Fisher v University of Texas: The Economics of Race Based Affirmative Action

While the social impacts of the ruling in Fisher v. University of Texas — an affirmative action case recently argued before the United States Supreme Court — have gained increased attention recently, there has not been much emphasis on the economic effects the court’s decision may have on affirmative action as it currently stands. Despite the fact that an economic framework is not the central lens through which this case is being assessed, the court’s decision on affirmative action in college admissions may still entail economic consequences, particularly for the racial wealth gap.

To reflect briefly on history, race-based affirmative action has been used as a criterion in college admission decisions for several decades now, largely in an effort to “promote equal opportunity” to education for minority applicants. Due to historic discrimination against minorities in U.S. higher education, affirmative action was initially put into effect to mitigate the underrepresentation of minorities in colleges. Since the implementation of affirmative action, studies have shown that representation of minorities in collegiate institutions — especially in top-tier schools — has dramatically increased in both the short and long term. In fact, the University of Texas at Austin, the institution being challenged in Fisher v. University of Texas, has seen one of the most nationally significant increases in representation of minorities as a result of affirmative action programs.

Much of the criticism charged towards affirmative action stems from the idea that the United States is a “post-racial society,” and that the country should discontinue giving preference to college applicants based on their race. While many Americans would like to believe this is the case, evidence shows that this claim does not hold up economically. From recent data accumulated during the 2010 census, it was determined that there are still significant wealth disparities between different racial groups — particularly between whites and African Americans where the median annual incomes are estimated at $63,000 and $38,000 respectively. In light of this, several studies have found high correlation between attending college and attaining higher incomes post-graduation. Through affirmative action, minorities are given increased opportunities to attend college, and as a result, achieve a higher income level in the future, which can help dissipate the current racial wealth gap.

Not only have affirmative action programs stimulated increased minority representation in schools, but they have also led to a larger representation of minorities in various job sectors, especially in high-level, professional jobs. Researchers from the University of Iowa have found that, principally due to the fact that affirmative action programs give minorities increased access to college, there have been considerable long-term increases in minority representation in high-level jobs. While social issues regarding affirmative action programs are still noticeably contentious, the economic effects of these programs have produced favorable results in narrowing the racial income divide. 

Many opponents of race-based affirmative action argue that other factors, such as socioeconomic class, would be better criteria for affirmative action programs. The economic effects of affirmative action based on socioeconomic class would be nearly identical to race-based affirmative action, except, rather than dissipating the racial wealth gap, this alternative program would help narrow the income gap more generally. If the ruling in Fisher v. University of Texas creates drastic changes in or prohibits race-based affirmative action, it is highly probable that alternative affirmative action programs will develop. Around the US, many educational institutions have eliminated their affirmative action programs altogether, citing that colleges should be “blind” to race. With all options still on the table in Fisher v. University of Texas, the Supreme Court’s ruling could lead to a severe widening of the inequality gap between different racial groups. On the other hand, if the Supreme Court upholds race-based affirmative action, as they have done previously, there may be an increase in affirmative action programs around the US which, in turn, will curtail the large racial wealth gap that continues to exist in America.

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Michael Lemm

Michael is currently a student at Cornell University studying Policy Analysis and Management with minors in Law and Regulation, and Business. He has previously worked as an editorial intern for Encyclopaedia Britannica and currently works as a Business Analyst for Cornell's Johnson School of Management. His interests are centered around income inequality, economic regulations, transportation infrastructure, and entrepreneurship.

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