Panel Paper: Measuring the Racial Wealth Gap

Thursday, November 8, 2018
8216 - Lobby Level (Marriott Wardman Park)

*Names in bold indicate Presenter

Fenaba Addo, University of Wisconsin, Madison, Darrick Hamilton, The New School and Jermaine Toney, Cornell University

With continued focus in academic and policy arenas on income inequality, our study centers wealth as the dominant form of racial and economic inequality and inequity in the United States. We believe wealth is a primary lever of the U.S. stratification system because of what it confers in our society: access to social status and political power, capital, selective educational institutions, better health, and health care. It has helped to establish and maintain a system of racial status and hierarchy in America. The lack of wealth, be it withheld or stolen, and debt accumulation have positioned Blacks at the bottom of the wealth distribution across generations. Studies indicates that while wealth inequality is large and growing, racial wealth inequality is even larger and persistent. And yet, we also believe that the scope of the discussion on racial wealth inequality is hindered, in part, due to data limitations and measurement issues.

In this study we have two specific aims. First, we examine different analytic approaches to measuring the black/white wealth gap. Our analyses allow us to distinguish between estimation techniques that account for non-normal distributions, skewness, and a high concentration of negative and zero values such as quantile regression, inverse hyperbolic sign and logarithmic transformations, in addition to OLS models. We pay particular attention to how differences in wealth information collected from the Survey of Consumer Finances, Panel Study of Income Dynamics, and Survey of Income and Program Participation contribute to variations in the measurement of wealth inequality. Based on the outcomes from our first aim, our second aim addresses the best approach for modeling racial wealth inequality in the U.S. This section draws from a theoretical lens that emphasizes historical and policy mechanisms that have not only promoted group-based wealth accumulation for some but also, wealth loss and theft for others. We conclude with a discussion on assessing bias in methods and recommendations for best practices when analyzing wealth and measuring wealth differentials in a racialized context.