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An Ordered Probit Model for Estimating Racial Discrimination
through Fair Housing Audits.CANOPY ROYCHOUDHURY
and ALLEN C. GOODMAN
Wayne State University
1993
Presented by Mahetem Gessese
• Introduction• Two persons (auditors) with matched characteristics such as age, sex, and
income • Equally eligible for the housing unitDirect methods of measuring of
discrimination
• Except one is black and one is white.• The paper examines the severity of differential treatment• The audit was done in metropolitan Detroit.
•
• Auditing technique, average and marginal level of discrimination
• John Yinger (1986)
• Tai = a + bRi +eai
• Where a, is the audit i, the individual auditor, T is the treatment variable, R
is binary variable for minority status and e, is the random error.
• Yinger argues that the OLS estimator b for beta is unbiased
• However the standard error of b is biased
• He recommends a paired difference- of-means test that would remove the
bias from the standard error of b
• Blacks in Boston were informed 30% fewer units
• The model
• Dj + a0 + aj +Wj + sumBij + sumvik[CiCk] +gYt + eij
• i=1,2,….k
• j=1,1..10
• Y* = Bx +e
Existing theories of Discrimination1) The agent prejudice 2) The customer prejudice 3) The perceived preference4) The rip-off hypothesis
Data569 observations317 collected randomly252 complaints-driven
Regression results
•Dj + a0 + aj +Wj + sumBij + sumvik[CiCk] +gYt + eij
plim(^ j) + j + 1(r2/r2w)/(1- j)
Conclusion
Conclusion
• Widespread discriminatory 1980 –1990
• Marginal discrimination higher than average discrimination