Racial Inequality in the Twenty-First Century: Anecdotes and Evidence

An empirical approach to understanding racial inequality.

Month: February, 2012

Causality, Crime, and Education.

What is causality? Why do we care about it? And why do economists and researchers spend so much time obsessing over it?

It’s because causality gives society and policy makers the ability to make inference about a given set of factors. In mathematics, the simple, elegant equation

(1)                                                   y= f(x)

yields causal inference explicitly. Equation (1)  gives a lot of information. It says that some set of inputs x, in some functional form, denoted as f(.), yields output y. As an example, consider the case of computers. Computers have inputs such as processors, hard disks, and random access memory that are combined to produce the output; i.e., computers. In this simple framework, we have causality. We can cause these set of inputs x, to produce y. But, remember, it does depend on f(.). 

Why is this important to racial inequality? Well, because some  might argue that the reason ethnic minorities suffer from lower socioeconomic outcomes is because they cause them. That is, the intrinsic effect of being an ethnic minority leads one to have a lower socioeconomic outcome. Informally, this suggests that Blacks have the lowest wages because they’re Black;  that Hispanics are the least educated in America because they’re Hispanic; Blacks and Hispanics have the highest crime rates because of their skin color, and no other reason than their racial background. These statements, are incorrect.

Yet, the latter claim I presented above was, in fact, made by an organization known as the New Century Foundation (Here’s the link). They did an independent study and suggested that,

  •  Blacks are seven times more likely than people of other races to commit murder, and eight times more likely to commit robbery.
  • When blacks commit crimes of violence, they are nearly three times more likely than non-blacks to use a gun, and more than twice as likely to use a knife.
  •  Hispanics commit violent crimes at roughly three times the white rate, and Asians commit violent crimes at about one quarter the white rate.
  • The single best indicator of violent crime levels in an area is the percentage of the population that is black and Hispanic.  (New Century Foundation [2005])

While these statements are informative, they are not causal effects. But, how do I know? How can I causally say that Blacks and Hispanics don’t suffer from these socioeconomic problems, and that they don’t commit these crimes because they have, as I was once so eloquently told, “shit morals.”

Because of research. Empirical evidence has given much information about the socioeconomic problems ethnic minorities face. A simple abstract offers a very useful retort to the New Century Foundation’s work.

“There has been no satisfactory analysis of arrest and offender rates comparing ethnic groups controlling for relevant social factors. Reearch is needed to investigate possible disparities in the treatment of the ethnic minorities throughout the criminal justice system.” (Walker [1987]  p. 39)

Moreover, Lance Lochner and Enrico Moretti [2004] found that the more schooling a particular person achieved, the less likely they were to be incarcerated. Finally, Cameron and Heckman [2001] estimated that, after controlling for parental income, Blacks and Hispanics were more likely to graduate from high school and attend college than Whites.

So, it is not being a minority that causes minorities to suffer socioeconomic problems, it is simply the consequence of growing up  poor*. Socioeconomic upbringing is the problem, and not being a raical minority.

Post Script: As a minor edit, I realize that I wasn’t very explicit about how Heckman and Cameron [2001] and Lochner and Moretti [2004] are able to treat their effects as causal; allow me to elaborate very briefly. Lochner and Moretti [2004] use a very wonderful statistical method (yet slightly complicated so I’ll leave out the details [Here’s the link to the paper]) to tease out causality. Heckman and Cameron [2001] are less willing to suggest causality (Here’s the link to the paper).

Post Post Script: Any hostile comments will be removed, and I won’t dedicate time to respond to them; nor will I respond to retorts citing other blog posts. The information I present in these blog posts will be from peer reviewed (Often Tier 1) academic journals. I trust blogs for summaries of cited research, that’s what I will present here, and that is all I will respond to.

*I would just like to note that in no way am I implying that all minorities are poor, this was in regards to the fact that, on average, those in poverty are minorities.


[1]  New Century Foundation. 2005. “The Color of Crime.”

[2] Walker, Monica, 1987. Interpreting Race and Crime Statistics. Journal of the Royal Statistical Society. 150 (1): 39-56.

[3] Lochner, Lance, and Enrico Moretti, 2004. The Effect of Education on Crime: Evidence from Prison Inmates, Arrests, and Self-Reports. American Economic Review. 94 (1): 155-189.

[4] Cameron, Stephen V, and James J. Heckman, 2001. The Dynamics of Educational Attainment for Black, Hispanic, and White Males. Journal of Political Economy. 109 (3): 455-499.


Income Inequality.

On February 2nd, 2012 Robin Hanson, an Associate Professor of Economics at George Mason University, published a blog post entitled “Unequal Inequality.” Dr. Hanson’s post was quite insightful, and offered very useful information. His main point was that there are many forms of inequality that exist today and he inquired as to why American society cares about income the most. The seven forms of inequality he listed were:

  1. Inequality across species
  2. Inequality across the eras of human history
  3. Non-financial inequality, such as of popularity, respect, beauty, sex, kids
  4. Income inequality between the nations of a world
  5. Income inequality between the families of a nation
  6. Income inequality between the siblings of a family
  7. Income inequality between the days of a person’s life.

Hanson concludes by saying, “…we do not just have a generic aversion to inequality; our concern is very selective.  The best explanation I can think of is that our distant ancestors got into the habit of complaining about inequality of transferable assets with a tribe, as a way to coordinate a veiled threat to take those assets if they were not offered freely.  Such threats would have been far less effective regarding the other forms of inequality.”

So, simply, why do we care about income inequality? Because income is the proxy for happiness. Microeconomics has functioned on the fundamental precept that income can be used as a measurement for happiness, this is the standard metric of all Utility theory (In truth there is a hint of cynicism about the whole thing; economists assume human beings are glutinous and lazy, humans only want to work the minimum amount of hours we can while consuming the maximum amount of goods we can…yet, these assumptions make for some very useful derivations and, as it turns out, it tends to model human behavior okay.). Moreover, income is the mechanism that generates all of those things that make us happy. I am a firm believer that money does not make an individual happy, yet the things that money has the potential to bring do, in fact, yield happiness. As an anecdotal example consider Christmas, buying gifts for the children, and having a nice home cooked meal. These are, at least typically, not a trivial expense. Having a lovely, festive evening with the family offers so much happiness for the typical American family (theist or not) but without*  income to acquire gifts or a nice meal for family and friends, it is rather hard to share those events in the same spirit. This is not to say a family will be miserable without these material things, but it truly helps.

Income not only provides humans with the things that make us happy, but it provides us with security, good health (assuming people with higher income purchase insurance, which they do), and safety. Society cares about income inequality because many people in the lower income that live in housing projects or low socioeconomic areas lack these things that so many people take for granted. So, the simple answer to Dr. Hanson’s very good question is that income, typically, measures happiness, and we like happiness.

This topic is a very useful motivation for trying to understand why I (and why society) cares about income inequality and, even more, educational inequality. Indeed, education is the mechanism that can generate income, and income is the vector that begets happiness. This is the objective of this blog: to offer insight into income and education and how they vary across different ethnic groups. It is simply not enough to offer anecdotes and state that we need more equality, we have to understand why there is inequality.

Post Script:

*As an aside,  I think it’s worth mentioning that people in the upper income that are still, relatively, worse off than the top income group don’t suffer here. My statements here only apply to those suffering major economic disparities.

Martin Luther King, Jr.