Ch. 2: Racial segregation
Aaron Swartz
Bowles makes the argument (documented more floridly in an _Atlantic_ profile of such things by Jonathan Rauch[1]) that racial segregation is the product of only mildly homophilic social preferences. Whites want a few more whites around, blacks a few less, and soon everything tips over into segregation.
[1]: http://www.theatlantic.com/doc/200204/rauch
One could argue that Bowles is only using this as a toy example, but since he repeatedly refers to it as racial segregation and stresses the increased realism of the exercise, I think it's fair to take him at his word.
According to the evidence I've seen on racial preferences (summarized in Massey and Denton, _American Apartheid_, and even more briefly in Massey, _Categorically Unequal_), racial housing preferences like these (i.e. mild homophily) do seem to exist, but I'm skeptical that such preferences are exogenous.
Since so few people live in integrated neighborhoods, I doubt they have an accurate view of how they would actually feel about living in them. Thus their preferences are shaped by the existing segregated equilibrium. Intervening to disrupt the segregation could cause them to rethink their preferences and create a new equilibrium.
I think what's striking to me is that no other racial group in America suffers the same sort of hypersegregation blacks do. Do homophilic preferences only extend to the black-white divide, or has that race hit an unusually bad equilibrium? Does anyone know of any research on this?
Chris Mealy
stuff, and which ultimately led me to MBIE.)
You're in luck. Mike Konczal wrote up recent research on neighborhood
segregation tipping point dynamics:
http://rortybomb.wordpress.com/2009/07/15/still-tippin/
As for why people think what they think about where to live, I'm with
you. MBIE has already made me start seeing everything as endogenous. I
suspect by the time I've finished it I'll know less about economics
than when I started. I mean that in a good way.