Abstract: Paper No. 162
Cash in Your Face: The Cost of Racial and Ethnic Discrimination in Housing
John Yinger
July 1993
While many studies document the continued existence of housing
discrimination against minorities-Blacks and Hispanics-the cost of such
actions are more difficult to measure. In this innovative paper, the
author builds on two lines of research to estimate dollar values of
discrimination in housing and mortgage markets. He expands the search
model developed by Courant to recognize intermediaries and to allow
calculation of the net cost of discrimination in housing and mortgage
search. In so doing, the author explicitly incorporates the real world
possibilities that discrimination may reduce the housing search, lower the
probability of obtaining a mortgage, and involve demeaning treatment.
Using values obtained in his previous work with the Housing Discrimination
Study, the author then calibrates the Courant model. His calculations
indicate that discrimination imposes a cost of at least $1,700 on blacks
and Hispanics each time they want to search for new housing. Equally
important is the finding that a large part of this is due to unequal
treatment in the mortgage market.
The revised version of this paper was published in the Journal of
Urban Economics, November 1997, pp. 339-365. Those interested in
this work should see that journal.
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