NEW YORK – A year after the murder of George Floyd, the protests for racial justice around the world, and the many corporate pledges for racial equity that followed, media and political leaders at every level have shined a spotlight on systemic racial oppression and discrimination. But there’s an unintended consequence of the focus on securing civil rights and equal treatment for Black Americans: new research from Columbia Business School shows that all Americans – including Black Americans – are underestimating the racial gap in wealth and opportunity.
The study, Americans Misperceive Racial Disparities in Economic Mobility shows that even though Americans are aware of the economic racial disparities that exist, they often misjudge the progress that has been made. Research finds that Americans consistently overestimate the likelihood of poor Black Americans moving up the economic ladder. Americans also overestimate the likelihood of poor white people to get ahead economically, but to a much lesser extent than they do for Blacks.
“In the United States, most people agree that there is an economic racial gap, but very few realize how big that gap actually is,” said Shai Davidai, an Assistant Professor of Business at Columbia Business School. “When it comes to civil rights and equal treatment in the United States, people are more knowledgeable of key problems and more motivated to act in anti-racist ways. But racial progress should not be conflated with economic mobility.”
The researchers recruited 3,112 people – including one group of respondents who shared their income level – to take part in five studies that examined the relationship between economic inequality and the belief in economic mobility. In one study, participants were randomly assigned to read one of two short articles: one discussing the amount of progress Black people have made in the U.S in the past century, or one about how much progress still needs to be made toward racial equality. Both articles focused on social rather than economic progress. People who read the positive story about racial progress believed a Black child born into a family in the poorest 20 percent of the population was more than twice as likely to move up the economic ladder than those who read about the lack of progress.
In another study, Davidai and his co-author, Ohio State University Fisher College of Business Professor Jesse Walker, asked participants to estimate the chances that a randomly selected child born to a family in the lowest income quintile (0 to 20 percent) would rise to one of the four higher income quintiles. They made two predictions: one for a white child and one for a Black child. Results showed that participants overestimated upward mobility for the white child by about 5 percent, but overestimated mobility for the Black child by three times the rate at about 16 percent.
Other key findings include:
- Black Americans also overestimate economic mobility for Black children: A separate study found that Black participants also overestimated a Black child’s probability of moving out of poverty.
- Americans underestimated the chances of a white child rising to the highest income quintiles: When participants estimated the likelihood that a randomly selected poor child would be able to rise to one of the two highest income quintiles, they underestimated the chances of a white child doing so.
- Americans uniformly overestimate chances of Black children’s upward mobility, regardless of their knowledge of racial progress: Regardless of the article, participants overestimated the chances of the Black child from a poor family achieving more economic success.
“The distribution of wealth based on race in the United States is staggering,” said Davidai. “Most Black American households have a negative net wealth and when we make people aware of the vast economic disparities that still exist, they realize that the problem is bigger than just racial and social progress.”
The study Americans Misperceive Racial Disparities in Economic Mobility is available online here.
To learn more about the cutting-edge research being conducted at Columbia Business School, please visit www.gsb.columbia.edu.
About the researcher
Shai Davidai is Assistant Professor in the Management Division of Columbia Business School. His research examines people’s everyday judgments of themselves, other...Read more.