Emerging Trends in The Social and Behavioral Sciences

A Social Psychological Approach to Racializing Wealth Inequality

Item

Title

A Social Psychological Approach to Racializing Wealth Inequality

Author

Brown, Joey

Research Area

Class, Status and Power

Topic

Social and Economic Inequality

Abstract

Since the Civil Rights' movements of the 1960s, some Blacks have advanced socioeconomically, resulting in a flourishing Black middle‐class. The Black middle‐class has experienced upward mobility as measured by traditional indicators of education and income. Cultural narratives promoting colorblindness and stressing the rise of a postracial, meritocratic America uphold Black advancement as a symbol of success. However, a focus on racial wealth inequality complicates the narrative of Black success and tells a different story regarding the life chances of Black Americans, even those who are middle‐class. This essay explicates foundational research on the increasing visibility of the Black middle‐class and racial wealth inequality. Secondly, it discusses advances in research on race and wealth inequality as well as recent social psychological theory on social class that may be useful in thinking about mechanisms and consequences of racial wealth inequality. Finally, the essay raises some key issues and questions for social psychologists interested in racial wealth inequality. By no means exhaustive, the goal is to begin a conversation on how social psychologists can contribute to understanding racial wealth inequality. In particular, social psychological work may help us understand continuing racial wealth inequality by considering the role of financial socialization, addressing tensions between objective and subjective social class identification, and thinking about the role of self and identity in wealth creation, accumulation, and dissemination.

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Identifier

etrds0363

extracted text

A Social Psychological Approach
to Racializing Wealth Inequality
JOEY BROWN

Abstract
Since the Civil Rights’ movements of the 1960s, some Blacks have advanced socioeconomically, resulting in a flourishing Black middle-class. The Black middle-class
has experienced upward mobility as measured by traditional indicators of education and income. Cultural narratives promoting colorblindness and stressing the rise
of a postracial, meritocratic America uphold Black advancement as a symbol of success. However, a focus on racial wealth inequality complicates the narrative of Black
success and tells a different story regarding the life chances of Black Americans,
even those who are middle-class. This essay explicates foundational research on the
increasing visibility of the Black middle-class and racial wealth inequality. Secondly,
it discusses advances in research on race and wealth inequality as well as recent social
psychological theory on social class that may be useful in thinking about mechanisms
and consequences of racial wealth inequality. Finally, the essay raises some key issues
and questions for social psychologists interested in racial wealth inequality. By no
means exhaustive, the goal is to begin a conversation on how social psychologists can
contribute to understanding racial wealth inequality. In particular, social psychological work may help us understand continuing racial wealth inequality by considering
the role of financial socialization, addressing tensions between objective and subjective social class identification, and thinking about the role of self and identity in
wealth creation, accumulation, and dissemination.

INTRODUCTION
The Civil Rights’ movement brought a wave of change to Black America. As
racial discrimination has become illegal, open access to higher education and
other institutions has facilitated the advancement of Blacks. Indeed, a Black
middle-class has emerged and realized gains in income, education, and occupation. In a society where we have elected a Black president and the Black
middle-class is thriving, the significance of race may be obscured (Parks &
Hughey, 2011). However, enduring racial wealth inequality results in divergent life chances among different racial groups. To understand contemporary

Emerging Trends in the Social and Behavioral Sciences. Edited by Robert Scott and Stephen Kosslyn.
© 2015 John Wiley & Sons, Inc. ISBN 978-1-118-90077-2.

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race relations, we must interrogate the sources and consequences of racial
wealth inequality.
Increasingly, sociologists have been exploring the significance of racial
wealth inequality and trying to explain the racial wealth gap. Wealth is
a reserve of resources while income refers to a flow of resources (Keister,
2000). In the sociological literature, wealth is considered net worth or net
financial assets (Oliver & Shapiro, 1995). Net worth is calculated by taking
the difference of all assets owned by a household or individual minus
their debts. Net financial assets are calculated similarly but exclude home
and car equity, because these assets are not liquid, or easily converted into
cash. While income allots control over proximal circumstances, wealth
is also an important indicator of social and economic well-being. Wealth
determines people’s ability to endure financial emergencies such as stints of
unemployment or unexpected medical expenses and achieve the American
Dream of securing a home. It is also a means of creating intergenerational
advantages by allowing parents to invest in their children in ways those
who only have income cannot. In this way, wealth is a key factor in the social
reproduction of advantage.
FOUNDATIONAL RESEARCH: RACE, THE BLACK MIDDLE-CLASS,
AND WEALTH
Not all Black people are the same and we have recognized status divisions within the Black community for quite some time. The recognition of
Black socioeconomic diversity extends to Du Bois’s pioneering work The
Philadelphia Negro (Du Bois, 1899). Before the Civil Rights’ movement,
sociologists consistently acknowledged the presence of high status Blacks
even though they were economically disadvantaged compared to Whites
(Drake & Cayton, 1946; Frazier, 1962). However, after the 1960s Civil Rights
movements, Dr William Julius Wilson’s (1980) identification of the development of an increasingly dual class structure among blacks composed of
a Black middle-class and a growing black underclass began a discussion
about the relative impacts of race versus class on the life chances of Black
Ameriacns. Wilson argued that American institutions had evolved in such a
way that class cleavages among Blacks had resulted in divergent life chances
among Blacks who were socioeconomically different. A middle-class group
of Blacks was poised to benefit from Civil Rights’ legislation and their life
chances increased. Meanwhile, shifts in the modern industrial economy
had deleterious effects on the life chances of poor Blacks by restricting
labor market participation while inducing high unemployment rates and
increasing welfare participation. Wilson ends optimistic about the prospects

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for the Black middle-class, which has been followed by a wave of research
on the Black middle-class.
The position of the Black middle-class has been celebrated in American
society and heralded as evidence of racial progress. In general, the Black
middle-class has made gains in the realms of educational, income, and
occupational attainment that are to be celebrated (Hunt & Ray, 2012; Pattillo,
1999). At the same time, scholars are aware of the challenges middle-class
Blacks face in the maintenance of their social class positions. The work
by Landry (1987) provided evidence that newly middle-class Blacks were
concentrated in the lower middle-class and needed dual earner households
to sustain their middle-class status. Further, the work by Pattillo-McCoy
(1999) examines the nuances of life as a member of the Black middle-class
in Chicago. These Blacks live in a buffer zone between white middle-class
neighborhoods and the Black poor, which poses challenges associated with
their status. For instance, the proximity and social ties to less affluent Blacks
make it difficult to for parents to transfer their status to Black youth who are
exposed to a range of lifestyles and opportunities. In comparison, members
of the White middle-class are more likely to live in socioeconomically homogeneous neighborhoods. Nevertheless, middle-class Blacks’ household
compositions have become more diverse (Marsh, Darity, Cohen, Casper, &
Salters, 2007). Further, they do engage in work to maintain and reproduce
their social positions, which is more difficult for lower middle-class Blacks
compared to upper middle-class Blacks (Lacy, 2007). However, another story
emerges when we consider racial wealth inequality.
While sociological research on the Black middle-class has evolved, so has
research on the relationship between wealth and race. Early research focused
on how net worth factored into status attainment and also highlighted Black
disadvantage in terms of lower homeownership rates and home values (M.
R. Jackman & R. W. Jackman, 1980; Parcel, 1982). However, research on racial
wealth inequality was thrust full center after sociologists Melvin Oliver and
Thomas Shapiro’s (1995) book Black Wealth/White Wealth: A New Perspective on Racial Inequality. Using the Survey of Income and Program Participation as well as qualitative interviews, they empirically assessed racial wealth
inequality in the early 1990s comparing Blacks to Whites. They found that
while Blacks had made strides in income, racial wealth differences told a
different story about Blacks’ life chances. In general, wealth is highly concentrated, as the top 20% of households controlled almost 70% of the nation’s
wealth and roughly 87% of liquid financial assets. However, racial wealth
inequality was also very stark with the typical White household holding
roughly 12 times as much wealth as the typical Black household. Further,
roughly 41% of Blacks had less than $1000 in assets compared to 16% of

