Donald Trump has accused Kamala Harris of leveraging her supposed black heritage (her father is Jamaican and her mother is Indian) for political gain. Trump himself has been accused of making race an issue in the campaign, a claim he flatly rejects. More recently, he has been unequivocal that race should not matter in the presidential election; but matter it will.

Harris, similar to Obama before her, is multiracial. She chose not to campaign on her Indian ethnicity and as Obama did as well, is ignoring her white ethnicity. The rationality axiom strongly suggests that both candidates selected a campaign strategy designed to maximize the number of votes they receive and they cannot be reasonably faulted for doing so. Economists would refer to this as race rents. A rent is an excess return earned on an asset that derives from its scarcity (e.g., a minority presidential candidate).

All this will be sorted out in due time, but it is important to recognize that an election is a market just like any other in which candidates compete on the basis of their various attributes. We may believe that someone’s height or whether they are considered “good-looking” should not matter in the marketplace, but the data tell a different story. Individuals who are taller and “better-looking” command a wage premium in the job market. And so it will be in the 2024 presidential election; race and gender will matter in the final vote tally. The only question is how much.

The Tradeoffs

Some years back, I was teaching a required course in the MBA curriculum at my university. The first 10 minutes of each class were dedicated to discussing real-world issues during which students had the opportunity to pose any question of an economic or public policy nature. The question on this particular day had the students on the edge of their seats and me acutely aware of the teaching moment that had presented itself. The college of business was recruiting for a new department head and it was underrepresented in minority faculty members. The question posed to me was whether the college should hire a black female for this position who, although qualified, may not be the most qualified applicant based on objective metrics.

To answer this question, I enlisted the students’ participation in a classroom experiment. Specifically, I informed them that each applicant brought forth a set of objective metrics to the application process that included the reputation of the university from which the candidate received her doctorate, class ranking, grade-point average, quantity and quality of publications, teaching evaluations and strength of external recommendation letters.

I then inquired as to how many students would support hiring the minority candidate if she ranked first in terms of these objective metrics? It was perhaps not surprising that 100% of the students thought that she should be hired given that minorities were underrepresented in the college. I then asked how many students would support hiring her if she was objectively ranked second in the applicant pool? This time 85% of the students were in support of hiring her. I asked the same question of the students if she was objectively ranked third, fourth and finally fifth among the applicants. The support for hiring this candidate was 65%, 35% and less than 10%, respectively.

Upon posting the results of the classroom experiment on the whiteboard, I invited the class to interpret the results. Initially the students had no reaction. Finally, a hand was raised ever so tentatively in the back of the room. This student observed that as the price of diversity, as measured in terms of objective metrics foregone, increased the percentage of students supporting the diversity hire declines. This suggests that there is an inverse relationship between the effective price of diversity and the corresponding demand for diversity (as measured in terms of support for it). The majority of the students were willing to pay the price for diversity as long as the minority candidate ranked in the top three in the qualified applicant pool, but support for the minority candidate dropped off markedly thereafter as the price increased. (Discussion of this experiment spilled over into our next class meeting and word of it reached all the way to the Dean’s office, but that is a story for another day.)

The Presidential Race       

The presidential race (as well as the appointment of Supreme Court justices) involves tradeoffs among the candidates that are conceptually no different than the faculty hiring decision in the college of business. Each of the two candidates possesses a set of attributes and the voters assign weights to these attributes in making their respective choices. According to Pew Research, Americans are most concerned about the economy, healthcare, Supreme Court appointments, foreign policy, violent crime, illegal immigration, gun policy, abortion, and climate change. The ranking of these issues in terms of their overall importance varies with the candidate the voter supports.

Many voters view the candidacy of Vice-President Harris as a watershed moment because a woman of color has never occupied the oval office. This would have more than symbolic importance. It is one indication that America has turned the page on its discriminatory past. But at what price? Would voters choose Harris if there is say a 30% greater likelihood of WWIII and a 40% greater likelihood that the border remains open on her watch? Suppose that inflation is expected to be two percentage points higher in an Harris administration. What is the value of race/gender rents and does it exceed the margin of error in the 2024 presidential election?

Conclusion

In his landmark “I have a dream” speech, Martin Luther King departed from his prepared remarks to dream of a day in which his “children will one day live in a nation where they will not be judged by the color of their skin but by the content of their character.” We have now reached an inflection point in our history in which skin color may propel a candidate forward rather than hold them back. I believe that Dr. King would have some ambivalence about this development because nearly 160 years after slavery was abolished in this country a candidate’s skin color still matters. In light of the disparate records of the two presidential candidates over the last eight years, the election results are certain to provide some insight into precisely how much. 

Image: AT via Magic Studio