This report draws on recent findings detailed in Laouénan and Rathelot (2016) and looks at nineteen cities in North America and Europe with the largest number of listings to examine the existence of discrimination on Airbnb.
Airbnb was founded in 2008 and is now a major actor in the accommodation industry. However, the company has faced increasing criticism about the existence of ethnic discrimination on its platform, both on the host and guest sides. This has led Airbnb to react and design an anti-discrimination policy, made public in September 2016.
Two papers have recently documented ‘ethnic price gaps’ and the existence of discrimination against ethnic-minority guests (Edelman and Luca, 2015; Edelman, Luca and Sversky, forthcoming). However, little is known about which policies would be more efficient to fight discrimination, because we don’t know which discriminatory processes are at work.
The research finds that hosts from ethnic minorities have prices which are on average 3.5% lower, after we account for very detailed characteristics and location.
It also shows that the ‘ethnic price gap’ decreases starkly with an increased number of reviews. Among listings with more than twenty reviews, ethnic price gaps are smaller and statistically insignificant.
These findings, combined with additional evidence using a longitudinal sample, suggest that most of the ‘ethnic price gap’ is due to statistical discrimination which could be best solved by improving the amount of information about listings and the reviewing process.