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Whites. Their results showed that individual economic, social, and demographic factors explained little of the racial wealth gap. In addition, Blacks
and Whites with similar demographic characteristics still had drastically different levels of wealth. Therefore, they invoke the historical legacies of racial
inequality to explain racial wealth inequality. In particular, state policies have
historically limited Black asset accumulation and converged with economic
detours to curb Black business growth and sediment Blacks at the bottom of
the wealth hierarchy. These authors site discrimination in the mortgage and
housing markets and differences in inheritance as key facilitators of contemporary racial wealth inequality.
Since the work by Oliver and Shapiro (1995), sociologists have been more
attentive to wealth inequality and understanding the role of wealth in racial
inequality (Conley, 1999; Keister, 2000; Keister & Moller, 2000; Spilerman,
2000). Conley (1999) finds that including wealth as a measure of economic
well-being significantly decreases racial differences between Blacks and
Whites on a variety of indicators including educational attainment. Further,
the racialized nature of state policies has continued to be highlighted
by researchers such as Katznelson (2005) who makes visible the racially
charged nature of New Deal policies that were purposefully designed to
exclude Blacks. The role of the American Dream in obscuring the significant
impacts of wealth in the reproduction of wealth inequality has also been
highlighted. In particular, research shows that Americans use wealth to
secure advantages for their children through the use of transformative assets
or assets that allow young Whites to transcend their earned class positions.
These assets are provided at key junctures in people’s lives (Shapiro, 2004).
For instance, White parents are in a better position to repay college loans
and provide sizeable down payments for homes in more affluent neighborhoods with good schools. Further, good schools and neighborhoods
are perceived as White. Johnson (2006) finds that families who received
inheritances and family help downplay the impact of their inheritances
and instead emphasize their individual hard work. Contemporarily, Blacks
continue to suffer from marginalization and job discrimination, as well as
discrimination housing and credit markets whereby they are steered into
less affluent neighborhoods.
WEALTH, SOCIAL CLASS, AND SOCIAL PSYCHOLOGY
Recent research on wealth inequality has pushed us to think more about
the factors implicated in wealth accumulation and wealth inequality.
Researchers have considered larger societal forces and individual level
influences on wealth accumulation. Current research shows that wealth is
still highly concentrated by the top 1% of wealth owners who own roughly

A Social Psychological Approach to Racializing Wealth Inequality

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one-third of all the nation’s net worth and financial assets. In particular,
financial assets such as business equity and stocks helped isolate them from
the effects of the most recent Great Recession (Keister & Lee, 2014). Of this
elite group, 92.5% are White. Meanwhile, Blacks, Latinos, and other racial
groups make up 0.5%, 1.2%, and 5.9% of this group, respectively. Shapiro,
Meschede, and Osoro (2013) used 25 years of longitudinal data from the
Panel Study on Income Dynamics to track changes in family wealth from
1984 to 2009. They find that the top five contemporary factors implicated in
racial wealth inequality include years of homeownership, college education,
unemployment, family inheritance, and household income. Further, Blacks
still receive less return to all of these indicators compared to Whites. Meanwhile, Keister (2005) has explicated a model of adult wealth attainment,
where educational attainment is a key mechanism. The model proposes
that family background, individual traits, and the social context influence
educational attainment. In turn, educational attainment influences work
experience, financial literacy, and social network formation, which interact
with each other and contribute to adult wealth levels. Inheritance influences
wealth accumulation directly and indirectly by facilitating educational
attainment. Further, family background also influences whether people
receive an inheritance.
Recently, social psychologists have synthesized empirical research findings
and theorized how social psychology can contribute to making social class
visible and implicating the self in inequality research (Callero, 2013; Milkie,
Warner, & Ray, 2013). To develop a comprehensive understanding of inequality, Milkie, Warner, and Ray suggest that we investigate the production and
resistance of inequality across three levels of social reality: the macro level of
culture and institutions, an intermediate level of interaction, and at the level
of individuals or persons. Social class permeates culture and institutions.
In turn, culture and institutions govern and provide a context for interpersonal interactions that individuals use to distinguish themselves from others.
Simultaneously, interactions impact and interact with individuals’ self presentations, self-feelings, and self-evaluations.
Identity meanings are also associated with social inequality through the
power and value afforded different identities across the three levels of social
reality (Callero, Forthcoming). Identity emerges from human bodies that
need resources in order to survive. The ability of humans to use symbolic
meanings as a form of communication leads to the unequal distribution
of resources, which impacts people’s chances for survival. Callero emphasizes the connection between the symbolic and the body by stressing that
inequalities are inscribed on the body and manifest in the form of unequal
health outcomes. He reinforces a dual view of the self as produced by
social arrangements and as an agent of social change. Therefore, the self is

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implicated in social reproduction and resistance across the levels of social
reality.
TOWARD A SOCIAL PSYCHOLOGICAL APPROACH TO RACIALIZING
WEALTH
Insights from model and social psychological theories by Keister (2005) on
social class inequalities can yield productive social psychological research
that allows us to understand the mechanisms and consequences of racial
wealth inequality. The model by Keister (2005) highlights education, family, and work as institutions that are central to wealth accumulation. Further,
she includes social networks by pointing out the role education plays in influencing work, social network formation, and financial literacy. These are also
institutions and interactions that social psychologists have posited as important for social class inequality (Milkie et al., 2013). In particular, Keister (2005)
suggests that social factors such as family background and religion may influence financial literacy. Social psychologists can develop theories about how
these relationships work and empirically assess them. Understanding the
social nature of financial literacy may be especially important to understanding racial wealth inequality. Further, social psychologists can contribute by
focusing on identity and self in racial wealth inequality. These issues can be
placed in the context of three larger questions that may push us toward a
more comprehensive understanding of racial wealth inequality: What are key
institutions and interactions central to the acquisition of financial literacy?
How does wealth factor into objective and subjective dimensions of social
class? Finally, how do conceptions of the self and identity factor into wealth
creation, accumulation, and dissemination?
Sociologists suggest that financial institutions and markets are associated with economic inequality and recognize the increased importance of
finances in American wealth portfolios (Carruthers & Kim, 2011; Keister,
2005). Further, employers are placing increased responsibility on individuals
to secure their own retirement savings, which suggests that financial literacy
will become an increasingly important component in economic well-being
(O’Rand, 2011). Social psychologists can help gain a better understanding of
the social nature of financial literacy by investigating financial socialization
across the life course and within the key institutions of family, schools, and
occupations. Key questions should revolve around making connections
between ideologies, institutions, interactions, and financial literacy. How
do American ideologies stressing individualism structure financial socialization? How do social networks and interactions within them foster the
acquisition of financial literacy? Also, what role does race and class play in
financial socialization and the attainment of financial literacy?

A Social Psychological Approach to Racializing Wealth Inequality

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In terms of financial socialization within families, the research by Lareau
(2003) on concerted cultivation and natural growth as parenting techniques
of middle-class and working class parents may extend to financial management. A fruitful way to begin a conversation on financial socialization
might consider how class socialization extends to finances and results in an
emerging sense of entitlement or constraint. For instance, the financial situation that children and young adults face in working-class and middle-class
homes varies considerably, possibly resulting in different expectations
associated with financial management. These experiences may influence
how children and young adults come to understand and practice financial
management. Then we might ask if these situations and experiences also
differ across race. Financial socialization within families becomes even more
important as youths grow up and enter credit and housing markets, as
they are sites of discrimination (Pager & Shepherd, 2008). Following Milkie
et al. (2013), schools are also an important institution for understanding the
production of racial wealth inequality, but higher education institutions
must also be examined. Research showing that Blacks and students from
middle-income households are more likely to go into debt suggests that
financial management skills are crucial for Blacks and other students who
will graduate with student loan debt (Houle, 2014; Jackson & Reynolds,
2013). Therefore, interactions taking place inside financial aid offices are also
important in understanding the acquisition of student loan debt by Blacks.
Research should also investigate status safeguarding in the context of higher
education. Other important institutions include financial institutions such
as banks and other lending agencies. As Khan (2012) proposes, researchers
should be attentive to the interchangeability of different social resources
such as cultural knowledge about finances, social networks, and economic
power. Keeping in mind that the interchangeability of social resources may
help facilitate more nuanced understandings of the mechanisms leading to
racial wealth inequality.
Understanding how wealth factors into the objective and subjective dimensions of social class identification will also push us further toward understanding mechanisms and consequences of racial wealth inequality. Wealth
has been shown to be a powerful indicator of well-being (Conley, 1999; Oliver
& Shapiro, 1995). Research has also shown that Americans do have a sense
of their social class positions that roughly mirrors indicators used by sociologists (Hout, 2008). However, the match between subjective and objective
social class maps is higher among people whose social class indicators are
congruent. Further, income has become increasingly important in people’s
likelihood to identify as middle-class. Increasingly, Black Americans are more
likely to identify as middle-class with the relative impacts of education and
income exceeding that of occupation (Hunt & Ray, 2012). Self-identification

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is important because identification includes schemas individuals carry about
themselves. Class identification is important because it is used as a means to
draw race and moral boundaries against others (Lacy, 2007; Lamont, 1992;
Lamont, 2000). While these studies push our understanding of what factors
are important for social class identification and its impacts, future research
should consider the role of wealth in social class identification. Understanding the objective indicators underlying social class identification can provide
a clue as to what socioeconomic indicators are meaningful to people’s assessment of their status. Indeed, economic success has the tendency to be translated into moral virtue in America (Hochschild, 1995). How might wealth
be implicated in the objective and subjective class identifications of different
racial and ethnic groups besides Blacks and Whites as well? Further, how
might wealth influence understandings of human dignity, equality, justice,
and solidarity?
The role that self and identity play in processes of wealth creation, accumulation, and dissemination needs further investigation. As mentioned earlier,
self and identity engage in processes of social reproduction and resistance on
multiple levels. If this is the case, we should ask how the meanings attributed
to race and class identities factor into the strategies individuals use for wealth
creation and accumulation as well as its dissemination. This may also impact
which strategies are recognized and accepted as legitimate. Further, important identity meanings that should be assessed are meanings associated with
being wealthy and poor. Schervish (1994) finds that millionaires describe
their lives through moral biographies, whether by emphasizing hard work
that led to their achievement or by stressing how they overcame distinct burdens and responsibilities that accompany inheriting an elite social position.
In addition, researchers have been engaging in projects that seek to reconceptualize the meaning of poverty to ground it in wealth rather than income
(Martin, 2013; Shapiro & Wolff, 2001; Sherraden, 2011). These researchers
refer to this as being asset poor. In other words, researchers are seeking to
change the meaning of poverty on the cultural level to highlight the vast levels of economic inequality that still remain. What does it meant to be wealthy?
Does this vary according to people’s race and class locations? How do identity meanings associated with wealth intersect with those assigned to race
and class? How do these meanings influence strategies for wealth accumulation and what people do with wealth?
Finally, Callero pushes us to remember that inequality is important because
it impacts humans physically and mentally. While researchers have agreed
that wealth is important in health research (Pollack et al., 2007), the relationship between wealth and mental health typically receives less attention.
Mental health researchers acknowledge that socioeconomic status impacts

