The Economics of 'Acting White'

39 Pages Posted: 22 Aug 2003 Last revised: 4 Nov 2010

See all articles by Michael David Austen-Smith

Michael David Austen-Smith

Northwestern University - Department of Political Science

Roland G. Fryer

Harvard University - Department of Economics; National Bureau of Economic Research (NBER); American Bar Foundation; University of Chicago

Date Written: August 2003

Abstract

This paper formalizes a sociological phenomenon entitled 'acting white'. The key idea is that individuals face a tension between signaling their type to the outside labor market and signaling their type to a peer group: signals that induce high wages can be signals that induce peer rejection. We prove three basic results: (1) there exists no equilibria in which all types of individuals adopt distinct educational investment levels; (2) when individuals are not too patient, all equilibria satisfying a standard refinement involve a binary partition of the type space in which all types accepted by the group pool on a common low education level and all types rejected by the group separate at distinctly higher levels of education with correspondingly higher wages; and (3) when individuals are very patient, there is an increase in the variation of education levels within the group and an increase in the variance of types deemed acceptable by the group. The more those involved discount the future, the more salient peer pressure becomes and the more homogenous groups become.

Suggested Citation

Austen-Smith, Michael David and Fryer, Roland G., The Economics of 'Acting White' (August 2003). NBER Working Paper No. w9904. Available at SSRN: https://ssrn.com/abstract=435466

Michael David Austen-Smith

Northwestern University - Department of Political Science ( email )

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Roland G. Fryer (Contact Author)

Harvard University - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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American Bar Foundation

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University of Chicago ( email )

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