Sellers on classified ad websites favor buyers from affluent neighborhoods

New Rice University research has found that people selling stuff on classified ad websites prefer dealing with buyers from affluent neighborhoods.

“Disentangling the Effects of Race and Place in Economic Transactions: Findings from an Online Field Experiment” will appear in an upcoming edition of City and Community.

Max Besbris, an assistant professor of sociology at Rice and the study’s lead author, tested whether transactions conducted through online resale websites were affected by the addresses  where prospective buyers live. He also studied the role played by race and ethnicity.

“For several decades, social scientists have investigated how the geographic organization of inequality affects social and economic outcomes of those living in disadvantaged places,” Besbris said. “We were interested in seeing if this inequality extended to the online resale marketplace.”

So Besbris conducted an original field experiment in the market for secondhand goods. Researchers answered advertisements for used cellphones in ways that signaled the prospective buyer’s race and ethnicity, as well as whether the buyer lived in an advantaged or disadvantaged neighborhood.

As Besbris hypothesized, inquiries that included the name of a disadvantaged neighborhood received 12% fewer responses than those that referenced an advantaged neighborhood. In addition, those that received responses after claiming they were from disadvantaged neighborhoods were 25% more likely to have a seller suggest an alternate meeting place to complete the transaction.

Sellers were also less likely to respond to inquiries that claimed to be from neighborhoods with a high percentage of black residents than to inquiries from neighborhoods with a high percentage of Latinos. And inquiries that didn’t include an address received a nearly identical number of responses as those that indicated they came from a disadvantaged neighborhood.

“This evidence of discrimination or preference based on neighborhood of residence is a crucial contribution to our understanding of how place can shape life outcomes,” Besbris said. “What it reveals is that where you live affects all aspects of your life — even mundane interactions with others.”

Besbris and his colleagues conducted the study over 18 months, responding to 2,321 advertisements for used iPhones in 16 U.S. cities. He hopes the research will add to understanding of the wide-ranging effects of segregation and broaden the scope of anti-discrimination policies to include where people live.

To request a copy of the paper, contact Amy McCaig, senior media relations specialist at Rice, at 713-348-6777 or amym@rice.edu.