A Social Psychological Approach to Racializing Wealth Inequality

9

mental health and is also impacted by mental health (Miech, Caspi, Moffitt, Wright, & Silva, 1999). In other words, wealth levels may impact and
also be impacted by mental health. Mossakowski (2008) finds that wealth
exerts an independent influence on the mental health of young adults and
contributes to explaining racial and ethnic differences in depressive symptoms among Blacks, Whites, and Latinos. Further, Mossakowski (2012) finds
that increased levels of personal control and self-esteem during young adulthood increases the odds of having a positive net worth and owning a home
during midlife. However, these effects of internal personal control are more
important for Whites than Blacks. These results suggest that the relationships among wealth, race/ethnicity, and mental health may differ across the
life course. The work by Schervish, Coutsoukis, and Lewis (1994) finds that
individuals with large amounts of wealth experience psychological empowerment and a sense of hyperagency. A sense of agency supported by wealth
is important as Thoits (2006) has noted that personal agency may be a means
of enhancing mental health because people may choose to opt out of situations that distress them. This research suggests that there are important
relationships among race, wealth, and psychological well-being that need to
be further understood. Social psychologists can implicate wealth in the stress
process model Pearlin (1999) developed to examine social sources of stress by
thinking about wealth as a measure of socioeconomic status.
While social psychologists can push work forward on racial wealth inequality, they must stay in conversation with other sociologists. In particular, sociologists who specialize in race, stratification, gender and family, as well as
economic sociologists are needed to develop a more complete understanding
of racial wealth inequality. Further, researchers should act with a social justice motive toward trying to decrease racial wealth inequalities. Indeed, this
endeavor will take a mixture of quantitative and qualitative methods to get
a better grasp of the more nuanced mechanisms underpinning racial wealth
inequality. Studies on financial socialization need to be historical and contemporary to understand how contemporary changes in the importance of
finances have affected different racial groups. Gaining a full understanding
of the mechanisms and consequences will require interdisciplinary conversations. Sociologists can engage in conversation with economists and psychologists who study behavioral decision-making to understand how society
facilitates and hinders decisions in the best financial interest of individuals.
In general, wealth is a distal concern, but as individuals and groups gain
higher levels of material success, wealth becomes a more salient economic
resource. It is difficult to be concerned with wealth when you have more
proximal concerns such as if your paycheck will allow you to buy groceries.
Nevertheless, wealth is extremely important because of its ability to secure
social, material, and intergenerational advantages. Further, racial wealth

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inequality is not only a Black and White thing, although these disparities are
likely the most extreme. Therefore, understanding wealth inequality across
and within racial and ethnic groups is also an important task of sociologists.
Extreme wealth inequality, between racial groups and between the top
wealth owners and the rest of the wealth distribution, is a looming threat to
the well-being of all.
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(2007). Should health studies measure wealth? A systematic review. American Journal of Preventive Medicine, 33(3), 250–264.
Schervish, P. G. (1994). Wealth in western thought: The case for and against riches. Westport, CT: Praeger.
Schervish, P. G., Coutsoukis, P. E., & Lewis, E. (1994). Gospels of wealth: How the rich
portray their lives. Westport, CT: Praeger.
Shapiro, T. M. (2004). The hidden cost of being African American: How wealth perpetuates
inequality. New York, NY: Oxford University Press.
Shapiro, T., Meschede, T., & Osoro, S. (2013). The roots of the widening racial wealth
gap: Explaining the black-white economic divide. Waltham, MA: Brandeis University
Institute on Assets and Social Policy.
Shapiro, T. M., & Wolff, E. N. (2001). Assets for the poor: The benefits of spreading asset
ownership. New York, NY: Russell Sage Foundation.
Sherraden, M. (2011). Asset-based policies and financial services: Toward fairness
and inclusion. In R. D. Plotnick (Ed.), Old assumptions, new realities: Economic security for working families in the 21st century. New York, NY: Russell Sage Foundation.
Spilerman, S. (2000). Wealth and stratification processes. Annual Review of Sociology,
26, 497–524.
Thoits, P. A. (2006). Personal agency in the stress process. Journal of Health and Social
Behavior, 47(4), 309–323.
Wilson, W. J. (1980). The declining significance of race: Blacks and changing American
institutions (2nd ed.). Chicago, IL: University of Chicago Press.

FURTHER READING
Fiske, S. T., & Markus, H. R. (2012). Facing social class: How societal rank influences
interaction. New York, NY: Russell Sage Foundation.
Keister, L. A. (2000). Wealth in America: Trends in wealth inequality. New York, NY:
Cambridge University Press.
Keister, L. A. (2005). Getting rich: America’s new rich and how they got that way. New
York, NY: Cambridge University Press.
Lareau, A., & Conley, D. (2008). Social class: How does it work? New York, NY: Russell
Sage Foundation.
Oliver, M. L., & Shapiro, T. M. (1995). Black wealth/white wealth: A new perspective on
racial inequality. New York, NY: Routledge.
Shapiro, T. M., & Wolff, E. N. (2001). Assets for the poor: The benefits of spreading asset
ownership. New York, NY: Russell Sage Foundation.
Wilson, W. J. (1980). The declining significance of race: Blacks and changing American
institutions (2nd ed.). Chicago, IL: University of Chicago Press.

A Social Psychological Approach to Racializing Wealth Inequality

13

JOEY BROWN SHORT BIOGRAPHY
Joey Brown is currently a sociology graduate student at the University
of Maryland. His research interests include race, wealth inequality, and
morality.
http://www.socy.umd.edu/gradstudents
RELATED ESSAYS
Global Income Inequality (Sociology), Glenn Firebaugh
State of the Art in Competition Research (Psychology), Márta Fülöp and
Gábor Orosz
Education for Mobility or Status Reproduction? (Sociology), Karyn Lacy
Political Inequality (Sociology), Jeff Manza
Health and Social Inequality (Sociology), Bernice A. Pescosolido
Impact of Limited Education on Employment Prospects in Advanced
Economies (Sociology), Heike Solga
Public Opinion, The 1%, and Income Redistribution (Sociology), David L.
Weakliem
Gender and Work (Sociology), Christine L. Williams and Megan Tobias Neely



A Social Psychological Approach
to Racializing Wealth Inequality
JOEY BROWN

Abstract
Since the Civil Rights’ movements of the 1960s, some Blacks have advanced socioeconomically, resulting in a flourishing Black middle-class. The Black middle-class
has experienced upward mobility as measured by traditional indicators of education and income. Cultural narratives promoting colorblindness and stressing the rise
of a postracial, meritocratic America uphold Black advancement as a symbol of success. However, a focus on racial wealth inequality complicates the narrative of Black
success and tells a different story regarding the life chances of Black Americans,
even those who are middle-class. This essay explicates foundational research on the
increasing visibility of the Black middle-class and racial wealth inequality. Secondly,
it discusses advances in research on race and wealth inequality as well as recent social
psychological theory on social class that may be useful in thinking about mechanisms
and consequences of racial wealth inequality. Finally, the essay raises some key issues
and questions for social psychologists interested in racial wealth inequality. By no
means exhaustive, the goal is to begin a conversation on how social psychologists can
contribute to understanding racial wealth inequality. In particular, social psychological work may help us understand continuing racial wealth inequality by considering
the role of financial socialization, addressing tensions between objective and subjective social class identification, and thinking about the role of self and identity in
wealth creation, accumulation, and dissemination.

INTRODUCTION
The Civil Rights’ movement brought a wave of change to Black America. As
racial discrimination has become illegal, open access to higher education and
other institutions has facilitated the advancement of Blacks. Indeed, a Black
middle-class has emerged and realized gains in income, education, and occupation. In a society where we have elected a Black president and the Black
middle-class is thriving, the significance of race may be obscured (Parks &
Hughey, 2011). However, enduring racial wealth inequality results in divergent life chances among different racial groups. To understand contemporary

Emerging Trends in the Social and Behavioral Sciences. Edited by Robert Scott and Stephen Kosslyn.
© 2015 John Wiley & Sons, Inc. ISBN 978-1-118-90077-2.

