RACE, REDLINING, AND AUTOMOBILE INSURANCE PRICES

Following Becker's (1993) suggestion that rests for discrimination sho uld attempt to infer whether profits differ for products sold to minor ities and nonminorities, this article tests :he hypothesis that racial discrimination affects market prices of auto insurance in Missouri. C ompared with tests for discrimination in lending markets, our results are less susceptible to bias from omitted variables. Controlling for a vailable demographic and coverage-related factors, we do not find that loss ratios at the zip-code level are negatively related to percent m inority population. This finding is inconsistent with the hypothesis t hat racial discrimination increases premiums relative to expected clai m costs for minorities.