Gladwell vs. Sailer

Malcolm Gladwell and Steve Sailer have been engaged in some blog vs. blog fighting. Let's look at the following quote from Gladwell's blog:

In Blink, I tell the story of a study done by the law professor Ian Ayres. Ayres put togother of group of young men and women--half white and half black--and sent them to 242 car dealerships all around Chicago. All were attractive, well dressed, and well-educated. All had the same cover story: that they were professionals from a wealthy part of Chicago. All pointed to the lowest-priced car on the floor and said--"I'm interested in buying this car." Ayres's question was--all other things being equal, how does skin color and gender affect the initial price quoted by a car salesman? His results: white men, on average, got quoted a price $725 above invoice, white women got quoted a price $935 above invoice, black women $1195 above invoice, and black men $1687 above invoice.

This was, I concluded, a powerful example of discrimination--of how unconscious feelings and prejudices have the effect of dramatically influencing the fairness with which we treat different groups. Hardly a controverial statement, right? Well, in criticizing my book, one reviewer defended the car salesman, and called their discrimination entirely rational. He wrote:

"Black men for whatever complicated reasons, enjoy being seen as big spenders. And car salesmen are all too willing to help them spend big."

Let's analyze this statement according to the criteria from my racism post. First, content. Does the statement propagate false belief about a targetted group? I think it does. Since when do black men--collectively--desire to overpay for cars? The restaurant Per Se in Manhattan, where the prix fix is $250, is an example of a place where diners enjoy being seen as big spenders, and waiters are all too willing to help them spend big. Does that mean that Per Se is full of black men? Actually, it's full of white people. Although it could as easily be full of purple people, since the willingness to pay three times more for a meal than it would cost down the street has nothing to do with the color of your skin.

Yes the guy who dared to "defend" the car salesmen is none other than Steve Sailer. Gladwell just doesn't seem to get Sailer's point, nor does he seem to have any sort of understanding of human behavior.

First of all, I doubt that the discrimination cited is in any way "unconscious." The salesmen are intentionally quoting different prices based on sex and race. In the six weeks I worked as a stockbroker, the sales manager told us "don't bother to try to sell to women, it's a waste of time." If stockbrokers are taught to treat people differently based on sex, then I'm sure that car salesmen are also taught the same thing.

Steve Sailer is not "defending" the salesmen, but rather he is claiming that they are opportunistic scumbags whose goal is to rip off every customer for the biggest amount possible without losing the sale. Through trial and error, car salesmen have learned that they maximize their commissions by quoting different prices based on race and sex. This explanation of the behavior makes more sense to me than Gladwell's explanation that car salesmen quote higher prices to blacks because of "prejudices" which are implied to be untrue.

Gladwell expresses surprise that anyone would want to "overpay" for anything. Well in the real world, sales are based on emotion, not logic. That's what the sales manager at the stock broker job told me. And of course it's true. If people bought stocks logically, all full service brokers would be out of business. I definitely sensed that one of the reasons why some clients use full service brokers is because it makes them feel like a bigshot. Why to people want to overpay in order to feel like a bigshot? That's one of the mysteries of human behavior, isn't it?

I am reminded of the "suggested admission" of $14 at the Museum of Natural History in New York City. The sign says it's "suggested," and in fact you can tour the museum for free if you want, so why doesn't everybody just ask for a free ticket? Why do they want to overpay? While some people probably feel that they have a moral obligation to make a proper donation to a charitable institution, I suspect the majority of people paying full price do so because they don't want to appear to be a cheapskate. Why do they care if the person at the admissions counter thinks they're a cheapskate?

If black men like overpaying for stuff, why aren't there more black men eating at Per Se where the "prix fix" is $250? Well this one is easy to answer. Not that many black people can afford $250 for a meal. Furthermore, it may not be an environment where black people feel comfortable.

I'm not saying that I agree that Steve Sailer's overpaying explanation is correct, only that it's a reasonable explanation for rational discrimination. Maybe there are other explanations. Maybe black men just don't do as much research into prices before they walk into the car dealerships, so the salesmen know they can get away with quoting higher prices. Maybe the salesmen quote the higher price so they can then throw in a "free" upgrade such as the Enhanced Bling Package. One really needs an a car salesmen who's honest enough to talk about the issue to tell us the real motivations for the discrimination.

Sailer wins this exchange. Not only does Gladwell look pretty stupid here, but he has has also given Steve Sailer's blog a lot of free publicity.

