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Wealth Inequality in Black and White: Cultural and Structural Sources of the Racial Wealth Gap

Cedric Herring

Wealth Inequality in Black and White: Cultural and Structural Sources of the Racial Wealth Gap

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Race and Social Problems ISSN 1867-1748 Volume 8 Number 1 Race Soc Probl (2016) 8:4-17 DOI 10.1007/s12552-016-9159-8

Wealth Inequality in Black and White: Cultural and Structural Sources of the Racial Wealth Gap

Cedric Herring & Loren Henderson

Wealth Inequality in Black and White: Cultural and Structural

Sources of the Racial Wealth Gap

Cedric Herring 1

• Loren Henderson 1

Published online: 10 February 2016 ? Springer Science+Business Media New York 2016

Abstract Using data from the 2013 Survey of Consumer

Finances, this research examines competing and comple-

mentary cultural and structural explanations of the sources

of racial differences in wealth. We use OLS regression and

quantile regression to identify the major individual-level

sources of wealth differences between African Americans

and whites. Whites have more favorable wealth charac-

teristics than do African Americans on all of the variables

in the analysis: gender of household head, bankruptcies,

spending patterns, stock ownership, business ownership,

home ownership, inheritance, educational attainment,

income, occupation, age, and number of children. Cultural

factors, having a female-headed family, spending patterns,

and inheritance account for little of the racial wealth gap.

Racial differences in income, stock ownership, and busi-

ness ownership account for much of the explained racial

wealth gap. Moreover, compared with whites, African

Americans receive significantly lower wealth returns to

education, age, income, stock ownership, and business

ownership. We discuss the implications of our findings.

Keywords Racial inequality ? Wealth inequality ? Racial

wealth gap ? Net worth and race

Several studies have documented racial and ethnic differ-

ences in wealth ownership (Parcel 1982; Horton 1992;

Oliver and Shapiro 2006; Lewin-Epstein et al. 1997;

Conley 1999; Keister 2000a, b; Avery and Rendall 2002;

Shapiro 2004; Semyonov and Lewin-Epstein 2011, 2013).

Although researchers agree that there are extreme and

persistent racial differences in wealth, the reality of the

ever-increasing wealth gap in the USA has spawned

scholarly debates about the root causes of this phenomenon

(e.g., Massey and Denton 1993; Oliver and Shapiro 1995;

Conley 1999; Keister and Moller 2000; Shapiro et al. 2013;

Sullivan et al. 2015). Indeed, there are now competing

explanations in the ‘‘race-class’’ debate concerning wealth

accumulation and inequality. Some scholars have taken the

view that racial differences in wealth are primarily the

result of differences in cultural and behavioral factors such

as familial patterns, amounts of self-control, willingness to

delay gratification, and investment and consumption pat-

terns (e.g., Lewis 1963; Wilson 1987; Brimmer 1988;

Keister and Moller 2