Fairness is Not Silence: Unmasking Vacuous Neutrality in Small Language Models

Abstract: The rapid adoption of Small LLMs (SLMs) for on-device and resource-constrained deployments has outpaced our understanding of their ethical risks. To the best of our knowledge, we present the first large-scale audit of instruction-tuned SLMs spanning 0.5 to 5 billion parameters-an overlooked "middle tier" between BERT-class encoders and flagship LLMs. Our evaluation includes nine open-source models from the Qwen 2.5, LLaMA 3.2, Gemma 3, and Phi families. Using the BBQ benchmark under zero-shot prompting, we analyze both utility and fairness across ambiguous and disambiguated contexts. This evaluation reveals three key insights. First, competence and fairness need not be antagonistic: Phi models achieve F1 scores exceeding 90 percent while exhibiting minimal bias, showing that efficient and ethical NLP is attainable. Second, social bias varies significantly by architecture: Qwen 2.5 models may appear fair, but this often reflects vacuous neutrality, random guessing, or evasive behavior rather than genuine ethical alignment. In contrast, LLaMA 3.2 models exhibit stronger stereotypical bias, suggesting overconfidence rather than neutrality. Third, compression introduces nuanced trade-offs: 4-bit AWQ quantization improves F1 scores in ambiguous settings for LLaMA 3.2-3B but increases disability-related bias in Phi-4-Mini by over 7 percentage points. These insights provide practical guidance for the responsible deployment of SLMs in applications demanding fairness and efficiency, particularly benefiting small enterprises and resource-constrained environments.