How Racial Disparities Affect Economic Policy : The Indicator from Planet Money The economics profession has a serious inclusion problem, and that matters for how all of us understand the economy.

A Race Reckoning In Economics

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Hey, everyone. Stacey and Cardiff here. This is THE INDICATOR FROM PLANET MONEY. The American Economic Association, or the AEA, is the biggest and most important professional organization of economists in the country. And it recently made a statement saying that it had, quote, "only begun to understand racism and its impact on our profession and our discipline."


Black economists are severely underrepresented in the field of economics. According to a survey from the AEA, only about 3% of economists are Black. Nearly half of Black economists say they have experienced discrimination in the profession, and only 17% of Black economists agreed with the statement that, quote, "people of my race are respected within the field."

GARCIA: And this matters not just for the economics profession. It matters for how all of us understand the whole economy, and it matters for how economic policy gets made. Janelle Jones is an economic analyst and the managing director for policy research at the Groundwork Collaborative.

JANELLE JONES: What we have learned right now is that, like, we have a worse understanding of the economy because we haven't been listening to economists of color. Like, we are actually worse at economics because we have denied a voice to folks who understand it in a different way.

VANEK SMITH: So here's an example. Before the financial crisis of 2008, the unemployment rate for Black Americans started rising earlier and more sharply than the unemployment rate for white Americans. In fact, this often happens before recessions.

GARCIA: And if there had been more Black policymakers or Black economists who were advising policymakers, economists who understood this dynamic that Black workers are often the first to lose their jobs before a recession, then it is at least possible that policymakers would've reacted more quickly to help the economy. And they might have also had new and different ideas for how to help the economy.

VANEK SMITH: Janelle herself, along with the economist Jared Bernstein, recently published one such idea. It is a proposal that the Federal Reserve should focus explicitly on the Black unemployment rate when it makes decisions about managing the economy. Black workers historically have been roughly twice as likely to be unemployed as white workers. So according to Janelle's proposal, focusing on the Black unemployment rate would ensure that everyone benefits from a strong economy.

GARCIA: And as for how to get more economists of color into the economics profession, Janelle says one idea is for there to be more Black economists included among the gatekeepers of economics at universities and at economics journals.

JONES: Who are the editors at the top journals? Who are the deans who recruit new cohorts?

VANEK SMITH: Janelle relates this idea to an early experience of her own, when economist Sandy Darity recruited her to Duke University. Her own career and her contributions to economic ideas, she says, might have ended up on a totally different path if he hadn't done that.

JONES: I was entirely recruited because Sandy Darity was a tenured professor at Duke and wanted more students of color. But, you know, like, if he's not promoted to have tenure and have job security to be able to take a risk on someone else, like, you know, students of color don't get recruited.

GARCIA: The events of recent months have led to a renewed discussion among economists and economic policymakers for more ways to fight racism inside the profession and to include more diverse approaches to studying economics. Fanta Traore is a senior research assistant at the Federal Reserve. And she is the co-founder of the Sadie Collective, a group that supports young Black women who want to enter the field of economics.

FANTA TRAORE: With everything that's going on now with the COVID-19 pandemic, with the higher unemployment rates in the Black community, with the police brutality and the issues of that and the death of George Floyd and what that has incited, we cannot afford for things to go back to how they were.

VANEK SMITH: Fanta notes that only a tiny share of research papers, especially at the top economics journals, actually study race and racial discrimination.

TRAORE: And the fact that they don't when economics is a tool that's used to inform policy is very problematic. So a reckoning would mean that there would be a culture shift in economics.

GARCIA: A number of Black economists have also said that they were discouraged early in their careers from studying topics about race and racial discrimination because they would not get published or they would not advance in the profession. A recent study looked at the almost 14,000 research papers published between 1990 and 2018 at 10 of the most important economic journals. Only 105 of those papers empirically tested for different kinds of discrimination, including racial discrimination.

VANEK SMITH: Though, Fanta is quick to add that there are some economists who have long been doing the work of trying to understand the effects of racism and racial discrimination on the economy. She points to journals like The Review of Black Political Economy, which is published by the National Economic Association. It's just that this work is not really widely read or widely embraced within the mainstream of the economics profession.

GARCIA: After a quick break, we are going to speak to one of those economists, who says that if we want to understand racial dynamics in the economy, then the economics profession needs to overhaul the fundamental way that it studies the economy.


GARCIA: Darrick Hamilton is an economist at The Ohio State University, where he runs the Kirwan Institute for the Study of Race and Ethnicity.

DARRICK HAMILTON: I'm committed to economics, and I think economics does a whole lot of good in the world. But it has a long way to go, particularly as it relates to racial justice and racial inclusion.

GARCIA: Darrick says if the economics profession wants to better understand the economy and especially racial inequality, it needs to accept completely new approaches to studying it; approaches that it has traditionally shunned. And that would also make it possible for the profession to attract more economists of color in the future.

VANEK SMITH: Here's how Darrick explains it. Economics traditionally has used an approach to understanding racial inequality that emphasizes the skill set that people have. So economists might argue, well, if there's racial inequality, then it's probably because Black people have, on average, not as much education as white people or because Black people have less training. So, you know, you have to fix that if you want to fix racial inequality.

GARCIA: But when Darrick looked at the data, that traditional idea did not really hold up; or, at least, it was incomplete.

HAMILTON: Because what we know as an outcome is that even when Blacks acquire high levels of education, inequality, racial disparity persists and oftentimes widens.

VANEK SMITH: In one study, Darrick and his collaborators found that a Black family where the head of the household has a college degree still has less overall wealth, on average, than a white family where the head of the household does not even have a high school diploma.

GARCIA: And this is why it would be helpful to have a better understanding of how outright discrimination and other possible factors can lead to racial inequality, a better understanding of how the economy might be structured to perpetuate racial inequality because even when Black people do get the same skill sets as white people, they still end up with less.

VANEK SMITH: Darrick's argument is that Black scholars who might want to take the approach of studying discrimination in addition to things like differences in skill sets might be discouraged from doing so. They might even be discouraged from entering the profession of economics altogether, especially if they know that the profession is hostile to the approaches that they want to take. That hostility, he says, is what needs to change.

HAMILTON: The discipline is myopically committed to a certain frame. And its unwillingness to expand that frame to allow for alternative explanations and to have those alternative explanations rewarded in the profession creates a Catch-22.

GARCIA: If economics does not accept more approaches to studying inequality, Darrick says, then it will not attract economists of color who want to use those approaches. And without more economists of color, there won't be as many voices inside the profession who are pushing to accept new approaches. That is the Catch-22.

HAMILTON: So we need concerted effort to integrate the discipline to recruit people and bring them into the discipline. But we also need concerted efforts to make the discipline less hostile to that integration. And what do I mean by that? I mean the scholarship that people do needs to be empathetic to the groups that they bring into the profession to better understand where they come from and also to allow for structural approaches to be included in the ways in which we understand inequality in America.

GARCIA: This episode of THE INDICATOR was produced by Darius Rafieyan and fact-checked by Brittany Cronin. THE INDICATOR is edited by Paddy Hirsch, and it is a production of NPR.


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