Comments

[Peter]

Malcolm Gladwell should get an award for the Most Feeble Comeback Line of the Year, for saying that Steve Sailer and Judge Posner "have a low opinion of car salesmen." How devastating!

But seriously. Car salesmen earn almost all their pay from commissions and have sales managers constantly bellowing at them to sell sell sell. In most instances the commission for a specific sale varies considerably based on the final selling price. To use a strictly hypothetical example, if a salesman sells a car for its $20,000 invoice price he might get a $150 commission, but if he can bump up the price to $23,000 his commission might rise to $500.
Whatever prejudices a particular salesman might have, he's not going to do anything that will jeapordize his chances of selling as many cars as possible at the highest possible price. If quoting high initial prices to black male buyers causes deals to fall through, even a salesman who writes for Stormfront in his spare time is not going to follow that practice for very long.

[bbartlog]

There was also the accompanying goofiness from Gladwell where he stated that it was more racist to claim statistical differences between races than it was to use racial epithets. I can certainly believe that for the PC crowd it's far more important to tag the racial differences group as racists, but in this case the attempt at redefinition wanders rather far from common sense...

[superdestroyer]

The reason you do not see many blacks at Per Se (or since I am in Washington, DC; at The Inn at Little Washington) is that fine dining is viewed differently in black culture than in white culture. Blacks (on average) do not put the same value on fine dining that whites do)

The reserve (on average) applies to cars and clothes. A middle class white family (on average) will not spend as much on clothes as a middle class black family (on average). Blue collar whites (on average) do not mind buying clothes at Wal-Mart but, in my experience, blue collar blacks will not buy clothing from Wal-Mart. You are much more likely to find the teenage children of black blue collar families wearing expensive Nikes than the children of blue collar white familes. Is it racist that Footlocker makes more money off of blacks than whites but the Capital Grill makes more money off of whites?

[JewishAtheist]

Gladwell looks really bad in this exchange.

[Agnostic]

The whole point of Gladwell's gum-flapping seems to have been to name-drop an upscale restaurant, to mention how much it costs to eat there, and to describe this quantity using the phrase "prix fixe."

Given the lack of logical thought elsewhere in his retorts, we may conclude that they are instead additional badges that le haut monde sports to signal in-group status.

[Bobvis]

These results seem to be as ambiguous as they can come. It is entirely possible the salesmen are racist and are only willing to deal with black people if they get more money out of the transaction. Or perhaps they are quoting something way out of bounds to chase them off. Or perhaps there is implicit collusion among dealers everywhere.

Then again, maybe it's experiential as HS suggests.

On the third hand, maybe it's reverse discrimination! Perhaps car dealers are in awe of the superior negotiating skills of black people and thus feel the need to state a higher starting price than they would otherwise.

[Vic]

Blacks are notorious big spenders. Look at all of the stupid crap they put on their cars (gold rims, tons of DVD players, expensive stereo equipment). If I was a car salesman, I too would quote black men a higher price.

Why not make money off the stupidity of black men to spend big (even when they don't have a lot of money)?

[Spungen]

Oh, Malcolm. I used to think you were such a stud. Breaks my heart to see you hissing, stamping your feet, and forgetting your spell-checker.

Gladwell doesn't seem to understand the reality of hostile negotiation. Your opponent is expected to exploit any weakness to get more out of you. It appears women and blacks are at a socially imposed disadvantage in these negotiations, due to the observed behavior of their group. At minimum, they must work harder for the same deal a white man gets. So, they need to spread the word that they're getting ripped off, change their negotiation tactics, and let the car-selling community know they won't stand for disparate treatment. You can't blame a salesperson for doing what, in his experience, causes cars to sell at a higher price.

[bbartlog]

It is entirely possible the salesmen are racist and are only willing to deal with black people if they get more money out of the transaction. Or perhaps they are quoting something way out of bounds to chase them off.

Market competition doesn't solve every problem, but it would solve these pretty quickly. I don't think these are plausible hypotheses.
Car salespeople certainly are smart enough to take advantage of any psychological weaknesses of their customers. I worked with a guy who used to sell cars (before he worked with me as a draftsman... he shoulda stuck with selling cars...) and he demonstrated part of his expensive car sales spiel for me. If a customer tried to negotiate down the price of a Porsche, he'd feign sympathetic understanding and immediately redirect the customer to some less expensive car. Apparently worked like a charm, at least on his largely male clientele...

[Bobvis]

bbartlog, I don't see why they aren't plausible.

