When deciding whether to make an online purchase, skin color matters to some consumers, new research finds.
A study recently published in the Economic Journal of the Royal Economic Society discovered that online shoppers are less likely to purchase a product if a black person or someone with a tattoo is selling it.
As part of the study, researchers conducted a yearlong experiment selling iPods in about 1,200 online classified ads placed in more than 300 locales throughout the United States, ranging from small towns to major cities. They tested for racial bias among buyers by featuring photographs of the Apple iPod — all of which were silver, 8GB "current models" of the iPod nano digital media player, described as new in an unopened box, and for sale because the seller did not need it — held by a man's hand that was black, white, or white with a wrist tattoo.
The experiment found that black sellers did worse than white sellers on a variety of metrics. Specifically, black sellers received 13 percent fewer responses, 18 percent fewer offers, and offers that were 11 to 12 percent lower. The results were similar in magnitude to those associated with a white seller's display of a tattoo.
Researchers also found that buyers corresponding with a black seller also behave in ways suggesting they trust the seller less. They were 17 percent less likely to include their names, 44 percent less likely to agree to a proposed delivery by mail and 56 percent more likely to express concern about making a long-distance payment.
"We were really struck to find as much racial discrimination as we did," said University of Virginia professor Jennifer Doleac, a co-author of the study.
While the researchers weren't made aware of the potential buyers race, Doleac said they did know the racial makeups of the local area where they placed the ad, which varied across the country. She said on average, they found that black sellers did better in areas where a larger share of the local population was black, which suggests that buyers might have a preference for own-race sellers.
Researchers also discovered that black sellers do worst in markets with high property-crime rates and more racially segregated housing, suggesting that at least part of the explanation is "statistical discrimination" — that is, where race is used as a proxy for unobservable negative characteristics, such as the potential danger involved in the transaction, or the possibility that the iPod may be stolen — rather than simply "taste-based" discrimination.
"Buyers might not be trying to avoid buying from black sellers, per se, but are trying to avoid something else that they think is correlated with race: traveling to a dangerous neighborhood, buying stolen goods, etc," Doleac told BusinessNewsDaily. "This suggests that providing more information (e.g. central meeting places, purchase guarantees) could reduce racial disparities in outcomes."
The study was co-authored by Luke C.D. Stein, an assistant professor of finance at Arizona State University.
Originally published on BusinessNewsDaily.