Do Real Estate Brokers Choose to Discriminate? Evidence from the 1989 Housing Discrimination Study
Journal article by Jan Ondrich, Alex Stricker, John Yinger; Southern Economic Journal, Vol. 64, 1998
Journal Article Excerpt
Do real estate brokers choose to discriminate? Evidence from the 1989 housing discrimination study. by Jan Ondrich , Alex Stricker , John Yinger 1. Introduction Racial discrimination in housing involves a choice by housing agents to treat racial and ethnic minorities less favorably than other customers. This paper presents evidence from the 1989 Housing Discrimination Study (HDS) concerning the extent to which this type of choice is made in the U.S.(1) To be specific, this paper estimates the incidence of discrimination against African Americans and Hispanic Americans in qualitative actions taken by real estate brokers, such as showing an advertised unit to a customer or offering to help a customer find financing. It also tests hypotheses about the causes of discrimination. Many previous studies have used audit data to estimate the incidence of discrimination in housing (see Wienk et al. 1979; Galster 1990b, c; Roychoudhry and Goodman 1992, 1996; Turner and Mickelsons 1992; Page 1995; and Yinger 1995). Methodological issues that arise in estimating the incidence of discrimination are discussed in Fix and Struyk (1993) and Ondrich, Ross, and Yinger (1995). As pointed out by Yinger (1986), audit-based tests of the hypothesis that discrimination exists must account for unobserved factors that audit teammates share. This paper is the first to use the Chamberlain (1980) fixed-effects logit technique, which is designed to account for such factors with a qualitative dependent variable. Tests of hypotheses about the causes of discrimination in housing have appeared in Yinger (1986, 1991, 1995), Galster (1990c), Roychoudhry and Goodman (1992, 1996), and Page (1995).(2) This paper is the first to conduct them using data on housing agents' qualitative actions, for which the fixed-effects logit technique is well suited. This research on discrimination in housing is part of a broader literature on the economics of discrimination, which examines alternative methods for studying discrimination and explores discrimination in several different markets. Recent surveys cover research on discrimination in mortgage markets (Yinger 1995; Goering and Wienk 1996; Ladd forthcoming) and labor markets (Fix and Struyk 1993; Darity and Mason forthcoming).(3) The paper is organized as follows. The next section introduces HDS, the third explains how to measure discrimination in qualitative actions by real estate brokers, and the fourth presents estimates of the incidence of discrimination against blacks and Hispanics in the home sales market. The fifth section introduces hypotheses about the causes of discrimination; it explains the principal hypotheses in the literature and shows how they can be tested with audit data. Estimation results appear in the sixth section, and the last section presents our principal conclusions. 2. The Housing Discrimination Study According to the 1968 Fair Housing Act, discrimination exists whenever an individual receives unfavorable treatment in the housing market solely because he or she belongs to a protected class.(4) This paper focuses on two protected classes: blacks, also called African Americans, and Hispanics. The distinction between blacks and whites is an example of a racial distinction, in which a superficial physical characteristic, in this case dark skin, gains social power, thanks to a history of intergroup conflict and oppression.(5) The distinction between Hispanics and non-Hispanic whites is an example of an ethnic distinction in which cultural differences, for example, in language, religion, or country of origin, gain social power through a nation's history. In some parts of the U.S., this distinction also has a racial dimension because many Hispanic people have dark skins. The Housing Discrimination Study was designed to determine whether people in either of these protected classes continue to encounter discrimination in housing. This section provides an overview of the HDS audit methodology and of the types of real estate broker behavior in the HDS data. HDS Audit Methodology Each audit is conducted by two teammates, a white person and either a black or Hispanic person, who are equally qualified for housing. To ensure equal qualifications, teammates are matched according to sex and age, given the same training concerning how to behave during an audit, and assigned similar socioeconomic characteristics for the purposes of the audit. Teammates successively visit a real estate broker (or landlord) to inquire about available housing and then independently record what they were told and how they were treated. Discrimination is defined to be systematically less favorable treatment of the black or Hispanic auditors.The HDS audits were conducted in 25 U.S. metropolitan areas, which were selected to allow valid national estimates of unfavorable treatment. Black-white audits were conducted in 20 areas and Hispanic-white audits were conducted in 13 areas (with both ... |
End of free preview...
To continue reading this publication, you must have a Questia Subscription.
Try Us Today! Click Here
Questia provides the world's largest online library of scholarly books and journal articles, with integrated footnote and bibliography tools, highlighting, note taking and book marking. With a Questia subscription, you'll have access to the full text of more than 67,000 books and 1.5 million articles.
Already a subscriber? Login:
Sponsored Links
Free Newsletter
Get helpful how-to's, writing tips, search strategies, quizzes & more!
Search the Library
