Photo via AirBnb
For all the techno-utopian promise of the sharing economy, it's not free from accusations of discrimination. A new study out of Harvard Business School found that African-American hosts on Airbnb earn less money for renting out their apartments, and the authors concluded that’s probably because the website's users are racist.
Researchers analyzed housing listings in New York City and found that for living spaces of comparable quality, black hosts charged 12 percent less than white hosts—about $16 less per night. Since hosts generally set prices based on how much they find they can get, the researchers interpreted this to mean there was less demand for apartments rented by black hosts because of their race.
The authors, professors Benjamin Edelman and Michael Luca, called it an "unintended consequence of a seemingly routine mechanism for building trust." Like most peer-to-peer services, Airbnb’s business is based on a reputation system. Customers judge each other’s user profiles, photos, and reviews to determine if someone seems trustworthy, cool, and like someone you'd want to do business with. But the problem with being self-regulated by online reputation is that you can't do much to stop the "trusted community" from being bigoted jerks.
Naturally, AirBnb refuted the study, which was published online recently and is being reviewed for publication in an economic journal. In a statement to Recode, the company wrote:
We are committed to making Airbnb the most open, trusted, diverse, transparent community in the world and our terms of service prohibit content that discriminates. The data in this report is nearly two years old and is from only one of the more than 35,000 cities where Airbnb hosts welcome guests into their homes. Additionally, the authors made a number of subjective or inaccurate determinations when compiling their findings.
They have a point. The data was collected in 2010—a long time ago in internet years—and just in New York, whose housing market is notorious for race bias, meaning any discriminatory behavior on the part of Airbnb's users could be reflective of the market as a whole.
And since Airbnb wouldn't give out the number of inquiries listings got, researchers used rates as an indirect way to gauge demand. They analyzed the results after controlling for location, and rating apartments on a seven-point scale based on desirability. But drawing a line between price and racism is a pretty big leap to make.
Still, for whatever flaws the study may have, it raises some good questions. Why wouldn't the same biases exist in marketplaces online that have in the traditional US economy for ages? Unsurprisingly, previous research has arrived at the same conclusion that the web isn't immune to racial discrimination.
Last month a study published in the Economic Journal of the Royal Economic Society found that online shoppers are less likely to buy products from a merchant if they belong to a minority or have tattoos. Another study from last year found that when people searched for stereotypically black names in Google the search engine served up ads related to crime. Another, published in the Proceedings of the National Academy of Sciences in November, found that people weren't able to break past racial barriers on online dating sites.
And that’s just race. Though the Harvard study focused on prejudice against African-Americans specifically, no doubt there are other forms of discrimination going on in collaborative consumption businesses—biases based on age, gender, or attractiveness.
In fact, you could argue the neoliberal ideals behind many peer-to-peer startups make them even more vulnerable to discrimination, because companies don't always have to comply with the consumer protections and regulations enforced in traditional businesses. The study authors argue that Airbnb has no legal motivation to make sure its users aren't discriminating. "The main barrier that we see is a lack of liability or other economic incentive,” they wrote. “To date, no legal principle or customer demand requires or encourages Airbnb to take action to prevent discrimination.”
The way they see it, the company should be more proactive about preventing racism by downplaying photos and personal information in user profiles. "It is not immediately obvious what beneficial information these photos provide, while they risk facilitating discrimination by guests," the authors write. In a pretty flimsy comparison, they point out that eBay doesn't have user photographs for customers to peruse before buying something. But on Airbnb, you're not buying a collectible, you're spending money to utilize someone's personal space. Of course you're going to want to size up the person whose apartment you're considering living in.
Fighting discrimination with anonymity seems to me like putting a band-aid on the situation. Plus it’s just not the direction the web is going in. Our social life, workplace, dating scene, shopping mall, health care industry, education, and so on continue to model themselves after the reputation-based sharing economy, and developing a virtual persona and online reputation is getting harder to avoid. That means people are going to judge each other, just like they always have.