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.