Download Housing Discrimination Is Still Worth Worrying About

Housing Discrimination Is Still Worth Worrying About, by J. Yinger
Main Premise: Through empirical evidence, i.e. audit surveys, the myth of no housing
discrimination can be disposed of. The “truth” is “that discrimination on housing is still a
common experience for blacks and Hispanics and that the costs of discrimination is still
high.”
 Traditional sense of the word discrimination
o Audit studies – types of discrimination pages 901-902
Yinger’s solution: “improved enforcement of fair housing legislation not only promotes
principles that are at the heart of our democracy but also attacks one pillar of the system
that perpetuates large intergroup disparities.”
Claim 1: Discrimination is relatively rare
Version 1: Audit studies do not find very much discrimination
Version 2: Audit studies exaggerate the amount of discrimination black and
Hispanic households actually encounter
Version 1: Yinger’s four reasons
1. Frequency (agents are different)
2. Cumulative effects are high (types and instances)
a. Incidence can be determined using the following two approaches
i. Summary index (of agent behavior)
ii. Count favorability (of whites over blacks)
3. Lower bound on the incidence of discrimination (net and gross values are far
apart, i.e. net is too conservative).
a. Random or systematic results
b. Therefore, are we overstating discrimination cases?
4. Partial view (not a whole picture)
a. What about “steering”
i. Taxi metaphor: the taxi only takes you to where you want to
go…back to preferences article, is there a link?
ii. Do you remember the Fair Housing Act?
Version 2: Four flaws of exaggerated numbers
1. Non-blind (i.e. might have prior knowledge)
a. Practical
2. Matching
a. Are teammates perfect matches? (no justification in imply so)
3. Auditor selection
4. Sampling errors
a. “Results not typical”
Two noteworthy distinctions
1. “First, it misses the distinction between an act of discrimination and the impact of
discrimination on a particular market income”
2. Second, the “argument solely refers to the wage discrimination, whereas housing
(employment) audits are designed primarily to observe discrimination in access to
housing (jobs).”
Results of the HSD: as income rises discrimination does not rise, thus discrimination does
not depend on income
Claim 2: Discrimination now has little impact on housing markets
Version 1: Discrimination in housing must be declining
Version 2: Discrimination in housing is no longer worth worrying about
Version 1: Three reasons it should not be dismissed
1. Most declines are modest and in the case of whites it’s the highest
2. Untrue, there are 5 types of segregation
a. Evenness, isolation, clustering, concentration, centralization
3. Segregation has many causes, segregation and discrimination are not highly
correlated (although Thernstroms and Thernstroms* disagree)
(*Thernstroms and Thernstroms that homeownership gap explains discrimination, while
ignoring other indicative factors on predictive trends)
Version 2: Associated problems with discrimination
1. Increase search costs
2. Decrease satisfaction in house
3. Increase WTP to avoid it
4. Thus lowering the gain from housing five ways
a. Restricting information
b. Unpleasant/time consuming
c. Lack of mortgage info
d. Worse odds
e. Costs of moving
Claim 3: Fair Housing enforcement no longer has an important role to play in
aiding black and Hispanic households
Class not race argument: two reasons for disagreement
1. Central to the democratic system – what about equal opportunity?
2. Housing effect access to good schools (discrimination)  creating skill
differentials  income differentials  housing differentials
The Residential Preferences of Blacks and Whites: A Four-Metropolis Analysis,
by R. Farley, E.L. Fielding, and M. Krysan
The Hypothesis: The preference hypothesis assumes that both races, i.e. blacks and
whites, want to live in racially homogenous neighborhoods.

Attitudes are predominately influenced by education and birth cohort
o MCSUI (Multi-City Study of Urban Inequality) test of preferences
Findings: “Our findings challenge the hypothesis that levels of black-white residential
segregation remain high solely because of the distinctly different preferences of blacks
and whites. It is probable, however, that preferences interact with the other two factors—
discrimination in the marketing of housing and economic differences—in reinforcing
high segregation levels.
A side bar:
American Apartheid: A short introduction; declares blacks have been, are, and will
continue to be more radically segregated than other groups due to differentials in housing,
i.e. residential segregation. These relationship leave blacks behind in many ways (linkage
to Yinger (cycle)
The preference hypothesis: Research questions
1. “How strongly do blacks and whites prefer to live with others of their own race?
2. Do both races have an aversion to living with the other race?
3. Is the future for residential integration bleak…?”
Three countering theories behind racial segregation (housing) affect blacks.
1. Disadvantage position (more so than other races)
2. The current systems perpetuate the black predicament, i.e. lacking
a. Financial capital
b. Under employment
c. Under educated
d. Diminished political power.
