Economists are known for making a lot of assumptions.
In fact, the entire social science is built on the key assumption that people are rational and, for instance, wouldn’t buy more of a given good if the price went up.
But for too long economists have assumed in their research that race does not affect individual outcomes, to the point where racism that people experience on an everyday basis is virtually nonexistent in economic research, said AFL-CIO chief economist William Spriggs at a Tuesday panel on race and economics hosted by the Federal Reserve System.
“There appears to be no evidence that will get economists to admit: yes, there’s discrimination, and yes, it matters,” Spriggs said.
‘There appears to be no evidence that will get economists to admit: yes, there’s discrimination, and yes, it matters’
The panel was the latest in a series hosted by all 12 District Banks of the Federal Reserve System to examine how structural racism “threatens” the economy and “limits economic opportunity for people of color.”
The series comes as Black Americans have borne a disproportionate share of both the health and economic impacts of the coronavirus pandemic. Meanwhile, the U.S. has been engaged in a national conversation on racism since the killing of George Floyd by a Minneapolis police officer last year.
It was Floyd’s killing that inspired Spriggs, an economics professor at Howard University, to write an open letter to his fellow economists, urging them to rethink their assumptions about race, especially as it relates to policing.
“Watching the gut-wrenching brutal murder of George Floyd has gotten them to think about the bigger issue of what is really wrong, because their training as economists has let them silently accept lots of ‘givens’ they now understand should not be presumed, and that ‘givens’ do, in fact, matter,” he wrote in the July letter.
‘Their training as economists has let them silently accept lots of ‘givens’ they now understand should not be presumed, and that ‘givens’ do, in fact, matter’
Race is the variable “where economists are lazy,” Spriggs said Tuesday.
Importantly, the research that economists produce, which often doesn’t take race into account, often informs policies that either intentionally or unintentionally disadvantage people of color in practice, Spriggs said.
San Francisco Fed President Mary Daly, who moderated the panel Spriggs spoke on, said she found his letter “startling.”
“It changed how I approach things,” she added. She noted that in research she published shortly after receiving her PhD in economics, she did exactly what Spriggs advocated against in his letter by making race a control variable, meaning it could not impact the results of her research.
Sendhil Mullainathan, a University of Chicago economist who also spoke on the panel, said he admired how heartfelt Spriggs’ letter was in contrast to the “clinical nature” of most economic writing.
Even though Mullainathan, like most economists, deals with large datasets day in and day out, he said he makes a conscious effort to never lose sight of the fact that behind each data point is a human being.
Mullainathan and co-researcher Marianne Bertrand once studied how fictitious job applicants with “white-sounding” names fare against applicants with “Black-sounding” names. The applicants with white names “received 50% more callbacks for interviews,” the study found.
“There’s an element of this work that we do where we have to maintain neutrality, and we have to maintain some amount of clinical remove,” Mullainathan said. “But I worry that we’ve let too much of that creep in and we’ve lost our fundamental humanity a little bit in the process.”
There is no quick fix to correct the racism that has bubbled up in economics, Spriggs said. But a good place to start the cleanup process would be to invite more people of color into the “room where it happens”, he said referring to a song from the musical “Hamilton.”
Daly suggested that economists could become more aggressive in their questioning of the status quo.
“We’ve all lived through a year which we can’t turn away from,” Daly said. “We’ve seen disparities in health disparities and economic opportunity and outcomes disparities in safety, the ability to get to your home without incident. As a profession, we remain passive observers to these things — documenting oftentimes without challenging.”