Modeling America's Racial Wealth Disparities: Mathematical Models Help Chart Pathways for Closing Racial Wealth Gaps

Nascimento de Lima; Jonathan Lamb; Osonde Osoba; Jonathan Welburn

Abstract

Will America always be a country marked by racial disparity? Will Black families always be systematically poorer than white families? Can the American society reach a stage where past disparities are mended, economic opportunity is expanded, and where everyone gets their fair share? Are such goals mathematically feasible, and if so, over what timeframe? What policies could achieve these goals? For many, questions like these evoke a very strong response. Some may immediately object, arguing that America is and has always been a land of opportunity for all races and groups--a leading democracy that delivered prosperity through free markets. Others will say America has never been a land of opportunity for all--particularly for Black Americans. No matter where you lie along this spectrum, we invite you to dive into mathematical facts about racial wealth disparity in America and models that help shed light on America's wealth disparity struggle. Building on our recently released report describing the headwinds of a long and incessant racial wealth gap, we introduce a measure of racial wealth disparity and characterize the wealth distribution among Black and white US households. Next, we frame America's racial wealth disparity challenge within a computational optimization setting where the social objective is to close racial wealth gaps at a minimal cost. Finally, we discuss how models that describe long-term dynamics of wealth accumulation--specifically, overlapping generation (OLG) models--can be used to investigate whether the United States can ever become a country free of racial wealth disparities.