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The Economics of 'Acting White'

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  • David Austen-Smith
  • Roland G. Fryer

Abstract

This paper formalizes a sociological phenomenon entitled 'acting white'. The key idea is that individuals face a tension between signaling their type to the outside labor market and signaling their type to a peer group: signals that induce high wages can be signals that induce peer rejection. We prove three basic results: (1) there exists no equilibria in which all types of individuals adopt distinct educational investment levels; (2) when individuals are not too patient, all equilibria satisfying a standard refinement involve a binary partition of the type space in which all types accepted by the group pool on a common low education level and all types rejected by the group separate at distinctly higher levels of education with correspondingly higher wages; and (3) when individuals are very patient, there is an increase in the variation of education levels within the group and an increase in the variance of types deemed acceptable by the group. The more those involved discount the future, the more salient peer pressure becomes and the more homogenous groups become.

Suggested Citation

  • David Austen-Smith & Roland G. Fryer, 2003. "The Economics of 'Acting White'," NBER Working Papers 9904, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:9904
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    Cited by:

    1. Roland G. Fryer & Steven D. Levitt, 2004. "The Causes and Consequences of Distinctively Black Names," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(3), pages 767-805.
    2. Antecol, Heather & Cobb-Clark, Deborah A., 2008. "Identity and racial harassment," Journal of Economic Behavior & Organization, Elsevier, vol. 66(3-4), pages 529-557, June.
    3. Roland G. Fryer, Jr. & Paul Torelli, 2005. "An Empirical Analysis of 'Acting White'," NBER Working Papers 11334, National Bureau of Economic Research, Inc.
    4. Liuba Kogan Cogan & Joanna Kámiche Zegarra & Patricia Lay Ferrato, 2011. "¿El origen socioeconómico y la raza pagan? Un estudio interdisciplinario sobre la discriminación racial y socioeconómica en el ámbito empresarial limeño”. El caso de los egresados de la Universidad de," Working Papers 11-17, Centro de Investigación, Universidad del Pacífico.
    5. Roland G. Fryer, Jr, 2010. "The Importance of Segregation, Discrimination, Peer Dynamics, and Identity in Explaining Trends in the Racial Achievement Gap," NBER Working Papers 16257, National Bureau of Economic Research, Inc.
    6. Dohmen, Thomas, 2005. "Social Pressure Influences Decisions of Individuals: Evidence from the Behavior of Football Referees," IZA Discussion Papers 1595, Institute of Labor Economics (IZA).
    7. Neal, Derek, 2006. "Why Has Black-White Skill Convergence Stopped?," Handbook of the Economics of Education, in: Erik Hanushek & F. Welch (ed.), Handbook of the Economics of Education, edition 1, volume 1, chapter 9, pages 511-576, Elsevier.
    8. Harris Selod & Yves Zenou, 2006. "City Structure, Job Search and Labour Discrimination: Theory and Policy Implications," Economic Journal, Royal Economic Society, vol. 116(514), pages 1057-1087, October.
    9. David Austen-Smith & Ronald G. Fryer, 2005. "An Economic Analysis of 'Acting White'," Discussion Papers 1399, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    10. Kaushik Basu, 2005. "Racial conflict and the malignancy of identity," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 3(3), pages 221-241, December.

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    More about this item

    JEL classification:

    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • J0 - Labor and Demographic Economics - - General

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