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race relations, we must interrogate the sources and consequences of racial
wealth inequality.
Increasingly, sociologists have been exploring the significance of racial
wealth inequality and trying to explain the racial wealth gap. Wealth is
a reserve of resources while income refers to a flow of resources (Keister,
2000). In the sociological literature, wealth is considered net worth or net
financial assets (Oliver & Shapiro, 1995). Net worth is calculated by taking
the difference of all assets owned by a household or individual minus
their debts. Net financial assets are calculated similarly but exclude home
and car equity, because these assets are not liquid, or easily converted into
cash. While income allots control over proximal circumstances, wealth
is also an important indicator of social and economic well-being. Wealth
determines people’s ability to endure financial emergencies such as stints of
unemployment or unexpected medical expenses and achieve the American
Dream of securing a home. It is also a means of creating intergenerational
advantages by allowing parents to invest in their children in ways those
who only have income cannot. In this way, wealth is a key factor in the social
reproduction of advantage.
FOUNDATIONAL RESEARCH: RACE, THE BLACK MIDDLE-CLASS,
AND WEALTH
Not all Black people are the same and we have recognized status divisions within the Black community for quite some time. The recognition of
Black socioeconomic diversity extends to Du Bois’s pioneering work The
Philadelphia Negro (Du Bois, 1899). Before the Civil Rights’ movement,
sociologists consistently acknowledged the presence of high status Blacks
even though they were economically disadvantaged compared to Whites
(Drake & Cayton, 1946; Frazier, 1962). However, after the 1960s Civil Rights
movements, Dr William Julius Wilson’s (1980) identification of the development of an increasingly dual class structure among blacks composed of
a Black middle-class and a growing black underclass began a discussion
about the relative impacts of race versus class on the life chances of Black
Ameriacns. Wilson argued that American institutions had evolved in such a
way that class cleavages among Blacks had resulted in divergent life chances
among Blacks who were socioeconomically different. A middle-class group
of Blacks was poised to benefit from Civil Rights’ legislation and their life
chances increased. Meanwhile, shifts in the modern industrial economy
had deleterious effects on the life chances of poor Blacks by restricting
labor market participation while inducing high unemployment rates and
increasing welfare participation. Wilson ends optimistic about the prospects

A Social Psychological Approach to Racializing Wealth Inequality

3

for the Black middle-class, which has been followed by a wave of research
on the Black middle-class.
The position of the Black middle-class has been celebrated in American
society and heralded as evidence of racial progress. In general, the Black
middle-class has made gains in the realms of educational, income, and
occupational attainment that are to be celebrated (Hunt & Ray, 2012; Pattillo,
1999). At the same time, scholars are aware of the challenges middle-class
Blacks face in the maintenance of their social class positions. The work
by Landry (1987) provided evidence that newly middle-class Blacks were
concentrated in the lower middle-class and needed dual earner households
to sustain their middle-class status. Further, the work by Pattillo-McCoy
(1999) examines the nuances of life as a member of the Black middle-class
in Chicago. These Blacks live in a buffer zone between white middle-class
neighborhoods and the Black poor, which poses challenges associated with
their status. For instance, the proximity and social ties to less affluent Blacks
make it difficult to for parents to transfer their status to Black youth who are
exposed to a range of lifestyles and opportunities. In comparison, members
of the White middle-class are more likely to live in socioeconomically homogeneous neighborhoods. Nevertheless, middle-class Blacks’ household
compositions have become more diverse (Marsh, Darity, Cohen, Casper, &
Salters, 2007). Further, they do engage in work to maintain and reproduce
their social positions, which is more difficult for lower middle-class Blacks
compared to upper middle-class Blacks (Lacy, 2007). However, another story
emerges when we consider racial wealth inequality.
While sociological research on the Black middle-class has evolved, so has
research on the relationship between wealth and race. Early research focused
on how net worth factored into status attainment and also highlighted Black
disadvantage in terms of lower homeownership rates and home values (M.
R. Jackman & R. W. Jackman, 1980; Parcel, 1982). However, research on racial
wealth inequality was thrust full center after sociologists Melvin Oliver and
Thomas Shapiro’s (1995) book Black Wealth/White Wealth: A New Perspective on Racial Inequality. Using the Survey of Income and Program Participation as well as qualitative interviews, they empirically assessed racial wealth
inequality in the early 1990s comparing Blacks to Whites. They found that
while Blacks had made strides in income, racial wealth differences told a
different story about Blacks’ life chances. In general, wealth is highly concentrated, as the top 20% of households controlled almost 70% of the nation’s
wealth and roughly 87% of liquid financial assets. However, racial wealth
inequality was also very stark with the typical White household holding
roughly 12 times as much wealth as the typical Black household. Further,
roughly 41% of Blacks had less than $1000 in assets compared to 16% of

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Whites. Their results showed that individual economic, social, and demographic factors explained little of the racial wealth gap. In addition, Blacks
and Whites with similar demographic characteristics still had drastically different levels of wealth. Therefore, they invoke the historical legacies of racial
inequality to explain racial wealth inequality. In particular, state policies have
historically limited Black asset accumulation and converged with economic
detours to curb Black business growth and sediment Blacks at the bottom of
the wealth hierarchy. These authors site discrimination in the mortgage and
housing markets and differences in inheritance as key facilitators of contemporary racial wealth inequality.
Since the work by Oliver and Shapiro (1995), sociologists have been more
attentive to wealth inequality and understanding the role of wealth in racial
inequality (Conley, 1999; Keister, 2000; Keister & Moller, 2000; Spilerman,
2000). Conley (1999) finds that including wealth as a measure of economic
well-being significantly decreases racial differences between Blacks and
Whites on a variety of indicators including educational attainment. Further,
the racialized nature of state policies has continued to be highlighted
by researchers such as Katznelson (2005) who makes visible the racially
charged nature of New Deal policies that were purposefully designed to
exclude Blacks. The role of the American Dream in obscuring the significant
impacts of wealth in the reproduction of wealth inequality has also been
highlighted. In particular, research shows that Americans use wealth to
secure advantages for their children through the use of transformative assets
or assets that allow young Whites to transcend their earned class positions.
These assets are provided at key junctures in people’s lives (Shapiro, 2004).
For instance, White parents are in a better position to repay college loans
and provide sizeable down payments for homes in more affluent neighborhoods with good schools. Further, good schools and neighborhoods
are perceived as White. Johnson (2006) finds that families who received
inheritances and family help downplay the impact of their inheritances
and instead emphasize their individual hard work. Contemporarily, Blacks
continue to suffer from marginalization and job discrimination, as well as
discrimination housing and credit markets whereby they are steered into
less affluent neighborhoods.
WEALTH, SOCIAL CLASS, AND SOCIAL PSYCHOLOGY
Recent research on wealth inequality has pushed us to think more about
the factors implicated in wealth accumulation and wealth inequality.
Researchers have considered larger societal forces and individual level
influences on wealth accumulation. Current research shows that wealth is
still highly concentrated by the top 1% of wealth owners who own roughly

A Social Psychological Approach to Racializing Wealth Inequality

5

one-third of all the nation’s net worth and financial assets. In particular,
financial assets such as business equity and stocks helped isolate them from
the effects of the most recent Great Recession (Keister & Lee, 2014). Of this
elite group, 92.5% are White. Meanwhile, Blacks, Latinos, and other racial
groups make up 0.5%, 1.2%, and 5.9% of this group, respectively. Shapiro,
Meschede, and Osoro (2013) used 25 years of longitudinal data from the
Panel Study on Income Dynamics to track changes in family wealth from
1984 to 2009. They find that the top five contemporary factors implicated in
racial wealth inequality include years of homeownership, college education,
unemployment, family inheritance, and household income. Further, Blacks
still receive less return to all of these indicators compared to Whites. Meanwhile, Keister (2005) has explicated a model of adult wealth attainment,
where educational attainment is a key mechanism. The model proposes
that family background, individual traits, and the social context influence
educational attainment. In turn, educational attainment influences work
experience, financial literacy, and social network formation, which interact
with each other and contribute to adult wealth levels. Inheritance influences
wealth accumulation directly and indirectly by facilitating educational
attainment. Further, family background also influences whether people
receive an inheritance.
Recently, social psychologists have synthesized empirical research findings
and theorized how social psychology can contribute to making social class
visible and implicating the self in inequality research (Callero, 2013; Milkie,
Warner, & Ray, 2013). To develop a comprehensive understanding of inequality, Milkie, Warner, and Ray suggest that we investigate the production and
resistance of inequality across three levels of social reality: the macro level of
culture and institutions, an intermediate level of interaction, and at the level
of individuals or persons. Social class permeates culture and institutions.
In turn, culture and institutions govern and provide a context for interpersonal interactions that individuals use to distinguish themselves from others.
Simultaneously, interactions impact and interact with individuals’ self presentations, self-feelings, and self-evaluations.
Identity meanings are also associated with social inequality through the
power and value afforded different identities across the three levels of social
reality (Callero, Forthcoming). Identity emerges from human bodies that
need resources in order to survive. The ability of humans to use symbolic
meanings as a form of communication leads to the unequal distribution
of resources, which impacts people’s chances for survival. Callero emphasizes the connection between the symbolic and the body by stressing that
inequalities are inscribed on the body and manifest in the form of unequal
health outcomes. He reinforces a dual view of the self as produced by
social arrangements and as an agent of social change. Therefore, the self is

