Living Economics

Aborting White Flight
An ethnically integrated neighborhood may not come about or persist if it is not reinforced by deliberate intervention.

The fear of ethnic integration in some previously all-white neighborhoods in America has led to white flight when minorities started moving in. Such exodus was partly motivated by the fear that property value in the neighborhood would decline as a result of integration. Because of frantic selling of houses, the fear of property value erosion actually turned into a self-fulfilling prophecy.

Worried that the same might happen to their area, some longtime residents of Chicago's Southwest Side created something called the Home Equity Assurance Program in the early 90s. Funded by a special local tax, this insurance pool protected the residents from a decline in home values. If a homeowner couldn't sell his house at its assessed value, insurance would cover the difference. But the catch was that the residents were required to wait at least five years before a sale below the assessed value entitled them to file a claim. So, committed to live with their new neighbors for a few years, many white residents discovered that integration was not the horror they had expected. In fact, in the 10 years since the program started, only 10 residents on the Southwest Side filed claims! Thus, what started as a policy to restrain white flight, eventually led to neighborhood integration.

While the goal of the Assurance Program in Southwest Side was to restrain white flight, other places like Park Forest - a lovely village about 30 miles southwest of Chicago's Loop – followed a different policy to promote neighborhood integration. The complex, controversial issue is called “affirmative marketing” or “integration maintenance”. Maintaining integration is the goal; affirmative marketing is the method. The idea is this: A predominantly white community attracts blacks so it can become integrated. But at some point, it worries that if too many blacks move to town, whites will move out defeating integration. So the city then works hard to attract whites – while sometimes, critics say, discouraging blacks from moving in.

Ethnically integrated neighborhoods are obviously healthier environments for a society where many ethnic groups must live peacefully together. But if an integrated neighborhood is a collectively better solution, why can't the invisible hand bring about such a solution?

In some social situations with two choices, the collectively better solution may be unstable. In other words, this solution is only better when most choose the same solution. If the parties involved were not sure that most people are going to stick to the collectively better solution, they would do better by unilaterally defecting from the collectively better solution. Such a social situation is known as the prisoner's dilemma (see Games People Play). In the case of neighborhood integration, the two choices are staying put or moving out. If most families stay put, the integrated neighborhood is better for the residents. But if most families are moving out, then nobody wants to be the last family to move out. The resulting neighborhood would stay segregated but the color of the residents would change from all white to all minorities. Both equity assurance and affirmative marketing are designed to stabilize an otherwise unstable solution, which is an ethnically integrated neighborhood.

References:
  • Eig, J. “How Fear of Integration Turned White Enclave into a Melting Pot,” The Wall Street Journal, August 7, 2000.
  • Hayes, A. S. “Is Town's Housing Plan the Key to Integration Or a Form of Racism,” The Wall Street Journal, October 4, 1990.
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