Historical institutional access explains why black investors favor insurance and housing over stocks
Evidence
For example, it took until 1970 for the first black American to make a trade on the floor of the New York Stock Exchange. In contrast, the real estate and insurance industries have a history of employing black real estate and insurance agents. Insurance, in particular, was a thriving field for black Americans: Historian Christy Ford Chapin describes how “during the early twentieth century, black-operated insurance firms experienced great success even as they competed vigorously alongside white-operated insurance companies for the business of African American consumers.” This history helps explain why, for more than a decade, black Americans earning more than $50,000 have consistently said they prefer to invest in housing and life insurance, according to a yearly survey by Ariel Capital Management and Schwab—even though these forms of investment are more conservative and bring lower returns than the stock market. — Dorothy A. Brown, The Whiteness of Wealth, 458
Categorization
Category: Causal Relationships
- SEED: A possible essay angle: the financial services industry’s racial integration history (or lack of it) as a hidden determinant of today’s asset allocation gap — markets are not neutral arbiters of ‘good’ investing.
Related
- Historical industry access shapes blacks’ preference for housing and insurance over stocks (similarity 0.93)
- Stock market investing is less racially discriminatory than homeownership. (similarity 0.81)
- Financial-services diversity gaps make black disinvestment from markets a self-fulfilling prophecy (similarity 0.79)