These theories are…
1. Economic differentials – “segregation came about and persists because people
live where they can afford”
a. Wrong – “economic segregation is not complete…current economics
differentials between blacks and whites are not great enough to explain
existing levels of residential segregation.”
2. Discrimination in housing and ending markets – “segregation exists because of
the differential treatments of whites and blacks in the housing market.” I.e. “an
institutionalized practice”
3. Neighborhood preferences – “segregation result not so much from discriminatory
practices as from the different preferences of blacks and whites. I.e. “both races
want to live where they are numerically dominant”
Conclusions:
 “Race continues to be significant in the residential decision-making process”
according to the MCSUI results. (“although this importance varies in degree from
one metropolis to another”)
 “There are significant site differences in the racial residential preferences of
blacks and whites.” Detroit in particular, on the side of blacks and whites,
historically ingrained and white hostility. I.e. integration in Detroit is less
foreseeable. Proportion of blacks to whites might confound these (793)
 “Educational attainment and age are related to the neighborhood preferences of
whites but not those of blacks.” Due to lack of evidence among blacks, in fact the
elder population was more willing.
 “The racial residential preferences of blacks and whites overlap considerably,
offering some hope for an eventual decline in segregation.”
 “The results would imply that if blacks and whites were evenly distributed in
most U.S. metropolitan areas, the majority of whites would be comfortable with
the racial composition of their neighborhood.”
The Effect of Dual Local and National Register Historic District Designations on
Single-Family Housing Prices in New Orleans, by P. Haughey and V. Basolo
Purpose: To compare housing sale prices of single family homes, in national and local
historic districts, and in some cases dual designation areas, in New Orleans within a 5
year period (1992-1996).
 Using the hedonic price index.
Findings: those homes within nationally designated places were more expensive 33.1%,
in the dual they were 23.1% higher.
The implications for housing market distortions: As an indicator of how housing markets
can be distorted through local and federal regulations.
Market Distortions: any policy is a response to a market failure
Housing market as a unique market, i.e. it’s unlike other goods; explain how…
 Have constraints: land runs out, so supply runs off and prices continue to rise
 Heterogeneity: even in track housing
 Immobile (tied to place)
 Durable
 Expensive: relative to income
 Large adjustment/transaction costs: intangible
 The final article says that if preferences were the root of housing discrimination
we would have a perfect system right?
 Market assumes the freedom to live where ever we choose
o However, being subject to budget constraints doesn’t effect a fair market
system, the audit article ensured that equal resources were supposed for
both the blacks and the white participants in the surveys
o However this is not the case because the housing market is distorted,
 What about audits?
 I.e. looking at history…housing act of 1949, social inequity
 Yinger implies that it is ingrained into the system = i.e. through many institutions
including “steering”
Questions to consider
1. As a policy implication: do we solve problem based upon an egalitarian system or
do we base them on our current system of inequality?
2. Does this lead to more or less equality/equity (in and out of the housing markets),
as policy makers what is the right thing to do (think…is it better to work within
the system or pretend the system is something it isn’t?)Consider the following
statement “preferences are both a cause and an effect of racial discrimination” do
we agree or disagree?
3. According to the authors, if we went by preferences we’d have a fair market.
Then why the market distortions? Are we creating our own market distortions?
4. Are people honest with their preferences? For instance, given that higher edu. =
more liberal, suggest an educated person was giving the survey, would those
being surveyed not increase their response?
5. Consider the following: Typically both races do not mind if the opposite race is
moving into their neighborhood. However, while blacks would not mind moving
into an all white neighborhood if the house and price was right, whites, under the
same circumstances, typically would not. Does that mean “desegregation will
occur only if blacks enter largely white neighborhoods. Are blacks willing to do
so?”
6. Are the MCSUI (Multi-City Study of Urban Inequality) tests biased?
7. Markets assume equal information and access the information. Does this happen?
Do these create market distortions?
8. Is opportunity included in knowledge, i.e. because some are denied access to
certain housing options, i.e. discriminatory practices, thus are they misinformed
thus resulting in market distortions, or is in a different market factor that that
results in the distortion
9. As a result of the Fair Housing Act of 1988, “Orlebeke (1997) concludes that ‘the
real estate industry today is much more aware of the risks of getting nailed for
discriminatory behavior than it was in the seventies and eighties.” Consider the
following two claims 1) Yinger states “the presence of the 1988 amendments
hardly constitutes proof”. And 2) Thernstrom and Thernstrom’s state “that real
estate brokers ‘have been doing a mighty poor job of keeping blacks out of white
neighborhoods.”’ Who’s right? Why?