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EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES

implicated in social reproduction and resistance across the levels of social
reality.
TOWARD A SOCIAL PSYCHOLOGICAL APPROACH TO RACIALIZING
WEALTH
Insights from model and social psychological theories by Keister (2005) on
social class inequalities can yield productive social psychological research
that allows us to understand the mechanisms and consequences of racial
wealth inequality. The model by Keister (2005) highlights education, family, and work as institutions that are central to wealth accumulation. Further,
she includes social networks by pointing out the role education plays in influencing work, social network formation, and financial literacy. These are also
institutions and interactions that social psychologists have posited as important for social class inequality (Milkie et al., 2013). In particular, Keister (2005)
suggests that social factors such as family background and religion may influence financial literacy. Social psychologists can develop theories about how
these relationships work and empirically assess them. Understanding the
social nature of financial literacy may be especially important to understanding racial wealth inequality. Further, social psychologists can contribute by
focusing on identity and self in racial wealth inequality. These issues can be
placed in the context of three larger questions that may push us toward a
more comprehensive understanding of racial wealth inequality: What are key
institutions and interactions central to the acquisition of financial literacy?
How does wealth factor into objective and subjective dimensions of social
class? Finally, how do conceptions of the self and identity factor into wealth
creation, accumulation, and dissemination?
Sociologists suggest that financial institutions and markets are associated with economic inequality and recognize the increased importance of
finances in American wealth portfolios (Carruthers & Kim, 2011; Keister,
2005). Further, employers are placing increased responsibility on individuals
to secure their own retirement savings, which suggests that financial literacy
will become an increasingly important component in economic well-being
(O’Rand, 2011). Social psychologists can help gain a better understanding of
the social nature of financial literacy by investigating financial socialization
across the life course and within the key institutions of family, schools, and
occupations. Key questions should revolve around making connections
between ideologies, institutions, interactions, and financial literacy. How
do American ideologies stressing individualism structure financial socialization? How do social networks and interactions within them foster the
acquisition of financial literacy? Also, what role does race and class play in
financial socialization and the attainment of financial literacy?

A Social Psychological Approach to Racializing Wealth Inequality

7

In terms of financial socialization within families, the research by Lareau
(2003) on concerted cultivation and natural growth as parenting techniques
of middle-class and working class parents may extend to financial management. A fruitful way to begin a conversation on financial socialization
might consider how class socialization extends to finances and results in an
emerging sense of entitlement or constraint. For instance, the financial situation that children and young adults face in working-class and middle-class
homes varies considerably, possibly resulting in different expectations
associated with financial management. These experiences may influence
how children and young adults come to understand and practice financial
management. Then we might ask if these situations and experiences also
differ across race. Financial socialization within families becomes even more
important as youths grow up and enter credit and housing markets, as
they are sites of discrimination (Pager & Shepherd, 2008). Following Milkie
et al. (2013), schools are also an important institution for understanding the
production of racial wealth inequality, but higher education institutions
must also be examined. Research showing that Blacks and students from
middle-income households are more likely to go into debt suggests that
financial management skills are crucial for Blacks and other students who
will graduate with student loan debt (Houle, 2014; Jackson & Reynolds,
2013). Therefore, interactions taking place inside financial aid offices are also
important in understanding the acquisition of student loan debt by Blacks.
Research should also investigate status safeguarding in the context of higher
education. Other important institutions include financial institutions such
as banks and other lending agencies. As Khan (2012) proposes, researchers
should be attentive to the interchangeability of different social resources
such as cultural knowledge about finances, social networks, and economic
power. Keeping in mind that the interchangeability of social resources may
help facilitate more nuanced understandings of the mechanisms leading to
racial wealth inequality.
Understanding how wealth factors into the objective and subjective dimensions of social class identification will also push us further toward understanding mechanisms and consequences of racial wealth inequality. Wealth
has been shown to be a powerful indicator of well-being (Conley, 1999; Oliver
& Shapiro, 1995). Research has also shown that Americans do have a sense
of their social class positions that roughly mirrors indicators used by sociologists (Hout, 2008). However, the match between subjective and objective
social class maps is higher among people whose social class indicators are
congruent. Further, income has become increasingly important in people’s
likelihood to identify as middle-class. Increasingly, Black Americans are more
likely to identify as middle-class with the relative impacts of education and
income exceeding that of occupation (Hunt & Ray, 2012). Self-identification

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EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES

is important because identification includes schemas individuals carry about
themselves. Class identification is important because it is used as a means to
draw race and moral boundaries against others (Lacy, 2007; Lamont, 1992;
Lamont, 2000). While these studies push our understanding of what factors
are important for social class identification and its impacts, future research
should consider the role of wealth in social class identification. Understanding the objective indicators underlying social class identification can provide
a clue as to what socioeconomic indicators are meaningful to people’s assessment of their status. Indeed, economic success has the tendency to be translated into moral virtue in America (Hochschild, 1995). How might wealth
be implicated in the objective and subjective class identifications of different
racial and ethnic groups besides Blacks and Whites as well? Further, how
might wealth influence understandings of human dignity, equality, justice,
and solidarity?
The role that self and identity play in processes of wealth creation, accumulation, and dissemination needs further investigation. As mentioned earlier,
self and identity engage in processes of social reproduction and resistance on
multiple levels. If this is the case, we should ask how the meanings attributed
to race and class identities factor into the strategies individuals use for wealth
creation and accumulation as well as its dissemination. This may also impact
which strategies are recognized and accepted as legitimate. Further, important identity meanings that should be assessed are meanings associated with
being wealthy and poor. Schervish (1994) finds that millionaires describe
their lives through moral biographies, whether by emphasizing hard work
that led to their achievement or by stressing how they overcame distinct burdens and responsibilities that accompany inheriting an elite social position.
In addition, researchers have been engaging in projects that seek to reconceptualize the meaning of poverty to ground it in wealth rather than income
(Martin, 2013; Shapiro & Wolff, 2001; Sherraden, 2011). These researchers
refer to this as being asset poor. In other words, researchers are seeking to
change the meaning of poverty on the cultural level to highlight the vast levels of economic inequality that still remain. What does it meant to be wealthy?
Does this vary according to people’s race and class locations? How do identity meanings associated with wealth intersect with those assigned to race
and class? How do these meanings influence strategies for wealth accumulation and what people do with wealth?
Finally, Callero pushes us to remember that inequality is important because
it impacts humans physically and mentally. While researchers have agreed
that wealth is important in health research (Pollack et al., 2007), the relationship between wealth and mental health typically receives less attention.
Mental health researchers acknowledge that socioeconomic status impacts

A Social Psychological Approach to Racializing Wealth Inequality

9

mental health and is also impacted by mental health (Miech, Caspi, Moffitt, Wright, & Silva, 1999). In other words, wealth levels may impact and
also be impacted by mental health. Mossakowski (2008) finds that wealth
exerts an independent influence on the mental health of young adults and
contributes to explaining racial and ethnic differences in depressive symptoms among Blacks, Whites, and Latinos. Further, Mossakowski (2012) finds
that increased levels of personal control and self-esteem during young adulthood increases the odds of having a positive net worth and owning a home
during midlife. However, these effects of internal personal control are more
important for Whites than Blacks. These results suggest that the relationships among wealth, race/ethnicity, and mental health may differ across the
life course. The work by Schervish, Coutsoukis, and Lewis (1994) finds that
individuals with large amounts of wealth experience psychological empowerment and a sense of hyperagency. A sense of agency supported by wealth
is important as Thoits (2006) has noted that personal agency may be a means
of enhancing mental health because people may choose to opt out of situations that distress them. This research suggests that there are important
relationships among race, wealth, and psychological well-being that need to
be further understood. Social psychologists can implicate wealth in the stress
process model Pearlin (1999) developed to examine social sources of stress by
thinking about wealth as a measure of socioeconomic status.
While social psychologists can push work forward on racial wealth inequality, they must stay in conversation with other sociologists. In particular, sociologists who specialize in race, stratification, gender and family, as well as
economic sociologists are needed to develop a more complete understanding
of racial wealth inequality. Further, researchers should act with a social justice motive toward trying to decrease racial wealth inequalities. Indeed, this
endeavor will take a mixture of quantitative and qualitative methods to get
a better grasp of the more nuanced mechanisms underpinning racial wealth
inequality. Studies on financial socialization need to be historical and contemporary to understand how contemporary changes in the importance of
finances have affected different racial groups. Gaining a full understanding
of the mechanisms and consequences will require interdisciplinary conversations. Sociologists can engage in conversation with economists and psychologists who study behavioral decision-making to understand how society
facilitates and hinders decisions in the best financial interest of individuals.
In general, wealth is a distal concern, but as individuals and groups gain
higher levels of material success, wealth becomes a more salient economic
resource. It is difficult to be concerned with wealth when you have more
proximal concerns such as if your paycheck will allow you to buy groceries.
Nevertheless, wealth is extremely important because of its ability to secure
social, material, and intergenerational advantages. Further, racial wealth

