New Research: "In the Interest of Race"
I co-authored a new research article recently about racism and school bonds, which is set to be published in the journal Inquiry later this year. This week I wanted to write about the article’s main findings.
Using complex methods on a big dataset of 12,083 school districts with public census data from 1997-2018, Eleni Schirmer, Sebastian Anti, and I found a highly statistically significant relationship between public school student racial demographics and interest rate on that districts’ bonds.
In other words, the more white students in a district, the lower the district’s borrowing costs on the municipal bond market.
Specifically, we found that an increase of white students by 1% means a .3% reduction in interest that a district pays on their bonds. In some districts, with high racial animus, it’s one-to-one! We also found that a sample of bond statements are almost entirely race-evasive, never mentioning racial demographics. Using a racial capitalism theoretical framework, we argue that there’s a white interest discount in the market for school bonds.
But we also found that this discount only applies up to a certain threshold. If a district has a really high number of white students, in some cases, their borrowing costs are super high, and we’re not exactly sure why. Our best guess is that small and rural districts with a lot of white students pay more in borrowing costs.
The paper contributes to a growing literature examining school bonds. No one that we could find had looked at this specific aspect of school bonds, in this particular way. We used a QuantCrit/quantitative criticalism approach, combining critical theory with complex quantitative methods and mixed methods too.
We also innovated in data collection. Data on school bond borrowing costs is super expensive and complex. But by using a workaround with public census data, we offer a way of calculating an approximate (or real) interest rate by looking at what districts are paying in interest and when they’re paying it.
The link at the top of the post goes to a preprint of the article, which should be coming out later this year in Inquiry. I’d love to know what you think of it!