This piece in The Guardian:
A $95,000 question: why are whites five times richer than blacks in the US?
OK, interesting question. And we get to this report (and this reads like the press release from it rather than an actual report but I can\’t see a fuller version of the report around).
There\’s not really sufficient information in that short paper to tease out exactly what has been happening: we\’re told rather what the researchers assume has been happening.
But it ain\’t just that blacks have lower incomes than whites…..there\’s a significant difference in financial assets between races on roughly the same incomes. We should also note that they\’ve been following the same couple of thousand families over the past couple of decades….so this is panel data, not a random statistical selection at points in time.
What really puzzles me though is that they don\’t seem to discuss, at all, the most obvious cause of this wealth gap.
Start very simply….if you were going to attain some level of wealth, some stock of (non-housing) financial assets, over a period of a couple of decades, what is it that you would have to do?
Yes, well done that man. You would have to save. So, the most obvious explanation for a gap in wealth achieved would be a gap in the original savings rates. But we don\’t get any information upon this at all: we just get the statement that the wealth gap exists.
Which is, umm, puzzling really.
Note also that it\’s households being measured here and I see no indication that (possible, I\’ve no idea whether there is in fact such a difference) possible differences in household size have been accounted for.
As an analogy, think of that old favourite the gender pay gap. Five years ago people would point to the simple existence of it and assert that this proved discrimination. Enough people have been, over that period, pointing out that what matters is not the existence of a gap but the reason for the existence of that gap. If, for example, the gap is a result of discrimination then that may well be something we want to do something about. If the gap is, however, a result of lifestyle choices freely made (which is what almost all of it really does seem to be) then this is probably not something we really want to do anything about.
Please leave aside your views on the gender pay gap, whatever they are, and accept this just as an analogy. To make the point that it\’s not the existence of a gap which proves there is a problem: we need to find out what is causing the gap to a) show that there is a problem and b) only if we know the causes can we possibly craft policies to ameliorate said problem.
So it is with this finding about the race wealth gap. The paper certainly seems to show the existence of a wealth gap. But given that it doesn\’t manage to even discuss, let alone measure the importance of, the most obvious reasons for the existence of said gap there\’s not a lot we can take from it about what we ought to do about the gap….if anything.