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The Economics of 'Acting White'

  • David Austen-Smith
  • Roland G. Fryer

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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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
Date of revision:
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
Note: LS
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  1. Kandori, Michihiro, 1992. "Social Norms and Community Enforcement," Review of Economic Studies, Wiley Blackwell, vol. 59(1), pages 63-80, January.
  2. David Austen-Smith, 2002. "Peer Pressure and Job Market Signaling," Discussion Papers 1352, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  3. Banks, Jeffrey S & Sobel, Joel, 1987. "Equilibrium Selection in Signaling Games," Econometrica, Econometric Society, vol. 55(3), pages 647-61, May.
  4. Phelps, Edmund S, 1972. "The Statistical Theory of Racism and Sexism," American Economic Review, American Economic Association, vol. 62(4), pages 659-61, September.
  5. John G. Riley, 1976. "Informational Equilibrium," UCLA Economics Working Papers 071, UCLA Department of Economics.
  6. Cho, In-Koo & Kreps, David M, 1987. "Signaling Games and Stable Equilibria," The Quarterly Journal of Economics, MIT Press, vol. 102(2), pages 179-221, May.
  7. Lindbeck, Assar & Nyberg, Sten & Weibull, Jörgen W., 1997. "Social Norms and Economic Incentives in the Welfare State," Working Paper Series 476, Research Institute of Industrial Economics.
  8. Roland G. Fryer, Jr. & Steven D. Levitt, 2002. "Understanding the Black-White Test Score Gap in the First Two Years of School," NBER Working Papers 8975, National Bureau of Economic Research, Inc.
  9. George A. Akerlof, 1978. "A theory of social custom, of which unemployment may be one consequence," Special Studies Papers 118, Board of Governors of the Federal Reserve System (U.S.).
  10. George A. Akerlof & Rachel E. Kranton, 2000. "Economics And Identity," The Quarterly Journal of Economics, MIT Press, vol. 115(3), pages 715-753, August.
  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, vol. 90(4), pages 599-617, November.
  12. George A. Akerlof, 1997. "Social Distance and Social Decisions," Econometrica, Econometric Society, vol. 65(5), pages 1005-1028, September.
  13. Cho, In-Koo & Sobel, Joel, 1990. "Strategic stability and uniqueness in signaling games," Journal of Economic Theory, Elsevier, vol. 50(2), pages 381-413, April.
  14. Bernheim, B Douglas, 1994. "A Theory of Conformity," Journal of Political Economy, University of Chicago Press, vol. 102(5), pages 841-77, October.
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