Effect of neighborhood stigma on economic transactions

Max Besbris, Jacob William Faber, Peter Rich, Patrick Sharkey

Research output: Contribution to journalArticlepeer-review

Abstract

The hypothesis of neighborhood stigma predicts that individuals who reside in areas known for high crime, poverty, disorder, and/or racial isolation embody the negative characteristics attributed to their communities and experience suspicion and mistrust in their interactions with strangers. This article provides an experimental test of whether neighborhood stigma affects individuals in one domain of social life: economic transactions. To evaluate the neighborhood stigma hypothesis, this study adopts an audit design in a locally organized, online classified market, using advertisements for used iPhones and randomly manipulating the neighborhood of the seller. The primary outcome under study is the number of responses generated by sellers from disadvantaged relative to advantaged neighborhoods. Advertisements from disadvantaged neighborhoods received significantly fewer responses than advertisements from advantaged neighborhoods. Results provide robust evidence that individuals from disadvantaged neighborhoods bear a stigma that influences their prospects in economic exchanges. The stigma is greater for advertisements originating from disadvantaged neighborhoods where the majority of residents are black. This evidence reveals that residence in a disadvantaged neighborhood not only affects individuals through mechanisms involving economic resources, institutional quality, and social networks but also affects residents through the perceptions of others.

Original languageEnglish (US)
Pages (from-to)4994-4998
Number of pages5
JournalProceedings of the National Academy of Sciences of the United States of America
Volume112
Issue number16
DOIs
StatePublished - Apr 21 2015

Keywords

  • Discrimination
  • Neighborhoods
  • Stigma
  • Transactions

ASJC Scopus subject areas

  • General

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