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EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES

inequality is not only a Black and White thing, although these disparities are
likely the most extreme. Therefore, understanding wealth inequality across
and within racial and ethnic groups is also an important task of sociologists.
Extreme wealth inequality, between racial groups and between the top
wealth owners and the rest of the wealth distribution, is a looming threat to
the well-being of all.
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Oliver, M. L., & Shapiro, T. M. (1995). Black wealth/white wealth: A new perspective on
racial inequality. New York, NY: Routledge.
O’Rand, A. M. (2011). 2010 SSS presidential address: The devolution of risk and the
changing life course in the united states. Social Forces, 90(1), 1–16.
Pager, D., & Shepherd, H. (2008). The sociology of discrimination: Racial discrimination in employment, housing, credit, and consumer markets. Annual Review of
Sociology, 34, 181–209.
Parcel, T. L. (1982). Wealth-accumulation of black and white men – the case of housing equity. Social Problems, 30(2), 199–211.
Parks, G., & Hughey, M. W. (2011). The Obamas and a (post) racial America? Oxford.
New York, NY: Oxford University Press.
Pattillo, M. E. (1999). Black picket fences: Privilege and peril among the black middle class.
Chicago, IL: University of Chicago, Press.
Pattillo-McCoy, M. (1999). Black Picket Fences: Privilege and Peril in the Black Middle
Class Neighborhood. Chicago: Univ. ChicagoPress.

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Pearlin, L. (1999). The stress process revisited: Reflections on concepts and their interrelationships. In C. Aneshensel & J. C. Phelan (Eds.), Handbook of the sociology of
mental health (pp. 395–415). New York, NY: Plenium.
Pollack, C. E., Chideya, S., Cubbin, C., Williams, B., Dekker, M., & Braveman, P.
(2007). Should health studies measure wealth? A systematic review. American Journal of Preventive Medicine, 33(3), 250–264.
Schervish, P. G. (1994). Wealth in western thought: The case for and against riches. Westport, CT: Praeger.
Schervish, P. G., Coutsoukis, P. E., & Lewis, E. (1994). Gospels of wealth: How the rich
portray their lives. Westport, CT: Praeger.
Shapiro, T. M. (2004). The hidden cost of being African American: How wealth perpetuates
inequality. New York, NY: Oxford University Press.
Shapiro, T., Meschede, T., & Osoro, S. (2013). The roots of the widening racial wealth
gap: Explaining the black-white economic divide. Waltham, MA: Brandeis University
Institute on Assets and Social Policy.
Shapiro, T. M., & Wolff, E. N. (2001). Assets for the poor: The benefits of spreading asset
ownership. New York, NY: Russell Sage Foundation.
Sherraden, M. (2011). Asset-based policies and financial services: Toward fairness
and inclusion. In R. D. Plotnick (Ed.), Old assumptions, new realities: Economic security for working families in the 21st century. New York, NY: Russell Sage Foundation.
Spilerman, S. (2000). Wealth and stratification processes. Annual Review of Sociology,
26, 497–524.
Thoits, P. A. (2006). Personal agency in the stress process. Journal of Health and Social
Behavior, 47(4), 309–323.
Wilson, W. J. (1980). The declining significance of race: Blacks and changing American
institutions (2nd ed.). Chicago, IL: University of Chicago Press.

FURTHER READING
Fiske, S. T., & Markus, H. R. (2012). Facing social class: How societal rank influences
interaction. New York, NY: Russell Sage Foundation.
Keister, L. A. (2000). Wealth in America: Trends in wealth inequality. New York, NY:
Cambridge University Press.
Keister, L. A. (2005). Getting rich: America’s new rich and how they got that way. New
York, NY: Cambridge University Press.
Lareau, A., & Conley, D. (2008). Social class: How does it work? New York, NY: Russell
Sage Foundation.
Oliver, M. L., & Shapiro, T. M. (1995). Black wealth/white wealth: A new perspective on
racial inequality. New York, NY: Routledge.
Shapiro, T. M., & Wolff, E. N. (2001). Assets for the poor: The benefits of spreading asset
ownership. New York, NY: Russell Sage Foundation.
Wilson, W. J. (1980). The declining significance of race: Blacks and changing American
institutions (2nd ed.). Chicago, IL: University of Chicago Press.

A Social Psychological Approach to Racializing Wealth Inequality

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JOEY BROWN SHORT BIOGRAPHY
Joey Brown is currently a sociology graduate student at the University
of Maryland. His research interests include race, wealth inequality, and
morality.
http://www.socy.umd.edu/gradstudents
RELATED ESSAYS
Global Income Inequality (Sociology), Glenn Firebaugh
State of the Art in Competition Research (Psychology), Márta Fülöp and
Gábor Orosz
Education for Mobility or Status Reproduction? (Sociology), Karyn Lacy
Political Inequality (Sociology), Jeff Manza
Health and Social Inequality (Sociology), Bernice A. Pescosolido
Impact of Limited Education on Employment Prospects in Advanced
Economies (Sociology), Heike Solga
Public Opinion, The 1%, and Income Redistribution (Sociology), David L.
Weakliem
Gender and Work (Sociology), Christine L. Williams and Megan Tobias Neely


A Social Psychological Approach
to Racializing Wealth Inequality
JOEY BROWN

Abstract
Since the Civil Rights’ movements of the 1960s, some Blacks have advanced socioeconomically, resulting in a flourishing Black middle-class. The Black middle-class
has experienced upward mobility as measured by traditional indicators of education and income. Cultural narratives promoting colorblindness and stressing the rise
of a postracial, meritocratic America uphold Black advancement as a symbol of success. However, a focus on racial wealth inequality complicates the narrative of Black
success and tells a different story regarding the life chances of Black Americans,
even those who are middle-class. This essay explicates foundational research on the
increasing visibility of the Black middle-class and racial wealth inequality. Secondly,
it discusses advances in research on race and wealth inequality as well as recent social
psychological theory on social class that may be useful in thinking about mechanisms
and consequences of racial wealth inequality. Finally, the essay raises some key issues
and questions for social psychologists interested in racial wealth inequality. By no
means exhaustive, the goal is to begin a conversation on how social psychologists can
contribute to understanding racial wealth inequality. In particular, social psychological work may help us understand continuing racial wealth inequality by considering
the role of financial socialization, addressing tensions between objective and subjective social class identification, and thinking about the role of self and identity in
wealth creation, accumulation, and dissemination.

INTRODUCTION
The Civil Rights’ movement brought a wave of change to Black America. As
racial discrimination has become illegal, open access to higher education and
other institutions has facilitated the advancement of Blacks. Indeed, a Black
middle-class has emerged and realized gains in income, education, and occupation. In a society where we have elected a Black president and the Black
middle-class is thriving, the significance of race may be obscured (Parks &
Hughey, 2011). However, enduring racial wealth inequality results in divergent life chances among different racial groups. To understand contemporary

Emerging Trends in the Social and Behavioral Sciences. Edited by Robert Scott and Stephen Kosslyn.
© 2015 John Wiley & Sons, Inc. ISBN 978-1-118-90077-2.

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race relations, we must interrogate the sources and consequences of racial
wealth inequality.
Increasingly, sociologists have been exploring the significance of racial
wealth inequality and trying to explain the racial wealth gap. Wealth is
a reserve of resources while income refers to a flow of resources (Keister,
2000). In the sociological literature, wealth is considered net worth or net
financial assets (Oliver & Shapiro, 1995). Net worth is calculated by taking
the difference of all assets owned by a household or individual minus
their debts. Net financial assets are calculated similarly but exclude home
and car equity, because these assets are not liquid, or easily converted into
cash. While income allots control over proximal circumstances, wealth
is also an important indicator of social and economic well-being. Wealth
determines people’s ability to endure financial emergencies such as stints of
unemployment or unexpected medical expenses and achieve the American
Dream of securing a home. It is also a means of creating intergenerational
advantages by allowing parents to invest in their children in ways those
who only have income cannot. In this way, wealth is a key factor in the social
reproduction of advantage.
FOUNDATIONAL RESEARCH: RACE, THE BLACK MIDDLE-CLASS,
AND WEALTH
Not all Black people are the same and we have recognized status divisions within the Black community for quite some time. The recognition of
Black socioeconomic diversity extends to Du Bois’s pioneering work The
Philadelphia Negro (Du Bois, 1899). Before the Civil Rights’ movement,
sociologists consistently acknowledged the presence of high status Blacks
even though they were economically disadvantaged compared to Whites
(Drake & Cayton, 1946; Frazier, 1962). However, after the 1960s Civil Rights
movements, Dr William Julius Wilson’s (1980) identification of the development of an increasingly dual class structure among blacks composed of
a Black middle-class and a growing black underclass began a discussion
about the relative impacts of race versus class on the life chances of Black
Ameriacns. Wilson argued that American institutions had evolved in such a
way that class cleavages among Blacks had resulted in divergent life chances
among Blacks who were socioeconomically different. A middle-class group
of Blacks was poised to benefit from Civil Rights’ legislation and their life
chances increased. Meanwhile, shifts in the modern industrial economy
had deleterious effects on the life chances of poor Blacks by restricting
labor market participation while inducing high unemployment rates and
increasing welfare participation. Wilson ends optimistic about the prospects

