Studies of the racial wealth gap have primarily focused on structural barriers and institutional racism that excluded racial minorities from financial investments. Yet, little research has explored the implications of cultural differences produced by this historical exclusion. Informed by the cultural economic sociology literature, this paper investigates how racial differences in ideal financial behavior contribute to differences in wealth holdings between blacks and whites. Based on data from the Survey of Consumer Finances for 2001, 2004, and 2007, I find that ideal financial behavior around borrowing, saving, and investing contributed to differences in financial holdings between blacks and whites in two ways, which both resulted in more financial investments among white respondents, even when controlling for other characteristics. The same ideal led to either whites holding significantly larger investments than blacks or had a positive effect on whites’ financial holdings and a negative effect on blacks’. These findings suggest that blacks and whites may interpret ideal financial behaviors differently by assigning distinct meaning to those behaviors or defining the relationship between the financial activities of borrowing, saving, and investing differently. Ultimately, I show that culturally distinct ideals between blacks and whites contribute to the perpetuation of the racial wealth gap.
American Journal of Cultural Sociology – Springer Journals
Published: Sep 27, 2016