Effect of neighborhood stigma on economic transactions

Although previously theorized, virtually no rigorous empirical evidence has demonstrated an impact of neighborhood stigma on individual outcomes. To test for the effects of neighborhood stigma on economic transactions, an experimental audit of an online classified market was conducted in 2013–2014. In this market, advertisements were placed for used iPhones in which the neighborhood of the seller was randomly manipulated. Advertisements identifying the seller as a resident of a disadvantaged neighborhood received significantly fewer responses than advertisements identifying the seller as a resident of an advantaged neighborhood. The results provide strong evidence for an effect of neighborhood stigma on economic transactions, suggesting that individuals carry the stigma of their neighborhood with them as they take part in economic exchanges.