A Social Psychological Approach to Racializing Wealth Inequality

3

for the Black middle-class, which has been followed by a wave of research
on the Black middle-class.
The position of the Black middle-class has been celebrated in American
society and heralded as evidence of racial progress. In general, the Black
middle-class has made gains in the realms of educational, income, and
occupational attainment that are to be celebrated (Hunt & Ray, 2012; Pattillo,
1999). At the same time, scholars are aware of the challenges middle-class
Blacks face in the maintenance of their social class positions. The work
by Landry (1987) provided evidence that newly middle-class Blacks were
concentrated in the lower middle-class and needed dual earner households
to sustain their middle-class status. Further, the work by Pattillo-McCoy
(1999) examines the nuances of life as a member of the Black middle-class
in Chicago. These Blacks live in a buffer zone between white middle-class
neighborhoods and the Black poor, which poses challenges associated with
their status. For instance, the proximity and social ties to less affluent Blacks
make it difficult to for parents to transfer their status to Black youth who are
exposed to a range of lifestyles and opportunities. In comparison, members
of the White middle-class are more likely to live in socioeconomically homogeneous neighborhoods. Nevertheless, middle-class Blacks’ household
compositions have become more diverse (Marsh, Darity, Cohen, Casper, &
Salters, 2007). Further, they do engage in work to maintain and reproduce
their social positions, which is more difficult for lower middle-class Blacks
compared to upper middle-class Blacks (Lacy, 2007). However, another story
emerges when we consider racial wealth inequality.
While sociological research on the Black middle-class has evolved, so has
research on the relationship between wealth and race. Early research focused
on how net worth factored into status attainment and also highlighted Black
disadvantage in terms of lower homeownership rates and home values (M.
R. Jackman & R. W. Jackman, 1980; Parcel, 1982). However, research on racial
wealth inequality was thrust full center after sociologists Melvin Oliver and
Thomas Shapiro’s (1995) book Black Wealth/White Wealth: A New Perspective on Racial Inequality. Using the Survey of Income and Program Participation as well as qualitative interviews, they empirically assessed racial wealth
inequality in the early 1990s comparing Blacks to Whites. They found that
while Blacks had made strides in income, racial wealth differences told a
different story about Blacks’ life chances. In general, wealth is highly concentrated, as the top 20% of households controlled almost 70% of the nation’s
wealth and roughly 87% of liquid financial assets. However, racial wealth
inequality was also very stark with the typical White household holding
roughly 12 times as much wealth as the typical Black household. Further,
roughly 41% of Blacks had less than $1000 in assets compared to 16% of

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Whites. Their results showed that individual economic, social, and demographic factors explained little of the racial wealth gap. In addition, Blacks
and Whites with similar demographic characteristics still had drastically different levels of wealth. Therefore, they invoke the historical legacies of racial
inequality to explain racial wealth inequality. In particular, state policies have
historically limited Black asset accumulation and converged with economic
detours to curb Black business growth and sediment Blacks at the bottom of
the wealth hierarchy. These authors site discrimination in the mortgage and
housing markets and differences in inheritance as key facilitators of contemporary racial wealth inequality.
Since the work by Oliver and Shapiro (1995), sociologists have been more
attentive to wealth inequality and understanding the role of wealth in racial
inequality (Conley, 1999; Keister, 2000; Keister & Moller, 2000; Spilerman,
2000). Conley (1999) finds that including wealth as a measure of economic
well-being significantly decreases racial differences between Blacks and
Whites on a variety of indicators including educational attainment. Further,
the racialized nature of state policies has continued to be highlighted
by researchers such as Katznelson (2005) who makes visible the racially
charged nature of New Deal policies that were purposefully designed to
exclude Blacks. The role of the American Dream in obscuring the significant
impacts of wealth in the reproduction of wealth inequality has also been
highlighted. In particular, research shows that Americans use wealth to
secure advantages for their children through the use of transformative assets
or assets that allow young Whites to transcend their earned class positions.
These assets are provided at key junctures in people’s lives (Shapiro, 2004).
For instance, White parents are in a better position to repay college loans
and provide sizeable down payments for homes in more affluent neighborhoods with good schools. Further, good schools and neighborhoods
are perceived as White. Johnson (2006) finds that families who received
inheritances and family help downplay the impact of their inheritances
and instead emphasize their individual hard work. Contemporarily, Blacks
continue to suffer from marginalization and job discrimination, as well as
discrimination housing and credit markets whereby they are steered into
less affluent neighborhoods.
WEALTH, SOCIAL CLASS, AND SOCIAL PSYCHOLOGY
Recent research on wealth inequality has pushed us to think more about
the factors implicated in wealth accumulation and wealth inequality.
Researchers have considered larger societal forces and individual level
influences on wealth accumulation. Current research shows that wealth is
still highly concentrated by the top 1% of wealth owners who own roughly

A Social Psychological Approach to Racializing Wealth Inequality

5

one-third of all the nation’s net worth and financial assets. In particular,
financial assets such as business equity and stocks helped isolate them from
the effects of the most recent Great Recession (Keister & Lee, 2014). Of this
elite group, 92.5% are White. Meanwhile, Blacks, Latinos, and other racial
groups make up 0.5%, 1.2%, and 5.9% of this group, respectively. Shapiro,
Meschede, and Osoro (2013) used 25 years of longitudinal data from the
Panel Study on Income Dynamics to track changes in family wealth from
1984 to 2009. They find that the top five contemporary factors implicated in
racial wealth inequality include years of homeownership, college education,
unemployment, family inheritance, and household income. Further, Blacks
still receive less return to all of these indicators compared to Whites. Meanwhile, Keister (2005) has explicated a model of adult wealth attainment,
where educational attainment is a key mechanism. The model proposes
that family background, individual traits, and the social context influence
educational attainment. In turn, educational attainment influences work
experience, financial literacy, and social network formation, which interact
with each other and contribute to adult wealth levels. Inheritance influences
wealth accumulation directly and indirectly by facilitating educational
attainment. Further, family background also influences whether people
receive an inheritance.
Recently, social psychologists have synthesized empirical research findings
and theorized how social psychology can contribute to making social class
visible and implicating the self in inequality research (Callero, 2013; Milkie,
Warner, & Ray, 2013). To develop a comprehensive understanding of inequality, Milkie, Warner, and Ray suggest that we investigate the production and
resistance of inequality across three levels of social reality: the macro level of
culture and institutions, an intermediate level of interaction, and at the level
of individuals or persons. Social class permeates culture and institutions.
In turn, culture and institutions govern and provide a context for interpersonal interactions that individuals use to distinguish themselves from others.
Simultaneously, interactions impact and interact with individuals’ self presentations, self-feelings, and self-evaluations.
Identity meanings are also associated with social inequality through the
power and value afforded different identities across the three levels of social
reality (Callero, Forthcoming). Identity emerges from human bodies that
need resources in order to survive. The ability of humans to use symbolic
meanings as a form of communication leads to the unequal distribution
of resources, which impacts people’s chances for survival. Callero emphasizes the connection between the symbolic and the body by stressing that
inequalities are inscribed on the body and manifest in the form of unequal
health outcomes. He reinforces a dual view of the self as produced by
social arrangements and as an agent of social change. Therefore, the self is

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EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES

implicated in social reproduction and resistance across the levels of social
reality.
TOWARD A SOCIAL PSYCHOLOGICAL APPROACH TO RACIALIZING
WEALTH
Insights from model and social psychological theories by Keister (2005) on
social class inequalities can yield productive social psychological research
that allows us to understand the mechanisms and consequences of racial
wealth inequality. The model by Keister (2005) highlights education, family, and work as institutions that are central to wealth accumulation. Further,
she includes social networks by pointing out the role education plays in influencing work, social network formation, and financial literacy. These are also
institutions and interactions that social psychologists have posited as important for social class inequality (Milkie et al., 2013). In particular, Keister (2005)
suggests that social factors such as family background and religion may influence financial literacy. Social psychologists can develop theories about how
these relationships work and empirically assess them. Understanding the
social nature of financial literacy may be especially important to understanding racial wealth inequality. Further, social psychologists can contribute by
focusing on identity and self in racial wealth inequality. These issues can be
placed in the context of three larger questions that may push us toward a
more comprehensive understanding of racial wealth inequality: What are key
institutions and interactions central to the acquisition of financial literacy?
How does wealth factor into objective and subjective dimensions of social
class? Finally, how do conceptions of the self and identity factor into wealth
creation, accumulation, and dissemination?
Sociologists suggest that financial institutions and markets are associated with economic inequality and recognize the increased importance of
finances in American wealth portfolios (Carruthers & Kim, 2011; Keister,
2005). Further, employers are placing increased responsibility on individuals
to secure their own retirement savings, which suggests that financial literacy
will become an increasingly important component in economic well-being
(O’Rand, 2011). Social psychologists can help gain a better understanding of
the social nature of financial literacy by investigating financial socialization
across the life course and within the key institutions of family, schools, and
occupations. Key questions should revolve around making connections
between ideologies, institutions, interactions, and financial literacy. How
do American ideologies stressing individualism structure financial socialization? How do social networks and interactions within them foster the
acquisition of financial literacy? Also, what role does race and class play in
financial socialization and the attainment of financial literacy?