Let me give a different story. Let's say someone who is extraordinarily smelly (like a skunk) walks into your dealership and wants to buy a car. You don't want him there because you incur cognitive (non-financial) costs by this guy's presence. Might you not quote him a higher price? That way, you would either get rid of the smelly individual or at least get paid for dealing with him. And since all of the car dealerships would feel the same way, the smelly guy would get a higher quoted price wherever he went *even under perfect competition*.

Market competition wouldn't bring the price the smelly guy pays down to the price that everyone else pays because the cost of the transaction is higher for the smelly guy (due to his smell).

Similarly, if dealerships don't like transacting with black people for some reason, they will incorporate these psychological costs into the price they quote.

[SFG]

"Why do they care if the person at the admissions counter thinks they're a cheapskate?"

What if you're with your girlfriend?

I tended to make the same mistake--analyzing the situation from the position of a solitary ticketgoer (my own personal experience) when in fact these things have a social purpose.

[Half Sigma]

"What if you're with your girlfriend?"

You're girlfriend would be impressed with your rational decision making. (Yes, I'm being sarcastic here.)

[bbartlog]

I see what you're saying, but I question the assumption of universal racism required to make the example work. For your 'smelly guy' analogy it's necessary for *every* dealer to not like the guy - indeed not only that, but for everyone who might become a dealer to dislike him. My assumption is that some people are more racist than others and that a non-racist car dealer would exist (or could enter the business) to exploit the opportunity offered by black customers who were being overcharged elsewhere.

[Bobvis]

bbartlog,
You're right. Theoretically, we only need two non-racist car dealers to compete against each other to push prices down to what they would be for white people. In practice, however, there are search costs associated with going around to locate these non-racist car dealers. If search costs are high enough, even the non-racist dealers will charge black people more because they know it will take a long time for black customers to locate the other non-racist dealer!

Search costs can be very significant in this business. It can take a long time to extract a dealer's best price.

[The Superfluous Man]

I think at heart, Gladwell like many on the left is convinced that racism is universal and all-powerful. This attitude easily skews what one deems plausible and probable. It seemed the same way when I very briefly spoke to a man about whether the black-white IQ gap is partly genetic, citing transracial adoption studies. He responded that the gap grows with age because blacks cling to their culture more or feel a greater sense of inferiority as they age. Increasing heritability with age is the alternative and more plausible explanation, but the notion of bigotry as ubiquitious fogs the pupils.

[David Alexander]

If black men like overpaying for stuff, why aren't there more black men eating at Per Se where the "prix fix" is $250? Well this one is easy to answer. Not that many black people can afford $250 for a meal. Furthermore, it may not be an environment where black people feel comfortable.

One of the big things that I've noticed is the fact that even in my old working/middle class black neighbourhood in Queens, there were very few restaurants, while in contrast, out here in Bellmore, there's plenty of eateries. In fact, we never had a diner, while now I'm near plenty of diners. The only eateries were McDonalds, KFC, Chinese take-out places, and Caribbean take-out places. IIRC, I don't think there's a real Caribbean restaurant in Manhattan, which is highly telling.

Just as an interesting anecdotes, I recently ate at a Red Lobster next to a restuarant that specialized in Southern cuisine. The Red Lobster's patrons were mostly black, while the majority of the patrons in the smaller restaurant were white. In addition, while the Olive Garden near me had patrons, the Italian restaurant in the same town had no black patrons with the exception of myself.

I'd speculate and say, yes, black people do spend more money on clothing because brand name clothing is an excellent way to show status (look at my closet of moderately priced Nautica clothing), and because "black" fashion is much more heavily brand-based (look at the large logos featured in hip hop clothing) than typical "white" fashions. Admittedly, there is some apprehension in going to a restaurant where you're very likely to be the only black person there.* The many black people would prefer a name brand chain that has standardized menus and tastes since many are clueless in terms of the smaller restaurants that rely on word of mouth.

*It's also why de facto segregation is not going away. Not only are white people uncomfortable around blacks, some blacks are uncomfortable around whites. Plus, interestingly, black people seem to be highly unaware of the fact that they're only 12% of the population...

[Spungen]

The fact that one will overpay doesn't necessarily mean one likes to. A lot of black people seem terrified people will think they're poor.

Man, what is it with black people and Red Lobster? I'm always seeing jokes about that on TV. Here, the Red Lobster black patronage seems about proportional to the community; there are a lot more fat white patrons.

I keep hearing grape soda jokes, too. I like grape soda.

[David Alexander]

Man, what is it with black people and Red Lobster? I'm always seeing jokes about that on TV. Here, the Red Lobster black patronage seems about proportional to the community; there are a lot more fat white patrons.

