Economists who worry about wealth disparities between racial groups are preoccupied with addressing the causes of racial inequality. They all have different theories and explanations about the causes of racial wealth gaps, but the prevailing assumption is that some form of unfairness must be driving it.
The key form of unfairness thought to produce disparities in racial outcomes is discrimination. Discrimination may be direct or indirect. According to critical race theories, it includes things like legacies of oppression, systemic racism, and even unconscious bias. The general idea is that government can fix these manifestations of discrimination—by banning or penalizing them—thereby reducing or eliminating the racial attainment gap.
Those who assume economic disparities are caused by racial discrimination rely on what Robert Nozick termed “normative sociology,” where any narrative can be used to derive one’s preferred causal explanations. Nozick explains:
Normative sociology, the study of what the causes of problems ought to be, greatly fascinates all of us. If X is bad, and Y which is also bad can be tied to X by a plausible story, it is very hard to resist the conclusion that one causes the other. . . We want one bad thing to be caused by another. . . . then we happily leap to the conclusion that the second evil is caused by the first.
Normative sociology also operates in the reverse—if we start by asking “what the causes of problems ought to be,” we can guarantee that the cause will never be what we do not want it to be. For example, socialists insist that price fixing should not cause supply problems. They believe the cause of bad economic outcomes should instead be some group they dislike—greedy profiteers—and so it must be.
Many people happily change their beliefs on causation depending on which political party happens to be in power. For example, Republicans who aim to make America great again view price control as socialism if Kamala Harris proposes it but consider it a very good policy to make life affordable for Americans when Donald Trump takes aim at what he calls “price gouging.”
In that light, the question concerning racial inequality is, what do you feel ought to be the cause? This approach is very similar to what the economist Thomas Sowell described as “a particular set of underlying assumptions about the world—a certain vision of reality.” People evaluate whether an argument is plausible or not based on how closely it aligns with their own assumptions. They conclude that the primary cause of economic outcomes must be the explanation that makes the most sense given their worldview and their political preferences.
This explains the double standards in the burden of proof that Sowell highlights. An explanation that goes against the prevailing vision is held to such an onerous standard of proof that, in reality, it can never be conclusively established. Conversely, an explanation which corroborates the prevailing vision is deemed presumptively true, and the burden is on whoever contests that vision to prove that it is not true—which is often impossible.
The prevailing vision, as Sowell points out, is that disparities are caused by discrimination. Accordingly, the policy debate is not concerned with causation, but simply with establishing that discrimination exists and measuring attainment gaps.
Thomas Sowell does not deny that discrimination exists. Instead, he identifies correlations that may help further our understanding of wealth gaps between different racial groups. To test the hypothesis that racial economic disadvantage is primarily caused by discrimination, he measures other variables such as educational achievement, family structure, and employment rates, comparing the results across different racial groups.
In Discrimination and Disparities, Sowell argues that, in light of what we now know about all the relevant variables, the statistical evidence that disparities exist does not, by itself, establish causality. Sowell explains:
The mere omission of one crucial fact can turn accurate statistics into traps that lead to conclusions that would be demonstrably false if the full facts were known. This often happens in comparisons of different ethnic groups and different income classes, among other comparisons.
To progressives, the study of different variables that influence economic outcomes seems amoral, or—to use one of their favorite terms—“problematic.” They believe Sowell’s focus on multiple correlations is intended to sidestep altogether what they see as the main issue—discrimination.
Discrimination is the only explanation that feels morally acceptable to progressives as the cause of racial inequality. They expressed the same sentiment when Robert Fogel and Stanely Engerman studied factors such as education, health, and diet among slaves in the South. Progressives were outraged—they saw this type of study as somehow morally suspect.
Similarly, progressives suspect Sowell of “correlation hunting” in an attempt to “victim blame.” For example, in her review of Sowell’s Discrimination and Disparities, Jennifer Dolec argues that the correlation between having a criminal record and difficulty finding a job is a mystery. Nobody knows why employers are reluctant to hire criminals. It could just be that they hate criminals, and hate is wrong. There is really no obvious reason why you should hesitate to employ a serial thief. Therefore, she believes it would be a good idea for the government to ban employers from discriminating against criminals until we understand why this discrimination is happening:
We don’t yet fully understand why employers discriminate against people with criminal records—this is one of many relevant questions on the research frontier. . . If employers’ discrimination against people with records is due to simple animus, then we’ll need to increase the cost of such discrimination (by making it illegal, for instance, or providing financial incentives to hire people from this group), until the perceived cost of hiring the person is equal to the perceived benefit.
Although Dolec believes she is critically reviewing Sowell’s work, all she has done is provide evidence that Sowell is correct to criticize ideologically-driven intellectuals. Her belief in discrimination as the cause of all social and economic ills, and her insistence that the state has an important role to play in ending discrimination, is the text book example of Sowell’s argument that progressives act on their ideological beliefs about causes—on what they believe the causes ought to be based on their worldview.
The reason why progressives believe that discrimination is always wrong is precisely because of their underlying premise that racial discrimination—and not the individual’s own lack of credentials or criminal record—is the primary cause of their economic disadvantage.
And yet, when their belief that discrimination causes economic disadvantage is challenged by evidence of many other factors that correlate with economic disadvantage, they hasten to remind us that correlation is not causation.
It is indeed true that correlation is not causation. The purpose of Sowell’s study of correlations in context of racial disadvantage is not to claim that these correlations cause poor economic outcomes but to show that there are no grounds for believing discrimination to be the only relevant cause—after all, following their own insistence that Sowell’s correlations do not prove causation, neither does their repeated insistence that “discrimination exists” prove causation.
In The Vision of the Anointed, Sowell highlights this double standard—progressives who dismiss his studies as irrelevant to causation never seem to consider that their own preoccupation with measuring gaps could, by the same reasoning, be dismissed as irrelevant to causation. The World Economic Forum claims to have identified “empirical methods that help show causality” and “actual causal impact of a new policy,” but it turns out that they just mean that they can “tease out causality” by measuring different variables that correlate with the outcome being studied. That is precisely the type of work done by Sowell, whom the WEF completely ignores. They never ask whether Sowell’s research may also have “teased out causality.”
Ultimately, economists cannot escape the fact that correlations do not establish causality. They understand this very well when they seek to dismiss Sowell’s work, but the principle applies just as well to progressives. As the Austrian economist Frank Shostak points out, correlations must be evaluated by reference to sound principles of economics—a correct understanding of the subject of investigation is the only way to ascertain its causes.
Most economists use correlations among the various pieces of unique historical data to empirically estimate the future direction of an economy.
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[But] correlations between the various pieces of historical data cannot establish causality. Correlations can only describe, but not explain. We hold that causality can be ascertained by means of establishing the definition of the subject of investigation.
