Economists are ‘lazy’ when it comes to studying the effects of racism, says AFL-CIO chief economist

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Economists are known for making many assumptions. In fact, all of social science is based on the key assumption that people are rational and, for example, would not 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 a daily basis is virtually non-existent in economic research, said the AFL-CIO chief economist, William Spriggs, at a panel Tuesday on race and economics sponsored by the Federal Reserve System. “There seems to be no evidence to make economists admit: yes, there is discrimination and yes, it does matter,” Spriggs said.

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“‘There seems to be no evidence to make economists admit: yes, there is discrimination, and yes, it does matter'”

The panel was the latest in a series organized by the 12 district banks of the Federal Reserve System to examine how structural racism “threatens” the economy and “limits economic opportunities for people of color.” The series comes as African Americans have borne a disproportionate share of the health and economic impacts of the coronavirus pandemic. Meanwhile, the United States has been involved in a national conversation about racism since the murder of George Floyd by a Minneapolis police officer last year. It was Floyd’s murder 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 when it comes to the police. “Seeing the brutal and heartbreaking murder of George Floyd has led them to think about the bigger issue of what is really wrong, because their training as economists has allowed them to quietly accept many ‘dice’ that they now understand should not be presumed, and that ‘dice’ do matter, ”he wrote in the July letter.

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“‘Their training as economists has allowed them to quietly accept many’ dice ‘that they now understand should not be presumed, and that’ dice ‘do matter.’

Race is the variable “where economists are lazy,” Spriggs said Tuesday. Importantly, the research economists produce, which often does not take race into account, often informs policies that intentionally or unintentionally put people of color at a disadvantage in practice, Spriggs said. San Francisco Fed Chair Mary Daly, who moderated the panel at which Spriggs spoke, said she found his letter “surprising.” “It changed the way I approach things,” he added. He pointed out that in research he published shortly after receiving his doctorate in economics, he did exactly what Spriggs advocated in his letter by making race a control variable, meaning it couldn’t affect the results of his research.

William Spriggs, chief economist for the AFL-CIO (top left), said that economic research often ignores the fact that race affects individual outcomes. He spoke alongside San Francisco Fed President Mary Daly (top right) and Sendhil Mullainathan, a University of Chicago economist, on Tuesday. Minneapolis Fed

Sendhil Mullainathan, a University of Chicago economist who also spoke on the panel, said he admired how candid Spriggs’ letter was in contrast to the “clinical nature” of most economic writing. Although Mullainathan, like most economists, deals with big data sets day after day, he said he makes a conscious effort to never lose sight of the fact that behind every data point there is a human being. Mullainathan and co-investigator Marianne Bertrand once studied how fictitious job applicants with “white” sounding names compare to applicants with “black” sounding names. Applicants with white names “received 50% more callbacks for interviews,” the study found. “There is an element of this work that we do where we have to maintain neutrality and we have to maintain a certain amount of clinical clearance,” Mullainathan said. “But I’m concerned that we’ve let too much of that in and lost our fundamental humanity a little bit in the process.” There is no quick fix to correct the racism that has emerged in the economy, 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 had a year that we can’t get away from,” Daly said. “We have seen disparities in health disparities and disparities in economic opportunity and outcomes in safety, the ability to get home safely. As a profession, we remain passive observers of these things, documenting many times without challenging them. ”