Ayres and Siegelman’s article discusses their study regarding gender and race in the new car buying market. They sought to determine if gender and race lead to discrimination by the dealership, which forces minorities and women to pay more for the same products.
Their study required two people (always a white male and either a black male, white female, or black female) to visit a dealership and engage in price negotiations with a salesman. The testers were trained ahead of time to provide the same information and bargain in the same fashion to ensure their results were based solely on their race and/or gender.
The researchers looked at two factors: the short test (the salesman’s initial offer) and the long test (the final offer given to the tester after negotiating). The results of the white male were compared to each of the other three’s results to determine the price disparity between them.
The study undoubtedly found that white males fare the best in car-buying situations. The profit the dealership would make off a white male after the initial offer and the final offer were $725 and $418, respectively. Black men were asked to pay $962 and $1133, respectively. Black females were asked to initially pay 65% more than white males. White females’ initial and final offers were only $200 more than males, but this difference is still pronounced.
Previous similar tests showed discrimination in the types of questions dealers ask of the different races and sexes. For example, “sellers asked black female testers more often about their occupation, about financing, and whether they were married” (757). The study also found discrepancy in the tactics salesmen used to sell a car. For instance, they often tried to sell cars to women based on the color, gas mileage and dependability. Finally, they found dealers are less willing to disclose cost data to black testers, specifically black women. This “undermine[s] their ability to bargain as effectively as whites and thus facilitates price discrimination based on race” (758).
All of the information gained from the study showed there is strong discrimination in the car retail market. The reading didn’t offer theories about why is happens or solutions to end it, but it gave strong evidence that it definitely occurs.
It seems interesting that white males have the best opportunity to earn the highest pay of these four groups. And dealers know this, yet they still cut them the biggest break. It doesn’t make much sense to charge more money to the groups that statistically have the hardest time. If white males can stereotypically afford to pay more for a car, you would think the dealer would want to take advantage of that and charge THEM more. However, maybe the salesmen also stereotypically assume white males have the best education, and they are less likely to be able to pull one over on them.
Sunday, November 1, 2009
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I think this is an interesting topic especially given today’s modern car market. This study was done in the early 1990's when it was probably easier to make a sale and the American economy was better off. The car market in today’s world is mostly based upon miles per gallon and reliability with many used cars meeting and beating some of the new models it would be interesting to see if the results could be replicated. When reading this article I kept wondering if perhaps the individual salesman had any effect on the bargaining. Maybe the salesman may have been having a rough week and needed to make a sale for a lower price and perhaps the easy white male sale is handed off to the salesmen most in need. Also I was wondering if the lower cost might be an attempt to gain a return customer. Perhaps dealerships assume that white males will be more likely to by new cars more often than other sexes and races. If this is true it would explain the attempt to make more money off of a potentially non returning customer. I think in today’s car market it would be hard to replicate these numbers where salesmen are desperate to make a sale in order to maintain a steady income.
ReplyDeleteOnce again, the white male is given the idea of setting the standard in purchasing cars. White males can expect fair and equal treatment whether they are buying a geo or a porsche in this case. It is every other race that has to go through complicated treatment unless they initially show and express that they "have money" to spend on a car.
ReplyDeleteI am sure that there is still discrimination whether it be from an expensive dealership or just the average dealership. I expected the treatment of the women due to the fact that women are perceived of not knowing anything about cars and they just have some money to spend on a car they will look attractive in driving. I was also not surprised that the black males and females would be asked questions regarding occupation and basically establishing their socioeconomic status to the dealer in order to even be approved to continue service with the dealership. Personally, it would be smart to give everyone those prices that the minority instead of the majority are paying to make even more money simply.