There was a recent article in Nature magazine, How Scientists Fool Themselves - and How They Can Stop by Regina Nuzzo. In it there was a useful graphic outlining common cognitive fallacies that lead scientists to report wrong information.
Kiel and Waldman commit every one of these fallacies throughout their article. They could stop if they wanted to but then there would be nothing to support their ideological recommendations.
What Kiel and Waldman desperately want to report, apparently, is that African Americans are disproportionately sued for debt than white Americans. How would you know that? If white Americans who had failed to pay their debts, and controlling for all other variables such as capacity to pay, were sued at a lower rate than African Americans in a similar plight. But apparently that is not what the data shows. The peg they hang the article on is that lawsuits for debt payment are disproportionately concentrated in neighborhoods which are also disproportionately African American. But the predictive variables are debt and incapacity to pay, not race. If it happens that African Americans are more prone to incur debt and less able to pay, then you would expect to see such a concentration of lawsuits in African American neighborhoods. The authors reluctantly acknowledge this in an obfuscatory way before returning to bang on the implied racial discrimination drum.
These findings could suggest racial bias by lenders or collectors. But we found that there is another explanation: That generations of discrimination have left black families with grossly fewer resources to draw on when they come under financial pressure.The authors never address the core question, are whites with similar debt loads and similar incapacities to pay sued at the same rate as African Americans. Since the authors have done a lot of research and don't explicitly answer this, the most critical question, then the suspicion has to be that the data contradicts the story they want to tell. It appears that it is likely that there is no differential between the races when you control for the relevant variables.
[snip]
Today, the typical black household has a net worth of $11,000, while that of a typical white household is $141,900. As a result, while the budget is often tight for any low- or middle-income household, black households are less likely to have resources to draw on when they need it.
[snip]
This suggests white consumers are, in general, better able to resolve smaller debts.
[snip]
Lance LeComb, MSD’s spokesman, said the company had no demographic data on its customers and treated them all the same. The racial disparity in its suits, he said, is the result of “broader ills in our community that are outside of our scope and exceed our abilities and authority to do anything about.”
[snip]
Jan Stieger, executive director of the debt buyers’ trade group DBA International, said debt buyers don’t know the race of debtors when they buy accounts. Any racial gap in the pattern of suits, she said, is not the result of debt buyer behavior. And debt buyers typically try other methods, such as collection calls, before suing.
“Truly, nobody is treated differently in this process,” she said.
[snip]
The clients at Beyond Housing, a St. Louis nonprofit that provides assistance to low-income families, are roughly half white and half black. But the staff has noticed a dispiriting difference: white clients are far more likely to have some kind of support to draw on, whether it’s their own assets or help from a family member.
For black clients, “so much of that kind of help has been already tapped out,” said Linda Ingram, the manager of the foreclosure intervention department. The lack of resources makes it harder for black clients to extricate themselves from debt. It also means the most stable members of a family can easily get overstretched.
The article is full of sad stories about people getting into debt. But the authors acknowledge several times that this is not a race issue, it is a behavior issue. People aren't being sued for debt payment because they are black but because they are not paying their debt. The solution to that problem is teaching people how to manage within a budget. The solution to discriminatory debt suits is a class action suit against the discriminator. But if there is no discrimination occurring, then you have to default back to addressing the behavioral issue rather than the legal issue.
And that is the tragedy of this well-intended but ultimately destructive advocacy journalism. By trying to make the root cause of the problem race rather than the real root cause, individual choices and behaviors, the opportunity is missed to actually make real improvements.
The journalists in this instance appear not to have much grounding in economics (or alternatively, reality). All the debts that they highlight are lawfully incurred debt obligations. All the collectors are lawfully seeking payment of those debts. Making it harder for them to collect the money that is owed them does not make the underlying problem go away. In fact, it exacerbates the problem. If debt default rates go up, then those companies will institute more stringent policies to prevent the debt being incurred in the first place. Lack of access to financing simply makes the life of the poor even harder, not the outcome that Kiel and Waldman actually want.
If they were honest about the data they have uncovered, they would acknowledge that the solution lies with helping people to become better financial planners and financial managers. This is not a race issue. Trying to make it about race is deceitful and counter-productive.
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