God knows why, but Red Lobster has a lot of black people. Which in turn means, it's the worst place to be a waiter. Black people suck at tipping.

[spungen]

Gladwell does make a point about the irony of Sailer's blog being comment-free:

Here's the deal. Steve Sailer can post all he wants on my blog so long as he allows readers to post on his blog. Sound fair?

[Turkey]

It was neat to read the Gladwell comments and see the whole Sailersphere mobilize and hop on the school bus over there for the game. The Gladwell area Applebees will, though it is after closing time, support their community by feeding bloomin' onions to the dejected home team after the bitter loss.

[Peter]

My wife and I had dinner last Friday at a newly opened Cheesecake Factory, and while waiting - almost 90 minutes - for a table I was mildly surprised at how multiracial the crowd was. I'd guess that about a quarter of the parties were black or Hispanic, which is much higher than what I'm used to seeing at restaurants around here. As far as I know, the company makes no special efforts at advertising toward minorities, unlike Red Lobster.
By the way, I had the banana creme cheesecake, which was wonderful, but was totally grossed out when I later found out that it's (gulp!) 900 calories per slice.

[SFG]

Last time I checked everyone was voting Sailer off the island; Gladwell's fanbase is orders of magnitude larger than Sailer's. Honesty tends to piss people off.
It's pretty obvious Gladwell doesn't need people raising embarassing questions. Look at how annoyed Levitt got.

I don't agree with all of Sailer's politics (no Steve, immigration is NOT the reason it was raining on your birthday) but I wish we had more gadflies around to annoy these mouthpieces of the status quo.

[Kirk]

I thought his piece on Mike Judge was far more interesting. One has to wonder what will become of "Lawrence" type blue-collar workers (from the movie Office Space) as every blue-collar job gets outsourced.

He raises the point (quoting the blog Your Lying Eyes) that a lot of Lawrences aren't going to put up with perky pink-collar office b.s.

from, Office Space

Peter: When you come in on Monday and you're not feeling real well, does anyone say to you, "Sounds like someone has a case of the Mondays"?

Lawrence: Shit, no, man. I believe you'd get your ass kicked, sayin' something like that.

Anyway, I thought that was far more interesting than the car dealer stuff.

[Simple test]

How about black owned bussiness offer different quotes for different races? If initial quote higher for white than black, Steve explanation is busted.

[Another idea]

If you do not like particular ethnic group, but you really can not refuse the bussiness service to that particular ethnic group in fear of civil right violation, what would you do? You gonna give them hard time or ridicular high cost to turn them away.

In rental bussiness, some just told black no vacancy or ridicular higher rent for the remaining units. Until white tennants come, the price can be renegociated to a lower price. Just never say `no black'

[anon]

"In rental bussiness, some just told black no vacancy or ridicular higher rent for the remaining units. Until white tennants come, the price can be renegociated to a lower price. Just never say `no black'"

This probably happens at high-end rental places, but I am not sure how often it happens.

There was a study that showed that when a white and black person with equal credentials and credit scores applied for the same apartment, the white candidate got far more replies than the black candidate. I can't remember when the study was done, but I do remember reading about it in the LA Times.

[Spungen]

I'd guess that about a quarter of the parties were black or Hispanic, which is much higher than what I'm used to seeing at restaurants around here.

I bet most were young people on dates. The Cheesecake Factory has universal appeal -- mildly upscale, but not challenging to the palate. Lots of drinks that young females like. Haven't been there in 10 years, but used to get taken there a lot and always left tipsy with some giant pasta-based seafood entree crammed into a takeout container.

As far as I know, the company makes no special efforts at advertising toward minorities, unlike Red Lobster.

I did not know Red Lobster did that; perhaps it explains the popularity of what would seems like a really whitebread restaurant.

[superdestroyer]

David,

I thought about writing about Red Lobster and blacks but did not want to be called a racist.

I guess most whites like Spungen do not count the number of black faces in a commercial. If they did , they would quickly realize that Red Lobster appeals to blacks. I would also hazard a guess that it is because Red Lobster servees many more breaded and fried fish dishes.

If you look at Bonefish Grill, a more upscale competitor to Red Lobster there is almost no blacks and I believe it is because they do not serve anything that is fried. During one meal at Bonefish, there was a table of three black women next to me, an elderly mother and two daughers. The mother was not happy to be at a restaurant without fried food and that served things like Swordfish and Salmon with sauces instead of white fish with tatar sauce.

