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Racial Disparities in Taxicab Tipping

Racial Disparities in Taxicab Tipping

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Published by TaxiDriverLV
We collected data on over 1000 taxicab rides in New Haven, CT in 2001. After
controlling for a host of other variables, we find two potential racial disparities in tipping:
(1) African-American cab drivers were tipped approximately one-third less than white
cab drivers; and (2) African-American passengers tipped approximately one-half the
amount of white passengers (African-Americanpassengers are 3.7 times more likely than
white passengers to leave no tip).
Many studies have documented seller discrimination against consumers, but this study
tests and finds that consumers discriminate based on the seller’s race. African-American
passengers also participated in the racialdiscrimination. While African-American
passengers generally tipped less, they also tipped black drivers approximately one-third
less than they tipped white drivers.
The finding that African-American passengerstend to tip less may not be robust to
including better controls for passenger social class. But it isstill possible to test for the
racialized inference that cab drivers (who also could not directly observe passenger
income) might make. Regressions suggest that a “rational” statistical discriminator
would expect African Americans to tip 56.5% less than white passengers.
These findings suggest that government-mandated tipping (via a “tip included” decal)
might reduce two different types of disparate treatment. First, mandated tipping would
directly reduce the passenger discrimination against black drivers documented in this
study. Second, mandated tipping might indirectly reduce the widely-documented
tendency of drivers to refuse to pick up black passengers.
We collected data on over 1000 taxicab rides in New Haven, CT in 2001. After
controlling for a host of other variables, we find two potential racial disparities in tipping:
(1) African-American cab drivers were tipped approximately one-third less than white
cab drivers; and (2) African-American passengers tipped approximately one-half the
amount of white passengers (African-Americanpassengers are 3.7 times more likely than
white passengers to leave no tip).
Many studies have documented seller discrimination against consumers, but this study
tests and finds that consumers discriminate based on the seller’s race. African-American
passengers also participated in the racialdiscrimination. While African-American
passengers generally tipped less, they also tipped black drivers approximately one-third
less than they tipped white drivers.
The finding that African-American passengerstend to tip less may not be robust to
including better controls for passenger social class. But it isstill possible to test for the
racialized inference that cab drivers (who also could not directly observe passenger
income) might make. Regressions suggest that a “rational” statistical discriminator
would expect African Americans to tip 56.5% less than white passengers.
These findings suggest that government-mandated tipping (via a “tip included” decal)
might reduce two different types of disparate treatment. First, mandated tipping would
directly reduce the passenger discrimination against black drivers documented in this
study. Second, mandated tipping might indirectly reduce the widely-documented
tendency of drivers to refuse to pick up black passengers.

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Published by: TaxiDriverLV on Jun 11, 2012
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06/11/2012

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Social Science Research Network Electronic Paper Collection at:http://papers.ssrn.com/abstract=401201
Center for Law, Economics and Public PolicyResearch Paper No. 276Public Law and Legal Theory
To Insure Prejudice: Racial Disparities in Taxicab Tipping
This paper can be downloaded without charge from:
Yale Law School
Ian Ayres, Fredrick E. Vars and Nasser Zakariya
Research Paper No. 50
 
 1
To Insure Prejudice:Racial Disparities in Taxicab Tipping
Ian Ayres, Fredrick E. Vars and Nasser Zakariya*
Abstract
:We collected data on over 1000 taxicab rides in New Haven, CT in 2001. After controlling for a host of other variables, we find two potential racial disparities in tipping:(1) African-American cab drivers were tipped approximately one-third less than whitecab drivers; and (2) African-American passengers tipped approximately one-half theamount of white passengers (African-American passengers are 3.7 times more likely thanwhite passengers to leave no tip).Many studies have documented seller discrimination against consumers, but this studytests and finds that consumers discriminate based on the seller’s race. African-American passengers also participated in the racial discrimination. While African-American passengers generally tipped less, they also tipped black drivers approximately one-thirdless than they tipped white drivers.The finding that African-American passengers tend to tip less may not be robust toincluding better controls for passenger social class. But it is still possible to test for theracialized inference that cab drivers (who also could not directly observe passenger income) might make. Regressions suggest that a “rational” statistical discriminator would expect African Americans to tip 56.5% less than white passengers.These findings suggest that government-mandated tipping (via a “tip included” decal)might reduce two different types of disparate treatment. First, mandated tipping woulddirectly reduce the passenger discrimination against black drivers documented in thisstudy. Second, mandated tipping might indirectly reduce the widely-documentedtendency of drivers to refuse to pick up black passengers.
*Ian Ayres is the Townsend Professor of Law at Yale Law School. Fredrick Vars is an associate at theChicago law firm of Miller Shakman & Hamilton. Nasser Zakariya is a fellow at the Yale Law SchoolCenter for the Study of Corporate Law. Please send comments to:ian.ayres@yale.edu. This article isdedicated to Underhill Moore and Suzanne Perry. Underhill Moore took to the streets of New Havenduring the 1930s to see whether people observed parking meter regulations.
See
John Henry Schlegel,
 American Legal Realism and Empirical Social Science: The Singular Case of Underhill Moore
, 29 B
UFF
.L. R 
EV
. 195 (1980). Nearly seventy years later, Perry conducted a pilot study of taxi and pizza deliverytipping that was the inspiration and foundation for the present effort. The authors thank Aditi Bagchi,Caroline Harada, Lee Harris, and Ian Slotin for their heroic efforts as auditors. Jennifer Brown, EmmaColeman, Neil Katyal, and seminar participants at Georgetown Law School provided helpful comments.
 
 2Table of ContentsIntroduction.........................................................................................................................1I. Race and the History of Tipping................................................................................4II. Description of Data....................................................................................................7III. Results......................................................................................................................10A. Lower Tips for Minority Drivers..........................................................................11B. Lower Tips By Minority Passengers.....................................................................11C. Driver and Passenger Racial Intersections............................................................13D. Regression Analysis..............................................................................................15IV. Alternative (Non-Racial) Hypotheses......................................................................23A. Censored Data?.....................................................................................................23B. Lower Tips for Minority Drivers..........................................................................25C. Lower Tips by Minority Passengers.....................................................................27V. Why Are Consumers Discriminating?.....................................................................31VI. Normative Implications...........................................................................................34A. Adding Insult to Injury?........................................................................................34B. Service Compris....................................................................................................361. Implementation.................................................................................................362. Reducing Driver Discrimination.......................................................................373. Countervailing Effects......................................................................................46Conclusion........................................................................................................................48

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