A Great Deal…Unless You're Black
Traveling is a lot of fun, but hotels are expensive and coach-surfing isn’t always feasible, which is where Airbnb comes in. The service lets people rent their rooms or apartments for travelers, who pay a daily rate that’s almost always below the price of a hotel room.
In theory, this is a boon for everyone involved; the host makes a little cash, and the guest gets a cheap place to stay for a night, a weekend, or a week. Indeed, I used it for a recent trip to Richmond, Virginia, and it was great.
But, according to a new study from Harvard Business Schooled—titled “Digital Discrimination: The Case of Airbnb.com”—the service isn’t so great for everyone. If you list a property on the website, you have to offer information about yourself, including a picture. And if you’re African American, this puts you at a disadvantage. Here’s more:
We find that non-black hosts are able to charge approximately 12% more than black hosts, holding location, rental characteristics, and quality constant. Moreover, black hosts receive a larger price penalty for having a poor location score relative to non-black hosts. These differences highlight the risk of discrimination in online marketplaces, suggesting an important unintended consequence of a seemingly-routine mechanism for building trust
In short, if you’re black and trying to attract travelers, you have to cut your prices to find takers, even if you live in a desirable area and offer comparable quality.
This isn’t a broad study, and could use more data. Still, sits well with what we know about implicit bias, discrimination, and the housing market. Last year, the Department of Housing and Urban Development released a report on housing discrimination. What it found was that, when it comes to renting or buying housing, blacks were told about or shown fewer units than their white, Hispanic, or Asian American counterparts.
Yes, some of this is a product of blatant discrimination, but much more comes from unfounded assumptions about the assets of minority renters and buyers, and their impact on existing home values.
In all likelihood, the reverse of this dynamic is replicating itself on Airbnb. Potential white renters are looking at black owners, and implicitly assuming negative characteristics, from the likelihood of crime to the cleanliness of the unit. As such, black owners have to reduce prices in order to make up for this disadvantage.
The Harvard researchers didn’t go into this, but I wouldn’t be surprised if there was more traditional discrimination for black and minority travelers. Since renters also have profiles on the service, it wouldn’t come as a shock to learn that people were turned down on account of their race. Which, in a big way, highlights the extent to which the internet isn’t a panacea for racism.
Like cosmic radiation, racial bias hangs in the background of American life, touching everything. It’s not always easy to see, but there are contexts—like housing—where it’s clear as day.