Racial segregation in urban consumption

ABSTRACT

This study presents empirical evidence that demographic aspects of locations have a significant effect on diners’ restaurant choices. Exploiting New York Times restaurant reviews, I find that black diners have stronger preferences for demographic similarities; in response to a review, a larger share of black residents near a restaurant location leads to an increase in the share of black diners. This result implies that the marginal utility of location varies as a function of diner race.

KEYWORDS:

• Segregation
• retail location
• urban consumption
• publicity

JEL CLASSIFICATION:

• D12
• D83
• J15
• R30

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

¹ The datasets are downloadable on the New York City’s webpage (https://www1.nyc.gov/site/tlc/about/tlc-trip-record-data.page).

² US Census Bureau provides tract-level demographic information; this study relies on data from the 2010 Census.

³ The most important omitted variable in this research is the quality of food because the estimated effects could be driven not only by NYT reviews but also by the restaurants’ actual quality. Thus, comparing reviewed restaurants to non-reviewed restaurants would create a serious endogeneity issue.

⁴ Spatial omitted variables could be a source of considerable endogeneity in this setting. When some retail districts become increasingly popular for Asian visitors, for example, it is possible that NYT critics review some restaurants in the districts. Thus, this research employs the spatial lag to address the issue.