Embedding Racism: City Government Credit Ratings and the Institutionalization of Race in Markets

Abstract

Abstract How does racism and racial inequality manifest in contemporary markets? Leveraging insights from the sociology of race and economic sociology, I highlight how ratings and scores operate as key mechanisms institutionalizing racism in markets according to an epistemology of racial ignorance. While ratings and scores give a veneer of individualized objectivity, their actual inputs reflect decades of racial disadvantage. The use of such racialized inputs embeds historical racism in ratings allowing racial inequality to persist and escape cognition as seemingly race-neutral inputs “explain away” racial disparities. I demonstrate this argument using an original dataset to approximate the evaluative criteria used in rating city government creditworthiness. I show that cities with larger proportions of Black residents receive worse credit ratings when controlling for the non-racialized inputs in the evaluative criteria. This racial disparity only attenuates after the inclusion of the criterion median family income, which I argue is a fundamentally racialized input owing to the legacy of racism in the United States. Establishing this point provides key theoretical takeaways at the intersection of race and economic sociology as scores and ratings pervade more corners of social life and push up against the epistemological seams of how we understand and identify inequality.