Now You See It, Now You Don't: Why Do Real Estate Agents Withhold Available Houses from Black Customers?
AbstractThis paper develops a new approach to testing hypotheses about the causes of discrimination in housing sales. We follow previous research by using data from fair housing audits, a matched-pair technique for comparing the traetment of equally qualified black and white home buyers. Our contribution is to shift the focus from differences in the treatment of teammates during an audit to agent decisions concerning an individual housing unit. Our sample consists of all units seen by either a black of a white auditor in the 1989 national Housing Discrimination Study. We estimate a multinomial logit model to explain a real estate agent's joint decisions concerning whether to show each unit to a white auditor and to a black auditor. We find evidence that real estate agents make and act upon inferences about a customer's preferences on the basis of the customer's initial inequity and that agents practice redlining, defined as the withholding of units in integrated neighborhoods. We find little evidence to support the conclusion that agents discriminate because of their own prejudice, but some evidence that they discriminate because of the prejudice of their white customes. More importantly, we find strong evidence of statistical discrimination; agents withhold houses from blacks when the probability of a successful transaction is perceived to be low.
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Bibliographic InfoPaper provided by Center for Policy Research, Maxwell School, Syracuse University in its series Center for Policy Research Working Papers with number 24.
Length: 35 pages
Date of creation: May 2000
Date of revision:
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Other versions of this item:
- Jan Ondrich & Stephen Ross & John Yinger, 2003. "Now You See It, Now You Don't: Why Do Real Estate Agents Withhold Available Houses from Black Customers?," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 854-873, November.
- Jan Ondrich & Stephen Ross & John Yinger, 2001. "Now You See it, Now You Don't: Why Do Real Estate Agents Withhold Available Houses from Black Customers?," Working papers 2001-01, University of Connecticut, Department of Economics, revised Aug 2002.
- J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
- J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
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