Americans underestimate the wealth gap between white and Black people - Business Insider

Americans grossly underestimate the racial wealth gap between Black and white families — and it's making it harder to achieve financial equality

8/3/2020 3:04:00 PM

Americans grossly underestimate the racial wealth gap between Black and white families — and it's making it harder to achieve financial equality

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Americans think the racial wealth gap is closing, when it's actually gotten biggerAmericans also believe that the wealth gap is closing, the national survey found. When in fact, it's gotten bigger over time. "The difference in median household incomes between white and Black Americans has grown from about $23,800 in 1970 to roughly $33,000 in 2018 (as measured in 2018 dollars),"

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the Pew Research Center said.In Kraus's 2019 study, people were given 12 randomly ordered years and asked to estimate the wealth gap between white and Black Americans at those dates. For example, a person was asked to estimate the gap in 1963, in 2012, and in 1975. The vast majority of respondents answered in a way that showed the gap improving over time. 

"In fact, the wealth gap has gotten larger since 1963, the earliest time point we used. The result is that people are overestimating equality in 1963 by 40 percentage points. At the most recent time point, 2016, the estimates are off now by 80 percentage points," Kraus told the Yale University's academic

blog. Why do people underestimate the racial wealth gap? Kraus and his research team are focusing on that question next. It could be a false understanding of progress, where people view it as linear, rather than a series of fits and bouts. "There's this belief that we're marching steadily toward progress, when in reality people have to give up things, there's struggle, there's retrenchment: periods where you have lack of progress, you have things becoming worse," Kraus told Business Insider.  

It's also because of how Americans view their country. "We would like to think about our country's history in terms of overcoming racial injustice rather than having it be a part of our everyday lives," he said. We can't move forward if we don't recognize modern systems of inequality 

Addressing the wealth gap will be near impossible if Americans continue to deny it exists, Kraus said.Black Americans still face racist lending practices from banks and financial institutions. Though the federal Fair Housing Act banned racial discrimination in lending in 1968, African Americans and Latinos continue to be denied mortgage loans at rates far higher than white people,

. Reveal analyzed millions of Home Mortgage Disclosure Act records and found evidence of modern-day redlining practices, or the routine denial of credit to nonwhite people, in 61 metro areas. Read more: Business Insider »

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