Jue Insights: Beyond Racial Attitudes: The Role of Outside Options in the Dynamics of White Flight

Abstract

When the fraction of minorities in a neighborhood exceeds the tipping point white flight accelerates. I develop a revealed-preference method to estimate the tipping points of 38,000 census tracts and the preferences of households for minority neighbors in the 123 Metropolitan Statistical Areas (MSA) covered by these census tracts over 40 years (1970-2010). I find that the average tipping point in an MSA initially covaries more with the racial attitudes of households than the outside options that they face but that this relationship reverses overtime. Ignoring outside options would obscure the declining role that racial attitudes play in understanding segregation.

Keywords: tipping points, residential segregation, outside options, preferences, race, Schelling model