Online Shoppers More Likely to Buy From White Sellers Than Black

Louis Bergeron, PhysOrg.com, July 20, 2010

Online shoppers are more likely to buy from a white seller than a black one, according to a study by two Stanford researchers who posted ads on local classified advertising websites across the United States.

The ads offered the latest version of the iPod nano for sale, with each ad containing a photo of either a dark- or light-skinned hand holding the popular digital music player. The ads with a black hand received 13 percent fewer responses and 17 percent fewer offers than ads showing a white hand. Black sellers were also offered less money for the iPods than white sellers.

“We were really struck to find as much racial discrimination as we did,” said Jennifer Doleac, one of the researchers and a doctoral candidate in economics. “On average it’s a younger, more educated group of people shopping online and if anything they probably discriminate less than the population as a whole.”

“We suspect that the negative effect of race would be even larger in the general population,” she said.

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The study showed that black sellers were at the greatest disadvantage in the Northeast, where they received 32 percent fewer offers than whites. In the Midwest, black sellers got 23 percent fewer offers, and they got 15 percent fewer in the South. The West was the only region where the difference in the number of offers received by black and white sellers was not statistically significant.

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{snip} The disparity [in the amount of money offered] was most pronounced when the ads were posted in locales with high crime rates or where blacks and whites were geographically isolated from each other.

In general, black sellers were at much less of a disadvantage when the ads were posted in more competitive markets, where larger numbers of iPods were for sale, Doleac said.

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Doleac and Stein never met with the buyers in person. Instead, when it came time to set up a meeting, the researchers said they were out of town and offered to ship the iPod to a buyer’s home, which produced another striking disparity.

Potential buyers corresponding with black sellers were 44 percent less likely to agree to have the iPod shipped to them and were 56 percent more likely to express concern about sending payment to the seller by PayPal.

Doleac and Stein interpreted the buyers’ reluctance as indicating a lack of trust in the sellers. The would-be buyers were also 17 percent less likely to include their name in emails when they responded to ads placed by black sellers.

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Because they never met with any of the buyers, Doleac and Stein have no information on the race of the respondents.

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{snip} Regardless of the posted price, the offers received by black sellers were lower than those received by whites. {snip}

The researchers also varied the quality of the writing in the ads, as a way to convey the seller’s socioeconomic status.

“We wanted to see if buyers might discriminate less if they thought it was a highly educated person placing the ad, rather than a person with a low level of education,” Doleac said. “But it turns out people just didn’t seem to care about the typos in the ads.

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“Our main finding is that when you completely isolate the effects of race on market outcome, it looks like black sellers do worse,” Doleac said.

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