The Why Axis: Hidden Motives and the Undiscovered Economics of Everyday Life (21 page)

Now imagine the exact same scenario in the exact same conditions. The only difference this time is that Jim is a black man.

Here’s the question: How much does Richard ask the black man to pay for the car? More? The same? Less?

We found that, when shopping for high-end cars, black men were given final offers that were approximately $800 higher than the quotes white men received.

Is this the same kind of discrimination as we saw in the gay experiment above? Why did the dealers treat the African American customers looking at the expensive cars comparatively poorly? Why were they less likely to offer them a test drive or coffee? To find out, we ran another set of experiments.

Bob thinks the new Toyota Corolla is a good looking car. The asking price is $16,995. Bob wants to secure a trade-in on his 2007 Pathfinder, which the Kelly Blue Book has listed at $10,000, minus a few dings. He just wants to get rid of the Pathfinder, so he’s ready to give it up for less than he could sell it for by himself.

As he inspects the shiny wheels, the salesman sidles up to him.

“Nice car,” says Bob. “Can I take it out for a test drive?”

“Of course. This is the only one we have left on the lot,” says the salesman. “My name’s Tony.” The salesman warmly extends his hand, which Bob shakes. “I’ll be right back, and you can take her for a spin.”

When Tony returns with the key and pops open the doors, Bob sinks into the driver’s seat, appreciating the feel of the soft, gray leather and that new-car smell.

As he pulls out of the dealership parking lot, Tony tries to figure out what kind of customer he has on the line. Bob is a black man who looks to be a little north of forty. He wears jeans and a nondescript blue parka over a red flannel shirt.

“So, how long have you been looking around for a car?” Tony asks.

“For a while now,” said Bob. “We’re in need of an upgrade, and I wanted to get a new car this time, not another used one.”

After the test drive, Bob says he’s ready to make a deal. After a long negotiation, a deal emerges: Bob will pay $400 above the price ($19,295) minus $8,000 for the Pathfinder.

Now, imagine the exact same scenario in the exact same conditions. The only difference this time is that Bob is a white man.

Here’s the question: which man gets a better deal?

In this case, neither—they both get the
same
deal. We found no difference in price quotes across testers when bargaining over
lower-end
models like the Toyota. The fact that the price quotes from dealers for low-end cars were the same regardless of the customer’s race suggested that the dealers were exercising economic discrimination in their pursuit of profits. That is, the dealers
discriminate when they think that the prospective buyer’s race indicates that he might be less likely to buy the expensive car. They don’t discriminate when they think that the buyers, regardless of race, are just as likely to buy the less expensive car.

To explain: we conjectured that the dealers may have thought the white men were more likely to buy the pricier cars, so they took the extra time to engage in a little sweet talk, offering them coffee, and so on—as Richard did with Jim. In this case, the dealers simply reacted to the incentives they were facing. They were also willing to negotiate more with the white buyers, believing that the process was going to lead to a deal.

In other words, if you are a bigot, you will consistently act like a bigot. But if you discriminate only when you think it boosts your profits, you are engaging in economic discrimination. Such discrimination may very well be unethical and unfair, and in the case of the BMW car dealers, you are treating some people poorly based on their race. But it’s still not animus.

Discrimination and Public Policy

Remember the Archie Bunker remark to Sammy Davis Jr. we mentioned in the Introduction: “Your bein’ colored, now, I know you had no choice in that. But whatever made you turn Jew?”
⁶

As we suggested above, our research points to an interesting conclusion: based on everything we have studied, we’ve found that animus most often rears its ugly head
when the discriminator believes the person they are judging has a choice in the matter
.
⁷
For example, on seeing a person who is obese, some of us attribute that person’s size to a lack of self-control. If we look at a person who is openly gay, some of us attribute that characteristic to choice. But people can’t do much about their race or gender (unless they are transgender, of course).

These findings are consistent with what psychologists have denoted as attribution theory—that is, we make inferences about other people in an effort to explain causes or events to ourselves. We attribute causes of obesity, homosexuality, criminality, and so on based on these inferences, when in fact we know nothing at all about the individual in question. And the better we know someone else, the less likely we are to attribute stereotypes to them.

So now let’s revisit the issue on the importance of knowing the underlying motivation for why people discriminate. What difference does this knowledge make? After all, either way, people are behaving in an unfair, discriminatory way.

