Suan Mei Yu, Louisiana, HP discussed on Revisionist History
Com in the middle of my investigation of the pure assessment score and its many implications. I had a conversation with a professor at duke named bill. May you may friendly with some bond traders and he was talking with some of them one day when they mentioned that they were having difficulty with bonds issued by historically black colleges. Hp see us as they're known if you're a bond trader you worry about moving the bonds that you haven't inventory and they just mentioned you know. Hey we're having a really hard time placing these hec schools because people. Don't wanna hold along the way. The bond market works is at an institution needs money. Let's say a university wants to build a dormitory. The cost fifty million dollars. The school can't raise all that money on its own so it goes to a wall street bank which purchases a bond a promise of repayment from the university then the bank breaks that bond into many hundreds and hundreds of pieces and sells those pieces to wealthy investors or insurance companies or hedge funds. Suan mei yu. Here's that banks are struggling to sell bonds for historically black colleges he wonders is this just some apocryphal wall street story or is it. True luckily is a simple test. This the price. The bond trader charges is called the gross spread. If it's super easy to find buyers for the bonds the gross spread is like to be low if the traitor has difficulty finding buyers the spread can get quite pricey so if the bonds from black schools or harder to move than bonds from white schools. The spread should be higher. and are they. Yes they are. May you and his colleagues compared black schools with non hpc us that were otherwise identical. The spreads for the historically black schools were twenty percent higher in the bond market. A twenty percent difference in spreads is huge mayo and his co. researchers went one step further. They zeroed in on three states in the deep south. And you those three states were so those are louisiana mississippi alabama and. What's the difference in spread in those states. Not twenty percent thirty seven percent. May you and his colleagues have given us a scientifically rigorous measurement of just. How much of a burden black institutions face in the real world. You've put a number on reputation. What is a reputational cost being school. That overwhelmingly accepts and educates black kids in louisiana. The reputation cost is thirty percent. That's one way to think about it. But i would say it's the racial component of reputation. Spread is a reputation. Score isn't it. Investors don't know the precise ins and outs of all the institutions. They're asked to by how could they. There are literally hundreds of thousands of bonds on the market at any given time so the investors proceed on a feeling a feeling about how worthy and how safe it held egitim it the institution getting the loan. Is you see a black school and you say to yourself. I don't value that. Hp you quite as highly as the white school across town so you give the black school. A discount which is what prejudice is by the way a discount. Black life does not matter as much as the white life and who are these people imposing discount on black schools. they're wealthy successful people who are simply checking a box. I like this bond alex when a lot. I don't like this one they are. I suspect not a whole lot different from the college administrators. Who signed a number two. There appears for the us news rankings. Every year motivated by the same unconscious bias. I like the school four point two. I like this one a lot. Four point five. I don't like this one. Two point four even though i don't really know anything about it so if you were the president of a historically black college in one of those states with a reputational discount for being black is thirty seven percent. How do you think you'd feel about your peer assessment score. I thought i'd call walter. Kimbro president of dillard university a historically black college in louisiana. Someone i started looking at the formulas and dig into it. I was like this isn't a real good measurement of what we do in fact is a measurement of privilege dillard's reputation score is two point six. That's not good. You can't ever get to the top of the. Us news rankings. With a peer assessment score of two point six. Maybe it sounds. Defeat is but it's not yet fetus. Realistic is realistic horrible living. Nobody's gonna just go and say this school with all. These black people is great in their haste to compete with time and newsweek way back when maybe all. Us news did was create a system that allowed the presidents and deans of every college in the country to assign a number to their prejudice to.