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The Political Economy of Education, Financial Literacy, and the Racial Wealth Gap

Author

Listed:
  • William A. Darity
  • Darrick Hamilton

Abstract

This article examines the mismatch between the political discourse around individual agency, education, and financial literacy, and the actual racial wealth gap. The authors argue that the racial wealth gap is rooted in socioeconomic and political structure barriers rather than a disdain for or underachievement in education or financial literacy on the part of Black Americans, as might be suggested by the conventional wisdom. Also, the article presents a stratification economic lens as an alternative to the conventional wisdom to better understand why the racial wealth gap persists.

Suggested Citation

  • William A. Darity & Darrick Hamilton, 2017. "The Political Economy of Education, Financial Literacy, and the Racial Wealth Gap," Review, Federal Reserve Bank of St. Louis, vol. 99(1), pages 59-76.
    • Handle: RePEc:fip:fedlrv:00073
    DOI: 10.20955/r.2017.59-76
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    References listed on IDEAS

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    3. Francine D. Blau & John W. Graham, 1990. "Black-White Differences in Wealth and Asset Composition," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 105(2), pages 321-339.
    4. Mason, Patrick L., 1997. "Race, culture, and skill: interracial wage differentials among African Americans, Latinos, and whites," MPRA Paper 11329, University Library of Munich, Germany.
    5. Patrick Mason, 1997. "Race, culture, and skill: Interracial wage differences among African Americans, Latinos, and whites," The Review of Black Political Economy, Springer;National Economic Association, vol. 25(3), pages 5-39, March.
    6. N. Chiteji & Darrick Hamilton, 2002. "Family connections and the black-white wealth gap among middle-class families," The Review of Black Political Economy, Springer;National Economic Association, vol. 30(1), pages 9-28, June.
    7. Janelle Jones & John Schmitt, 2014. "A College Degree is No Guarantee," CEPR Reports and Issue Briefs 2014-08, Center for Economic and Policy Research (CEPR).
    8. Milton Friedman, 1957. "A Theory of the Consumption Function," NBER Books, National Bureau of Economic Research, Inc, number frie57-1, January.
    9. Ray Boshara & William R. Emmons & Bryan J. Noeth, 2015. "The Demographics of Wealth - How Age, Education and Race Separate Thrivers from Strugglers in Today's Economy. Essay No. 2: The Role of Education," Demographics of Wealth, Federal Reserve Bank of St. Louis, issue 2, pages 1-28.
    10. Menchik, Paul L & Jianakoplos, Nancy Ammon, 1997. "Black-White Wealth Inequality: Is Inheritance the Reason?," Economic Inquiry, Western Economic Association International, vol. 35(2), pages 428-442, April.
    11. William Darity & Darrick Hamilton & James Stewart, 2015. "A Tour de Force in Understanding Intergroup Inequality: An Introduction to Stratification Economics," The Review of Black Political Economy, Springer;National Economic Association, vol. 42(1), pages 1-6, June.
    12. William R. Emmons & Tasso Pettigrew & Lowell R. Ricketts, 2016. "Choosing to Fail or Lack of Choice? The Demographics of Loan Delinquency," In the Balance, Federal Reserve Bank of St. Louis, issue 15, pages 1-3.
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    Cited by:

    1. Natasha Dawn Harris & Darrell Norman Burrell, 2025. "Supporting a Culturally Responsive Approach to Financial Literacy," RAIS Conference Proceedings 2022-2025 0536, Research Association for Interdisciplinary Studies.
    2. Rodney D. Green & Sue E. Houchins, 2017. "Black Progress Through Business Improvement: Two Articles by Joseph R. Houchins, 1900-1989," The Review of Black Political Economy, Springer;National Economic Association, vol. 44(3), pages 393-401, December.
    3. Kristen Broady & Anthony Barr & Darlene Booth-Bell & Lucas Cain, 2025. "Racial Wealth Gains and Gaps: Ten Economic Facts About the Disparities," Journal of Economics, Race, and Policy, Springer, vol. 8(1), pages 40-56, March.
    4. Juliet Elu & Miesha Williams, 2023. "COVID-19 Cryptocurrency Investment: Wealth Disparities and Portfolio Diversification," Journal of Economics, Race, and Policy, Springer, vol. 6(1), pages 53-59, March.
    5. Terri Friedline & Zibei Chen & So’Phelia Morrow, 2021. "Families’ Financial Stress & Well-Being: The Importance of the Economy and Economic Environments," Journal of Family and Economic Issues, Springer, vol. 42(1), pages 34-51, July.
    6. Lu Fan & Swarn Chatterjee & Jinhee Kim, 2022. "An Integrated Framework of Young Adults’ Subjective Well-Being: The Roles of Personality Traits, Financial Responsibility, Perceived Financial Capability, and Race," Journal of Family and Economic Issues, Springer, vol. 43(1), pages 66-85, March.
    7. William A. Darity & Raffi E. García & Lauren Russell & Jorge N. Zumaeta, 2024. "Racial Disparities in Family Income, Assets, and Liabilities: A Century After the 1921 Tulsa Massacre," Journal of Family and Economic Issues, Springer, vol. 45(2), pages 256-275, June.
    8. Jean C. Bikomeye & Sima Namin & Chima Anyanwu & Caitlin S. Rublee & Jamie Ferschinger & Ken Leinbach & Patricia Lindquist & August Hoppe & Lawrence Hoffman & Justin Hegarty & Dwayne Sperber & Kirsten , 2021. "Resilience and Equity in a Time of Crises: Investing in Public Urban Greenspace Is Now More Essential Than Ever in the US and Beyond," IJERPH, MDPI, vol. 18(16), pages 1-39, August.
    9. Kathryn Wiley, 2025. "‘This is How you Will Make It’: Mothers, Othermothers, and Black Women’s Family Financial Socialization," Journal of Family and Economic Issues, Springer, vol. 46(2), pages 397-410, June.

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    More about this item

    Keywords

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    JEL classification:

    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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