Our answer is simple: we cannot begin to craft serious legislation to address discrimination until we understand its sources. The fact that animus, although dangerous, is waning, whereas economic discrimination is rising is important information for the policy maker. And although policy on discrimination continues to change, we know little about the relationship between policy interventions and the two types of discrimination.

For years, the US government has been codifying and erecting rules that forbid animus-based discrimination. Affirmative Action is arguably the most often-used public policy to fight discrimination. The term
Affirmative Action
entered public discussion in the United States in the early 1960s; it refers to regulations aimed at reducing bias against and compensating groups that were historically discriminated against on the basis of religion, race, or gender. This genre of policy is not restricted to the United States. For example, post apartheid South Africa adopted a policy of “Broad-Based Black Economic Empowerment,” which introduced the minimum representation of black employees companies had to meet.

In a sense, Affirmative Action is the opposite of Jim Crow, apartheid, and other terrible policies that historically discriminated against various minorities and kept them from desired jobs.
The supporters of Affirmative Action proposed reversing the effect of such harmful policies by increasing the participation of underrepresented groups in desired professions. This reversal certainly made sense in the 1960s and 1970s, when animus against minorities was strong.

But today we have, as a society, moved on to more subtle forms of discrimination. One of the problems with Affirmative Action, some opponents say, is that although the goal of promoting equality in societies is fine, such policies are no longer necessary given the advances women and minorities have made in the last fifty years.

An example of the problems associated with Affirmative Action policies has to do with the wrong inferences people may make regarding the success of a targeted minority. Think, for example, of a very intelligent and hard-working African American woman who graduates from a top law school. In the absence of an Affirmative Action policy, people would attribute her success to her strong skill set. But in the presence of Affirmative Action policy, people may attribute her success to government intervention. They would think she graduated due to favoritism, not so much because of her hard work and skill.

As a reaction to these types of objections, in some states Affirmative Action is no longer legal. For example, Proposition 209 in California now bars preferential treatment of women and minorities in public school admissions, government hiring, and contracting.

If a graduate admissions team at a university doesn’t admit a talented black woman because, all else being equal, it simply doesn’t like her race and gender, then a “reverse discrimination” policy such as Affirmative Action is probably a good solution. But if the reason for not admitting her is based on economic discrimination—for example, if the admission team believes that she can’t succeed—then Affirmative Action is not the right way to help her. The discrimination is based on the university’s “economic like” calculation: they want
the best students to graduate, and they believe that she’s less likely to perform. In this case, the solution is to change the cost-benefit analysis these committees follow. For example, if you are the candidate, you should try to signal that you can actually make it in the graduate program by earning good grades in more difficult undergraduate coursework. This is a different prescription than in cases where the discrimination is based on hate.

Our research suggests the old policy-making tools to combat modern-day discrimination in the labor market, such as hiring quotas and Affirmative Action are antiquated and misguided because they don’t deal with the real problems of discrimination today. Rather, they deal with the wrong type of discrimination, not the one that is prevalent and growing—modern-day economic discrimination.

Shop ‘til You Drop

The riddle that we proposed in the previous chapter: “What words can end modern discrimination?” have a simple solution:

“I am getting three price quotes today.”

As we learned in the experiment involving handicapped drivers, this works when the person offering the service or product is engaging in economic discrimination. Just for fun, next time you’re shopping in a venue that allows haggling, tell the salesperson “I’m getting three price quotes today.” Using this simple sentence, you might have completely changed the salesperson’s perception about the incentives she faces. Instead of trying to make a huge profit out of selling something to you, she will back up and give you a reasonable price, since she would understand that otherwise the competition could offer you something better.

Consider the following example. A few years back, while Uri was teaching a negotiation class in Singapore, he needed to buy a new
lens for his Nikon camera. He went to a shopping area with lots of camera stores, most of which offered great deals. On entering the first shop, Uri asked the salesman for “a good lens for this Nikon camera.”

The salesman explained what the options were and explained the details for each, then directed him to a lens he thought was the best. He wanted $790 for it. When Uri walked out, the salesman followed, asking how much Uri was willing to pay.

Now knowing more about the specific lens he needed, Uri could shop in earnest. Entering several other shops, he learned exactly why he wanted this particular lens. The more he learned about what he wanted, the better offers he received. In the end, he walked into the last shop, asked for “Nikon Nikkor AF-S 55–300mm f/4.5–5.6 ED VR High Power Zoom Lens, DX,” and bought the lens for $328. No negotiation was needed.