Subtle discrimination in business would be easy to eradicate

Medcalfe

John Lydon, the lead singer of 1970s punk band the Sex Pistols, called his first autobiography No Irish, No Blacks, No Dogs. His parents were immigrants from Ireland and found it hard to rent a flat because of discrimination against Irish people (and blacks and dogs) by landlords. Rental properties prominently displayed signs indicating who was not wanted as a tenant.

 

More than a half century later, such discrimination is less blatant – helped in part by antidiscrimination laws and cultural change.

But discrimination in the rental market has not been eradicated. A new study by Benjamin Edelman, Michael Luca and Dan Svirsky, three economists at Harvard University, found that guests with distinctly African-American names are 16 percent less likely to be accepted as guests through Airbnb in five U.S. cities. It didn’t matter if the hosts were white or African-American, male or female, or the size of property being rented. Hosts were willing to forgo up to $100 in revenue by rejecting guests with African-American-sounding names.

The Civil Rights Act of 1964 prohibits hotels in America discriminating based on race, color, religion or national origin. However, it is not certain that antidiscrimination laws cover the rapidly expanding sharing, or gig, economy.

The job market is still similarly biased. Marianne Bertrand and Sendhil Mullainathan found white-sounding names on résumés received 50 percent more callbacks than those with African-American-sounding names for interviews, although the rest of the résumé was identical.

It is relatively simple to eradicate this problem by using a blind application process. Most of the late-night shows, such as Full Frontal with Samantha Bee, erase applicants’ identities such as race, gender and age from submissions. Bee’s writing room is subsequently one third nonwhite and half are women. Auditions for orchestras that are held behind screens have increased the percentage of women in top orchestras from 10 percent in the 1980s to more than 30 percent today. Still not parity, but certainly an improvement.

Edelman and his colleagues suggest Airbnb could do something similar and conceal guests’ names. Moreover, it is not just firms in the sharing economy that may benefit from using a blind application process. Traditional firms also may benefit from the more diverse workforce it generates. It is relatively simple for human resources to replace names with a random collection of letters and numbers before the recruiter sees the applicant’s file.

 

The writer is an associate professor of finance and the Cree Walker Chair in the Hull College of Business at Augusta University.

 

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