more likely to interact with, such as those in their own birth cohort, suggesting that the relationship between children’s outcomes and parental employment rates is mediated by social interaction.