Racial discrimination on Airbnb: Are we moving into a new era of digital discrimination?

8 May 2017 09:49

(updated: 8 May 2017 10:44)

Racial discrimination on Airbnb: Are we moving into a new era of digital discrimination?

Read new blog by Siv Skard, Sigrid Klemsdal, Pauline Sundt and Helge Thorbjørnsen.

Sigrid Klemsdal

Sigrid Klemsdal

Master Student, NHH

Pauline Sundt

Pauline Sundt

Master Student, NHH

The sharing economy, also called collaborative consumption (Botsman & Rogers, 2010), has been noted as an “idea that will change the world” (Time, 17 March 2011). Consumers all around the world are taking part in this new marketplace, destined to make our lives easier - and more efficient (Leong, 2016). Sharing everything from housing (Airbnb) to cars (Zipcar) and screwdrivers (Taskrabbit), the sharing economy enables access to underutilized resources, profiting both owners, users, and Mother Earth. Valued as a EUR 28 billion industry in Europe in 2016, Europe’s five most prominent sharing economy sectors are predicted to deliver EUR 570 billion by 2025 (Pwc, 2016).

Airbnb, “the canonical example of the sharing economy” (Edelman, Luca and Svirsky, forthcoming), is an online marketplace for short-time housing rentals. Airbnb facilitates transactions between hosts and guests by enabling advertising of apartments, communication and handling payment, among other things. Hosts may decide whether to accept or reject a guest after seeing the person’s name, and often a picture. Likewise, potential guests may utilize the information available about the host when selecting an apartment.

Although antidiscrimination laws regulate the market for housing and rental accommodations, research has exposed how racial discrimination continues to exist in such traditional marketplaces (Edelman et al., forthcoming). However, with the sharing economy’s innovative way of connecting people, it has been debated whether this new and disruptive market may lead to a final eradication of such prejudicial behavior. Many have considered the various new businesses of the sharing economy to potentially pose as a cure for racial discrim­ination, by filtering out the racial signifiers one would encounter in more traditional marketplaces (Leong, 2016). Instead of meeting each other in person and instantly noticing traits such as race and behavior, we communicate through virtual channels, providing only the most essential infor­mation related to the transaction.

Yet, recent research on the sharing economy raises questions as to whether such online platforms really reduce discrimination - or if they actually worsen it. In an experiment conducted by Edelman et al. (forthcoming), it was revealed how applications on Airbnb from guests with distinctively African-American names were 16 percent less likely to be accepted relative to identical guests with distinctively White names. This article was, to the best of our knowledge, the first study to expose how racial bias influences consumer decision making within the sharing economy. As a market that has skyrocketed the last couple of years, and is predicted to continue growing far into the future, the issue of racial discrimination is unarguably an important area to investigate further. This sparks the question: Are we moving into a new era of digital discrimination?

A recent lab-experiment conducted at Center for Service Innovation (CSI), tested racial discrimination of hosts in an Airbnb setting. We tested the participants’ attitudes towards, willingness to rent, and amount willing to pay for, an apartment rented out by either a Norwegian host (in-group member) or an Iraqi host (out-group member). We also tested psychological mechanisms that may account for potential discrimination towards out-group members.

The descriptions of the apartment and hosts were identical, except for the hosts’ names and nationality. Results indicate that racial discrimination exists, but not necessarily in the predicted direction. Responses are dependent on participants’ political orientation and perceived out-group threat. Politically right-oriented individuals and those who perceive out-groups (i.e. Muslims) as a threat, have more negative attitudes towards, and are willing to pay less for, an apartment rented out by an Iraqi host than a Norwegian host (in-group member). However, individuals who are politically left-oriented and do not perceive out-groups as a threat, are significantly more positive towards the apartment when its host is Iraqi.

The evidence of racial discrimination in Airbnb introduces new challenges for policy-makers, as existing laws for traditional markets do not necessarily apply to the sharing economy. Edelman and Luca (2014) argue that any changes by Airbnb would likely be driven by ethical considerations or public pressure rather than law. A relevant future research agenda is therefore to test measures that actors in the sharing economy can undertake to reduce racial discrimination.

 

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