Income Inequality and the Persistence of Racial Economic Disparities

50 years after the civil rights movement, racial economic inequality remains a major fact of American life. In fact, the gap in family income between blacks and whites has not changed since the 1960s:

The utter lack of progress is striking, especially since racial gaps have narrowed in other areas: college attainment, high school test scores, and life expectancy have all seen some convergence between blacks and whites, though there remains much work to be done.

In a paper published in Sociological Science, I show that the intransigent racial income gap results from two opposing trends. Since the 1960s, there has been improvement in the relative position of blacks compared to whites. Despite continued disparities in parental wealth, access to educational resources, andtreatment in the labor market, the median African American has moved up the income distribution, from the 25th percentile of family income in 1968 to the 35th percentile today:

But this improvement in rank occurred just as macroeconomic shifts were causing wages to stagnate for the poor and middle class, and an ever-increasing share of national income to be allocated to the rich. Because of this dramatic growth in income inequality, the earnings at the 35th percentile have plummeted relative to the national mean:

Whites remain richer than average, so a decline relative to the national mean also means a decline relative to whites as a group. On net these two trends–improving relative position and increasing income inequality– have canceled each other out, such that there has been no overall change in the black-white family income gap.

If income inequality hadn’t gone up, the racial income gap would have decreased by about 30% over the past 50 years:

By the same token, if not for the improvement in the relative position of blacks, the gap would have increased by about the same amount:

These results show how racial inequality and economic inequality are fundamentally intertwined. This is a point that many civil rights leaders have made over the years, but today it tends to get lost in the discourse over whether social justice or economic justice should be prioritized in national politics.

Learn more by reading the paper, or download the data here!

Mechanism Design for Social Good

I presented at the second annual workshop on Mechanism Design for Social Good, held in conjunction with EC2018 at Cornell University. My talk was entitled “Mechanism Design and Marginal Distributions.”

Most social outcomes result from the combination of two factors. Marginal distributions are the set of possible outcomes that are available, while allocation processes determine which people get which outcomes. 

Most social scientists and most policy discussions focus their attention on allocation processes, with the goal of making them more fair. But as I described in my talk, many of our pressing social problems cannot be solved by better allocating our existing sets of outcomes. Instead, we need to focus our energy and attention on creating the better sets of outcomes that we want. 

I gave examples from my work on upward mobility and racial equality, but similar dynamics exist in issues from health care to education to housing.  They often result from poor social decision-making: it’s hard to aggregate from individual preferences to social choices, and the ways we do it right now in the United States are inadequate and vulnerable to pressure from wealthy donors and organized interests. Better mechanism design (ranked choice voting, for instance!) can help!

Here are the slides from my talk (you can download them here):