Evaluating Disparate (Adverse) Impact in Excel

This tutorial demonstrates how to evaluate disparate (adverse) impact in Excel by applying the 4/5ths Rule and the chi-square test of independence.
To learn how to visualize evidence (or the lack thereof) of disparate (adverse) impact, consider checking out the following tutorial: • Visualizing Disparate ... .
Other approaches for evaluating disparate impact that are not covered in this tutorial include the Z score ("2 standard deviation rule"), the Fisher exact test, and the Z_IR (Z impact ratio). When sample sizes are small, selection ratios are low, and/or there is a small proportion of individuals from the focal group, then a one-tailed Z_IR test may help to avoid false negatives (Morris, 2001; Morris & Lobsenz, 2000). Given that the 4/5ths Rule has a tendency to result in large proportion of false positives (even in large samples), it is advisable to pair the 4/5ths test with a statistical test like the chi-square test of independence, Fisher exact test, or the Z_IR test (Roth, Bobko, & Switzer, 2006).