Evidence on Discrimination in Consumer Markets

Abstract

Economists have contributed to the measurement of racial and ethnic discrimination in consumption and to the identification of its causes, especially in housing markets and car sales. To test the hypothesis that discrimination exists, economists have turned to regression analysis and to audits, a matched-pair survey technique. Economists also have developed audit-based measures of the incidence and severity of discrimination. Audit studies find continuing high levels of discrimination against minorities in the marketing of available housing and in car prices. Audit studies also find that discrimination can be caused both by economic agents' prejudice and by their search for profits.