I believe that Cheesecake factory has a large number of blackfaces because it serves several versions of fried chicken and fried fish.

[Fred]

For whatever it's worth, the last time I bought a car in the States, I offered to pay cash if the dealership would come down a certain amount. The salesman said that most of his customers (we were in a predominantly black area) took exactly the opposite approach. They would finance a car virtually indefinitely, so long as they could make the monthly payment. For many of his customers, the ultimate sales price and financing period were almost irrelevant, or anyway, so he claimed.

Of course, the salesman (white) might have been working a kind of racial bonding approach with me (also white). "You know, WE know how to buy a car sensibly" etc. Obviously, they'll tell you anything to make the sale. As they should.

[Peter]

I'd guess that about a quarter of the parties were black or Hispanic, which is much higher than what I'm used to seeing at restaurants around here.

I bet most were young people on dates. The Cheesecake Factory has universal appeal -- mildly upscale, but not challenging to the palate. Lots of drinks that young females like.

That sounds about right. I had noticed that the crowd in general was quite young, late teens and early twenties. It was a bit surprising considering it's scarcely an inexpensive place.

For whatever it's worth, the last time I bought a car in the States, I offered to pay cash if the dealership would come down a certain amount.

Car buyers rarely can get discounts for cash. From the dealership's standpoint every sale is a sale for cash, because even if the buyer finances the vehicle through the dealership the lender will pay the dealership cash in return for assignment of the note. The only car dealerships that do their own financing, without selling the notes in the secondary market, are the "Buy Here Pay Here" joints at the extreme bottom of the market. They sell decrepit old cars to low-income people at absurdly inflated prices and, not surprisingly, make a fortune in the process.

The salesman said that most of his customers (we were in a predominantly black area) took exactly the opposite approach. They would finance a car virtually indefinitely, so long as they could make the monthly payment. For many of his customers, the ultimate sales price and financing period were almost irrelevant

There's nothing racial about that. Many car buyers of all races shop according to monthly payment rather than by final price. While consumer advisors frown on the practice, I'm not so sure I agree that it's always a bad thing. If you can afford a payment of X dollars a month, there's nothing wrong in theory with buying the nicest car that'll cost you that much.

[Fred]

Peter,

Are you saying most people are indifferent as to whether they pay 600 per month for 36 months or 48 months or 60 months before paying off the loan? If so, are you claiming that this indifference is rational?

[Peter]

Are you saying most people are indifferent as to whether they pay 600 per month for 36 months or 48 months or 60 months before paying off the loan? If so, are you claiming that this indifference is rational?

Believe it or not, from what I've heard many people really don't care.

[Fred]

By the way, just to clarify, I am not saying that any or everything the salesman said to me was accurate. As I ackowledged, he may have been saying this simply as a ploy to flatter me or encourage some sense of fellow-feeling. For all I know, he could have been lying through his teeth.

"Believe it or not, from what I've heard many people really don't care."

Now that is a case of freakonomics.

[Peter]

Believe it or not, from what I've heard many people really don't care.

Now that is a case of freakonomics.

Car buying is an emotion-laden process and many people aren't good at thinking far ahead. Combine those two things and you end up with people who'll buy the most expensive cars they can handle without thinking through the time factor. Paying $600 per month for a brand-new car is thrilling, while paying $600 per month for a car that's five years old with high mileage is a lot less satisfying. But many people don't think that way.

[RobertHume]

"Spending too much" is common boasting behavior. Perhaps like the peacock's tail it is an element in evolution by sexual selection.

Gamblers throw it away at Vegas. Pot-Latches in NWUS Indian societiese.

[Spungen]

I guess most whites like Spungen do not count the number of black faces in a commercial.

You got me there. Actually, I've never seen a Red Lobster TV commercial that I've been aware of. Maybe TiVo has deprived me of the experience.

[bbartlog]

I remember noticing not just the number of black people when I went to Red Lobster, but also the number of asians... I'd guess the black/white division reflected Pittsburgh population pretty closely, but asians were quite overrepresented at the restaurant - maybe a fifth of the customers vs. being only a twentieth or so of the population here.

[bbartlog]

How about black owned bussiness offer different quotes for different races? If initial quote higher for white than black, Steve explanation is busted.

Ayre's study on car dealerships found that black car salesmen offered higher prices to black customers, just as white salesmen did. Similarly women offered higher prices to women. So it's not a case of offering a better deal to an in-group; the 'rational discrimination' explanation still seems to be the best fit.