The Why Axis by Uri Gneezy

Author:Uri Gneezy [Gneezy, Uri; List, John A.]
Language: eng
Format: epub
ISBN: 9781610393126
Publisher: PublicAffairs

Now, imagine the exact same scenario in the exact same conditions. The only difference this time is that Bob is a white man.

Here’s the question: which man gets a better deal?

In this case, neither—they both get the same deal. We found no difference in price quotes across testers when bargaining over lower-end models like the Toyota. The fact that the price quotes from dealers for low-end cars were the same regardless of the customer’s race suggested that the dealers were exercising economic discrimination in their pursuit of profits. That is, the dealers discriminate when they think that the prospective buyer’s race indicates that he might be less likely to buy the expensive car. They don’t discriminate when they think that the buyers, regardless of race, are just as likely to buy the less expensive car.

To explain: we conjectured that the dealers may have thought the white men were more likely to buy the pricier cars, so they took the extra time to engage in a little sweet talk, offering them coffee, and so on—as Richard did with Jim. In this case, the dealers simply reacted to the incentives they were facing. They were also willing to negotiate more with the white buyers, believing that the process was going to lead to a deal.

In other words, if you are a bigot, you will consistently act like a bigot. But if you discriminate only when you think it boosts your profits, you are engaging in economic discrimination. Such discrimination may very well be unethical and unfair, and in the case of the BMW car dealers, you are treating some people poorly based on their race. But it’s still not animus.

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