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The Economics of 'Acting White'

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  • David Austen-Smith
  • Roland G. Fryer

Abstract

This paper formalizes a sociological phenomenon entitled 'acting white'. The key idea is that individuals face a tension between signaling their type to the outside labor market and signaling their type to a peer group: signals that induce high wages can be signals that induce peer rejection. We prove three basic results: (1) there exists no equilibria in which all types of individuals adopt distinct educational investment levels; (2) when individuals are not too patient, all equilibria satisfying a standard refinement involve a binary partition of the type space in which all types accepted by the group pool on a common low education level and all types rejected by the group separate at distinctly higher levels of education with correspondingly higher wages; and (3) when individuals are very patient, there is an increase in the variation of education levels within the group and an increase in the variance of types deemed acceptable by the group. The more those involved discount the future, the more salient peer pressure becomes and the more homogenous groups become.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 9904.

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Date of creation: Aug 2003
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Publication status: published as Fryer, R. and D. Austen-Smith. “An Economic Analysis of ‘Acting White’." The Quarterly Journal of Economics (May 2005).
Handle: RePEc:nbr:nberwo:9904

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  1. Banks, Jeffrey S. & Sobel, Joel., 1985. "Equilibrium Selection in Signaling Games," Working Papers, California Institute of Technology, Division of the Humanities and Social Sciences 565, California Institute of Technology, Division of the Humanities and Social Sciences.
  2. Lindbeck, Assar & Nyberg, Sten & Weibull, Jörgen W., 1997. "Social Norms and Economic Incentives in the Welfare State," Working Paper Series, Research Institute of Industrial Economics 476, Research Institute of Industrial Economics.
  3. Cho, In-Koo & Kreps, David M, 1987. "Signaling Games and Stable Equilibria," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 102(2), pages 179-221, May.
  4. Bernheim, B Douglas, 1994. "A Theory of Conformity," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 102(5), pages 841-77, October.
  5. Kandori, Michihiro, 1992. "Social Norms and Community Enforcement," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 59(1), pages 63-80, January.
  6. Akerlof, George A, 1980. "A Theory of Social Custom, of Which Unemployment May be One Consequence," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 94(4), pages 749-75, June.
  7. Roland G. Fryer & Steven D. Levitt, 2004. "Understanding the Black-White Test Score Gap in the First Two Years of School," The Review of Economics and Statistics, MIT Press, vol. 86(2), pages 447-464, May.
  8. John G. Riley, 1976. "Informational Equilibrium," UCLA Economics Working Papers, UCLA Department of Economics 071, UCLA Department of Economics.
  9. Cho, In-Koo & Sobel, Joel, 1990. "Strategic stability and uniqueness in signaling games," Journal of Economic Theory, Elsevier, Elsevier, vol. 50(2), pages 381-413, April.
  10. Phelps, Edmund S, 1972. "The Statistical Theory of Racism and Sexism," American Economic Review, American Economic Association, American Economic Association, vol. 62(4), pages 659-61, September.
  11. Akerlof, George A, 1976. "The Economics of Caste and of the Rat Race and Other Woeful Tales," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 90(4), pages 599-617, November.
  12. George A. Akerlof & Rachel E. Kranton, 2000. "Economics And Identity," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 115(3), pages 715-753, August.
  13. George A. Akerlof, 1997. "Social Distance and Social Decisions," Econometrica, Econometric Society, Econometric Society, vol. 65(5), pages 1005-1028, September.
  14. David Austen-Smith, 2002. "Peer Pressure and Job Market Signaling," Discussion Papers, Northwestern University, Center for Mathematical Studies in Economics and Management Science 1352, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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Cited by:
  1. Harris Selod & Yves Zenou, 2004. "City Structure, Job Search and Labor Discrimination. Theory and Policy Implications," Working Papers, Centre de Recherche en Economie et Statistique 2004-13, Centre de Recherche en Economie et Statistique.
  2. Neal, Derek, 2006. "Why Has Black-White Skill Convergence Stopped?," Handbook of the Economics of Education, Elsevier, Elsevier.
  3. Liuba Kogan & Joanna Kámiche & Patricia Lay, 2011. "¿El origen socioeconómico y la raza pagan? Un estudio interdisciplinario sobre la discriminación racial y socioeconómica en el ámbito empresarial limeño. El caso de los egresados de la Universid," Working Papers, Departamento de Economía, Universidad del Pacífico 11-17, Departamento de Economía, Universidad del Pacífico, revised Dec 2011.
  4. Roland G. Fryer, Jr. & Paul Torelli, 2005. "An Empirical Analysis of 'Acting White'," NBER Working Papers 11334, National Bureau of Economic Research, Inc.
  5. Antecol, Heather & Cobb-Clark, Deborah A., 2004. "Identity and Racial Harassment," IZA Discussion Papers 1149, Institute for the Study of Labor (IZA).
  6. Roland G. Fryer & Steven D. Levitt, 2004. "The Causes and Consequences of Distinctively Black Names," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 119(3), pages 767-805, August.
  7. Basu, Kaushik, 2005. "Racial Conflict and the Malignancy of Identity," Working Papers, Cornell University, Center for Analytic Economics 05-02, Cornell University, Center for Analytic Economics.
  8. Dohmen, Thomas, 2005. "Social Pressure Influences Decisions of Individuals: Evidence from the Behavior of Football Referees," IZA Discussion Papers 1595, Institute for the Study of Labor (IZA).
  9. David Austen-Smith & Ronald G. Fryer, 2005. "An Economic Analysis of 'Acting White'," Discussion Papers, Northwestern University, Center for Mathematical Studies in Economics and Management Science 1399, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  10. Roland G. Fryer, Jr, 2010. "The Importance of Segregation, Discrimination, Peer Dynamics, and Identity in Explaining Trends in the Racial Achievement Gap," NBER Working Papers 16257, National Bureau of Economic Research, Inc.

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