Ethnic discrimination against landlords in the rental housing market

AbstractIn this paper, we examine ethnic discrimination against landlords by analysing whether landlords who are Palestinian citizens of Israel (PCI) (minority) receive fewer inquiries than Jewish (non-minority) landlords for available apartments for rent. Two hundred and forty eight fictitious advertisements for apartments for rent were advertised, half with names signalling Jewish individuals and half with names signalling individuals who are PCI. Moreover, the amount of information regarding the apartments was varied, as half of the advertisements included pictures and a longer description of the apartments, decreasing the uncertainty regarding potential landlords. Finally, through contact-sharing smartphone applications, we examine the ethnicity of the individuals calling each type of advertisement. The main finding is that Jewish landlords receive 36 percent more inquiries overall than landlords who are PCI, from 29 percent more unique phone numbers than landlords who are PCI. This finding holds for both high-information and low-information listings. In addition, we find that the more left-leaning a city is politically, the smaller the difference in inquiries between the two types of landlords.KEYWORDS: : Discriminationethnicitylandlordscorrespondence studyhousing market AcknowledgementsI would like to thank seminar participants at the University of California, Merced, and the College of Management Academic Studies, Israel, for helpful suggestions.Disclosure statementNo potential conflict of interest was reported by the authors. The experiment performed in this study was approved by the Ethics Committee of the College of Management Academic Studies, Rishon Lezion, Israel (Reference # 98-2017).Notes1 The term Palestinian citizens of Israel (PCI) refers to the 20% of Israeli citizens who are Arab-Palestinian, and were granted Israeli citizenship when the state was established in 1948. This group is sometimes referred to as Arab-Israelis, Palestinians inside Israel, ‘48 Arabs, Palestinian Arabs, or Palestinian Israelis (Berger, Citation2019). While the term “Arab” has commonly been used in studies comparing PCI to Jews in Israel, the term Arab is broad, and refers to people living in many other countries. Moreover, a large part of the Jewish population in Israel immigrated from Arab countries like Iraq, Yemen, and Morocco, among others, but in Israel they are not referred to as “Arab”.2 Other contexts where customer discrimination has been found include: Baseball card trade shows (List, Citation2004), baseball cards sold on the internet (Ayres et al., Citation2015), and Ipods sold on the internet (Doleac & Stein, Citation2013).3 Discrimination of landlords against potential tenants has also been tested using audit studies. These studies match real-life applicants on all characteristics except the one being studied (e.g. one Black individual and one white individual), coach them to behave similarly, and send them to seek housing from randomly selected landlords or agencies. Overall, these studies have found discrimination against Blacks and Hispanics in the US and also against ethnic minorities in Europe (see Oh and Yinger, (Citation2015) for a review). An audit study is not something that is possible in this situation due to the cost of obtaining real apartments for rent.4 The correspondence method which is used in this study has a complicated ethical issue that accompanies it. Most importantly, subjects (potential tenants in this case) did not give their permission to be part of the study, because getting this permission would compromise the study. However, given the importance of uncovering discriminatory behavior that provides backing to anti-discrimination legislation, correspondence studies are popular. Maximum care was taken in this study to minimize the inconvenience, as well as protect the privacy of those individuals who inquired about the advertisements for rent that were posted.5 Three is the modal number of rooms in apartments for rent posted on the website used in the study. A three-room apartment in Israel almost always refers to a two-bedroom apartment. There are two cities in Israel, Bnei-Brak (pop. 189,000) and Beit Shemesh (pop. 110,000), that are not included in the sample because they house a very large Orthodox (Haredi) population, and therefore there are certain social norms that make it less likely to have residents and landlords who are PCI living there. In addition, we include Ramle, Lod, Akko, and Nazareth Elite (which became Nof Hagalil in June 2019) because they have a large PCI population within the city, and Karmiel and Afula because they are in the northern