Diversity of skin color and sex appears on the face of a group, thus offering ready proof that its selection, such as through hiring and promotion, was not tainted with invidious discrimination. Holding all else equal—assuming, specifically, that the racially and sexually diverse group does not possess above-average cultural and ideological diversity—the costs of intra-group transactions remain low. Thus, for instance, might a facially diverse group of culturally and ideologically similar people get along very smoothly. Think, here, of an elite law school where every professor has absorbed Ivy League norms and all lean moderately left. They might bicker, of course; law professors specialize in that. But such a culturally and ideologically uniform group is not likely to host nasty public fights about ballot initiatives or the like.
Are there downsides to pursuing diversity of skin color and sex in hiring and promotion? Not if you can find enough well-qualified candidates, and not if you avoid discriminating against candidates for blameless having an uninteresting color or sex. Happily, it is not too hard to satisfy both conditions, these days.
Cultural diversity proves harder to document, and runs some risk of increasing intra-group transaction costs. Someone brought up solely within the confines of respectable East Coast institutions will have to work a bit to understand a peer raised Mormon, in Utah's backcountry. So, too, might differences of sexual orientation (which like cultural differences generally do not appear on a person's face) sometimes lead to innocent misunderstandings. Holding equal for other sorts of diversity, however, cultural differences offer many charms and few serious costs. Most of us, and especially those of us in academia, enjoy meeting friendly people with exotic backgrounds. When we share ideologies, moreover, meeting fellow travelers who differ from us suggests that our most heartfelt values transcend race, sex, and culture—a comforting, if somewhat smug, idea.
Ideological diversity, standing alone, proves at least as hard to document as cultural diversity—it does not appear on a person's face nor even, typically, in a person's dress or hairstyle—and much more likely to raise intra-group transaction costs. Religious differences prove largely intractable, though in polite society we tend to keep them private. Political differences, at least in American institutions, threaten to burst out into loud and public disagreements, however. Such frank exchanges can help each side to hone its arguments, of course, and thus offers the prospect of considerable gains both to the disputants and the group that harbors them both. But if local norms do not temper the tone and proper boundaries of ideological debate, transactions costs can easily soar, making it hard for a group to manage even run-of-the-mill functions efficiently.
In sum: diversity of skin color and sex offers few costs and modest benefits; cultural diversity creates slightly higher transaction costs but compensates with intriguing charms; and ideological diversity presents a high risk/high return strategy for institutions devoted to generating new and useful ideas.
[Crossposted at Agoraphilia, and MoneyLaw.]