Association for Public Policy Analysis & Management

There is no shortage of evidence documenting glaring disparities between white and Black Americans. Persistent racial disparities are the consequence of a historic system of structural racism. These inequities justify the push for a program of reparations to Blacks, and scholars have estimated amounts to be redistributed based on stolen wages during slavery and lost wealth during the Jim Crow era (Darity 2008). Given ongoing inequities in nearly every realm of American life, we aim to calculate the contemporary cost of racial inequity. We contribute to a body of literature concerning the “hidden cost” of being Black by employing a novel strategy and centering a paradigm of intersectionality (Shapiro, 2004; Crenshaw 1991).

We account for the disparities in health and income between Blacks and whites by using the compensating and equivalent surplus frameworks to estimate willingness to accept (WTA) and willingness to pay (WTP). Our preliminary findings, using the Behavioral Risk Factor Surveillance System, suggests the disparity between Blacks and whites are valued at $40,000 per person per year. This estimate can be interpreted as the WTP by an average white person to avoid the disparities in income and health experienced by an average black person. In consideration of overlapping systems of oppression (e.g racism, sexism), our findings suggest the WTP estimates lost wages and health inequity born by Black women are larger, approximating $46,000 per year. Finally, we find that estimates of WTA are much larger than WTP, which may help us conceptualize the value of white racial privilege.