A Social Psychological Approach to Racializing Wealth Inequality

7

In terms of financial socialization within families, the research by Lareau
(2003) on concerted cultivation and natural growth as parenting techniques
of middle-class and working class parents may extend to financial management. A fruitful way to begin a conversation on financial socialization
might consider how class socialization extends to finances and results in an
emerging sense of entitlement or constraint. For instance, the financial situation that children and young adults face in working-class and middle-class
homes varies considerably, possibly resulting in different expectations
associated with financial management. These experiences may influence
how children and young adults come to understand and practice financial
management. Then we might ask if these situations and experiences also
differ across race. Financial socialization within families becomes even more
important as youths grow up and enter credit and housing markets, as
they are sites of discrimination (Pager & Shepherd, 2008). Following Milkie
et al. (2013), schools are also an important institution for understanding the
production of racial wealth inequality, but higher education institutions
must also be examined. Research showing that Blacks and students from
middle-income households are more likely to go into debt suggests that
financial management skills are crucial for Blacks and other students who
will graduate with student loan debt (Houle, 2014; Jackson & Reynolds,
2013). Therefore, interactions taking place inside financial aid offices are also
important in understanding the acquisition of student loan debt by Blacks.
Research should also investigate status safeguarding in the context of higher
education. Other important institutions include financial institutions such
as banks and other lending agencies. As Khan (2012) proposes, researchers
should be attentive to the interchangeability of different social resources
such as cultural knowledge about finances, social networks, and economic
power. Keeping in mind that the interchangeability of social resources may
help facilitate more nuanced understandings of the mechanisms leading to
racial wealth inequality.
Understanding how wealth factors into the objective and subjective dimensions of social class identification will also push us further toward understanding mechanisms and consequences of racial wealth inequality. Wealth
has been shown to be a powerful indicator of well-being (Conley, 1999; Oliver
& Shapiro, 1995). Research has also shown that Americans do have a sense
of their social class positions that roughly mirrors indicators used by sociologists (Hout, 2008). However, the match between subjective and objective
social class maps is higher among people whose social class indicators are
congruent. Further, income has become increasingly important in people’s
likelihood to identify as middle-class. Increasingly, Black Americans are more
likely to identify as middle-class with the relative impacts of education and
income exceeding that of occupation (Hunt & Ray, 2012). Self-identification

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EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES

is important because identification includes schemas individuals carry about
themselves. Class identification is important because it is used as a means to
draw race and moral boundaries against others (Lacy, 2007; Lamont, 1992;
Lamont, 2000). While these studies push our understanding of what factors
are important for social class identification and its impacts, future research
should consider the role of wealth in social class identification. Understanding the objective indicators underlying social class identification can provide
a clue as to what socioeconomic indicators are meaningful to people’s assessment of their status. Indeed, economic success has the tendency to be translated into moral virtue in America (Hochschild, 1995). How might wealth
be implicated in the objective and subjective class identifications of different
racial and ethnic groups besides Blacks and Whites as well? Further, how
might wealth influence understandings of human dignity, equality, justice,
and solidarity?
The role that self and identity play in processes of wealth creation, accumulation, and dissemination needs further investigation. As mentioned earlier,
self and identity engage in processes of social reproduction and resistance on
multiple levels. If this is the case, we should ask how the meanings attributed
to race and class identities factor into the strategies individuals use for wealth
creation and accumulation as well as its dissemination. This may also impact
which strategies are recognized and accepted as legitimate. Further, important identity meanings that should be assessed are meanings associated with
being wealthy and poor. Schervish (1994) finds that millionaires describe
their lives through moral biographies, whether by emphasizing hard work
that led to their achievement or by stressing how they overcame distinct burdens and responsibilities that accompany inheriting an elite social position.
In addition, researchers have been engaging in projects that seek to reconceptualize the meaning of poverty to ground it in wealth rather than income
(Martin, 2013; Shapiro & Wolff, 2001; Sherraden, 2011). These researchers
refer to this as being asset poor. In other words, researchers are seeking to
change the meaning of poverty on the cultural level to highlight the vast levels of economic inequality that still remain. What does it meant to be wealthy?
Does this vary according to people’s race and class locations? How do identity meanings associated with wealth intersect with those assigned to race
and class? How do these meanings influence strategies for wealth accumulation and what people do with wealth?
Finally, Callero pushes us to remember that inequality is important because
it impacts humans physically and mentally. While researchers have agreed
that wealth is important in health research (Pollack et al., 2007), the relationship between wealth and mental health typically receives less attention.
Mental health researchers acknowledge that socioeconomic status impacts

A Social Psychological Approach to Racializing Wealth Inequality

9

mental health and is also impacted by mental health (Miech, Caspi, Moffitt, Wright, & Silva, 1999). In other words, wealth levels may impact and
also be impacted by mental health. Mossakowski (2008) finds that wealth
exerts an independent influence on the mental health of young adults and
contributes to explaining racial and ethnic differences in depressive symptoms among Blacks, Whites, and Latinos. Further, Mossakowski (2012) finds
that increased levels of personal control and self-esteem during young adulthood increases the odds of having a positive net worth and owning a home
during midlife. However, these effects of internal personal control are more
important for Whites than Blacks. These results suggest that the relationships among wealth, race/ethnicity, and mental health may differ across the
life course. The work by Schervish, Coutsoukis, and Lewis (1994) finds that
individuals with large amounts of wealth experience psychological empowerment and a sense of hyperagency. A sense of agency supported by wealth
is important as Thoits (2006) has noted that personal agency may be a means
of enhancing mental health because people may choose to opt out of situations that distress them. This research suggests that there are important
relationships among race, wealth, and psychological well-being that need to
be further understood. Social psychologists can implicate wealth in the stress
process model Pearlin (1999) developed to examine social sources of stress by
thinking about wealth as a measure of socioeconomic status.
While social psychologists can push work forward on racial wealth inequality, they must stay in conversation with other sociologists. In particular, sociologists who specialize in race, stratification, gender and family, as well as
economic sociologists are needed to develop a more complete understanding
of racial wealth inequality. Further, researchers should act with a social justice motive toward trying to decrease racial wealth inequalities. Indeed, this
endeavor will take a mixture of quantitative and qualitative methods to get
a better grasp of the more nuanced mechanisms underpinning racial wealth
inequality. Studies on financial socialization need to be historical and contemporary to understand how contemporary changes in the importance of
finances have affected different racial groups. Gaining a full understanding
of the mechanisms and consequences will require interdisciplinary conversations. Sociologists can engage in conversation with economists and psychologists who study behavioral decision-making to understand how society
facilitates and hinders decisions in the best financial interest of individuals.
In general, wealth is a distal concern, but as individuals and groups gain
higher levels of material success, wealth becomes a more salient economic
resource. It is difficult to be concerned with wealth when you have more
proximal concerns such as if your paycheck will allow you to buy groceries.
Nevertheless, wealth is extremely important because of its ability to secure
social, material, and intergenerational advantages. Further, racial wealth

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EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES

inequality is not only a Black and White thing, although these disparities are
likely the most extreme. Therefore, understanding wealth inequality across
and within racial and ethnic groups is also an important task of sociologists.
Extreme wealth inequality, between racial groups and between the top
wealth owners and the rest of the wealth distribution, is a looming threat to
the well-being of all.
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EMERGING TRENDS IN THE SOCIAL AND BEHAVIORAL SCIENCES

Pearlin, L. (1999). The stress process revisited: Reflections on concepts and their interrelationships. In C. Aneshensel & J. C. Phelan (Eds.), Handbook of the sociology of
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FURTHER READING
Fiske, S. T., & Markus, H. R. (2012). Facing social class: How societal rank influences
interaction. New York, NY: Russell Sage Foundation.
Keister, L. A. (2000). Wealth in America: Trends in wealth inequality. New York, NY:
Cambridge University Press.
Keister, L. A. (2005). Getting rich: America’s new rich and how they got that way. New
York, NY: Cambridge University Press.
Lareau, A., & Conley, D. (2008). Social class: How does it work? New York, NY: Russell
Sage Foundation.
Oliver, M. L., & Shapiro, T. M. (1995). Black wealth/white wealth: A new perspective on
racial inequality. New York, NY: Routledge.
Shapiro, T. M., & Wolff, E. N. (2001). Assets for the poor: The benefits of spreading asset
ownership. New York, NY: Russell Sage Foundation.
Wilson, W. J. (1980). The declining significance of race: Blacks and changing American
institutions (2nd ed.). Chicago, IL: University of Chicago Press.

A Social Psychological Approach to Racializing Wealth Inequality

13

JOEY BROWN SHORT BIOGRAPHY
Joey Brown is currently a sociology graduate student at the University
of Maryland. His research interests include race, wealth inequality, and
morality.
http://www.socy.umd.edu/gradstudents
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A Social Psychological Approach to Racializing Wealth Inequality