The key observation of Murphy (2002) relates to the inferential target: Are we interested in estimating an overall or a market-level discrimination effect? Several distinct effects might be estimated, and they need to be distinguished because the estimates that result will not necessarily be identical. What is the appropriate population of real estate agents or ads from which to sample? Do we want to use only those agents that minorities actually visit? If past discrimination affects choice of agent, this population may vary from the population of agents selling houses that members of a nonwhite population could reasonably afford. Thus, the estimated effect of discrimination will be different under these alternative sampling strategies. Would it make sense to sample from agents or ads that could not reasonably be expected to be appropriate for most members of the nonwhite population? Murphy recommends ascertaining “discrimination in situations in which Blacks are qualified buyers” (2002:72).

Auditor heterogeneity. Heckman and colleagues (Heckman, 1998; Heckman and Siegelman, 1993) also argue that average differences in treatment by race may be driven by differences in the unobserved characteristics of testers (i.e., auditor heterogeneity) rather than by discrimination.5 Such characteristics (e.g., accent, height, body language, or physical attractiveness) of one or the other member of the pair may have a significant impact on interpersonal interactions and judgments and thus lead to invalid results (Smith, 2002). The role of these characteristics cannot be eliminated because of the paucity of observations of the research subjects. Ross (2002) addresses the problem by suggesting that, instead of trying to match testers exactly (which is virtually impossible), one can train testers to ensure that their true characteristics, as opposed to their assigned characteristics, have little influence on their behavior during the test.

Murphy (2002) addresses most of the issues raised by Heckman (1998) and discussed above. She lays out a framework showing that “as long as audit pairs are matched on all qualifications that vary in distribution by race, audit results averaged over realtors, circumstances of the visits, and auditors can be viewed as an unbiased estimate of overall-level discrimination” (Murphy, 2002:69). Murphy formally delineates the circumstances under which an estimate of discrimination will be erroneous if the researcher fails to account for individual auditor characteristics that do not vary in distribution by race and therefore were not used in the matching process.

The problem is the effect of the heterogeneity among applicants and agents. The strategy of matching on all characteristics that vary in distribution by race—including observed, unobserved, and unobservable character-

5  

Note that such characteristics could also lead to an understatement of discrimination.



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