part of Israel which has a large PCI population.6 While computer applications like Google Maps can be used to view apartment buildings from the outside (Street View), some of the mappings can date as far back as 2011, so there could be changes (e.g. renovations) to one or both of the apartments posted which could make them more/less likely to receive inquiries for rent.7 The exchange rate at the time of the experiment varied from 3.39 to 3.78 NIS per US dollar and 4.07 to 4.42 NIS per euro.8 Pictures of the apartments were obtained from Google Images that are labeled as being free to use or share.9 Note that Mohammed and Ahmed signal Muslim PCI, which make up 84% of PCI . Christians and Druze each constitute about eight percent of PCI.10 Under the assumption that individuals usually set the range of prices for their apartment search to be in increments of 500 NIS, the lower price was never chosen to be a multiple of 500 NIS since in this case the higher price may not be in the same search. For example, if an individual searches for apartments whose maximum rent is 3000, and the two fictitious apartments have rents equal to 3000 and 3100, then the higher priced apartment would never appear in the individual’s search.11 An ad can be ‘jumped’ once every four hours, moving it to the top of the list of ads. In the experiment, each ad was ‘jumped’ once a day, at the same time when it was originally posted, morning or afternoon.12 Examining each of the rounds separately yields results that are qualitatively the same as the overall results reported in the main tables.13 While there are many of these types of applications, the two applications used in this study were Truecaller and Me, which are popular in Israel.14 We measure left-leaning voters as the sum of the percentage of voters who voted for the two left-leaning Jewish parties (Meretz and Mahane Tsioni) and parties representing PCI in the 2015 Israeli elections. The three major political parties representing PCI merged to form one party in the 2015 elections. As a robustness check, we also run the analysis with the percentage of left-leaning voters representing only the two left-leaning Jewish parties. The results of the two different measures are qualitatively similar.15 Bar, (Citation2018) finds that left-leaning political views are associated with less discrimination towards potential tenants who are PCI. Also in Israel, Sansani, (Citation2019) finds increased discrimination against Jewish potential tenants that are signaled as religious (versus Jewish potential tenants not signaled as religious) when the percentage of left-leaning voters in the city increases.16 It may be the case that two individuals representing the same family are inquiring regarding the same apartment listing from two different phone numbers. Because we have no way of detecting such cases, to the extent that this is the case, it overstates the number of unique inquiries. However, we have no reason to believe this would be the case more often with one category of landlord versus the other.17 Cities in Israel are considered ‘mixed’ by the Israeli Central Bureau of Statistics if PCI and Jews each constitute at least ten percent of the city’s population. The six cities identified as mixed in this study are Haifa, Tel-Aviv, Akko, Ramle, Lod, and Nazareth Elite (which became Nof Hagalil in June 2019). Jerusalem is not considered mixed because East Jerusalem, with a high percentage of Palestinians, is not officially part of Jerusalem. In addition, even though around 5% of Tel-Aviv’s population are PCI, because Jaffa is more than 25% PCI, Tel-Aviv is considered mixed. Maalot-Tarhisha is classified as mixed, but with a population of 21,500, there were very few existing apartment listings, so it is not included in the study.18 There are several ways in which names can be used to identify different groups in Israel within the non-PCI population. For instance, last names, which appear in many cases in the contact-sharing smartphone applications, can be used to identify Mizrahi and Ashkenazi Jews (see Sansani, Citation2018). Second, Jews who immigrated to Israel from the former Soviet Union (FSU) also have distinctive first names such as Sergey, Dimitry, Lena, and Marina. Third, Ethiopians in Israel can sometimes have distinctive names as well, such as Abbebe and Tesefa, but many Ethiopians will have traditional Israeli names. All of these groups are in the non-PCI group, with most of these being Mizrahi and Ashkenazi Jews. Ideally, we would be able to divide the non-PCI group into Mizrahi, Ashkenazi, FSU, and Ethiopian, but there are too many names that can be associated with more than one group for this additional delineation to be accurate.