Why are Whites Richer than Blacks?

Hi All,

It’s a statistical fact, Whites have more wealth than blacks. According to the US census bureau in 2000, households with White householders had a median net worth of $79,400; those with Black householders had only $7,500. In short, Whites had nearly ten times the wealth of blacks (1).

Why?

According to recent research, Whites are more likely to receive an inheritance, have higher incomes and devote more money to saving. Don’t believe me? Check the research below:

Racial Differences in Patterns of Wealth Accumulation

Maury Gittleman and Edward N. Wolff

Making use of PSID data for 1984, 1989, and 1994, we examine race differences in patterns of asset accumulation. Our results indicate, as expected, that inheritances raise the rate of wealth accumulation of whites relative to that of African Americans. But, while whites devote a greater share of their income to saving, racial differences in saving rates are not significant, once we control for income. Though our results may be period-specific, we also do not find evidence that the rate of return to capital is greater for whites than for African Americans. Simulations suggest that African Americans would have gained significant ground relative to whites during the period if they had inherited similar amounts, saved at the same rate, had comparable income levels and, more speculatively, had portfolios closer in composition to those of whites.