Not that long ago, online commerce promised not only to make markets more efficient but also more inclusive and less prone to discrimination. The rationale was simple: On the internet, no one knows whether you’re black or white, male or female, making it more difficult for discrimination to occur. Those early ideals have long since withered, as Airbnb and other online platforms have increasingly asked buyers and sellers to provide pictures and other racially identifying information to counterparties. Even worse, the emergence of discrimination in online markets is undoing gains that occurred in offline markets through decades of regulation and enforcement.
For example, even as offline housing rental markets have seen dramatic reductions in discrimination, academic research and a growing number of firsthand accounts have shown that black guests are more likely to be rejected on Airbnb than their white counterparts, holding all else equal. For years after this evidence emerged, Airbnb did nothing. But facing mounting criticism for facilitating discrimination (and the growing specter of regulation as well as a class-action lawsuit), Airbnb has now acknowledged that it was slow to react and posted a 32-page response on its site, proposing a series of changes to the platform.
The proposals range from bias training for hosts to assistance in finding alternative accommodations for guests who were denied a booking on the basis of race. Some of the proposals may help level the playing field for minority users and can serve as a guide for other businesses. The most promising is a commitment to increase the number of hosts who will accept qualified guests without looking at their profile information beforehand (via a feature called “instant book”).
But in our view, Airbnb isn’t going far enough. Here, we highlight the key elements that should be a part of any solution to discrimination on online platforms: incentives, salience, and transparency.
As economists, we cannot think about a problem without considering economic incentives in guiding behavior. So if Airbnb hosts want to discriminate, let’s at least make them pay for the privilege. What would this look like in practice? Airbnb already provides an “instant book” option, which allows a prospective guest to make a booking without being screened by hosts (potentially based on race). As mentioned above, the site aims to expand instant bookings dramatically, to over a million listings by January 2017. We hope the company will provide appropriate incentives—in the form of listing discounts or surcharges—to push hosts toward this option. (This may be a happy coincidence of business interests and anti-discrimination policy, as instant booking may reduce the number of unconsummated transactions on the site.)
Airbnb also announced it will experiment with the removal of photos from listings. As social scientists interested in evidence-based policy, we applaud the company’s use of a randomized control trial to explore the consequences. (If you open Airbnb right now, do a search, and see listings without host pictures—then you are in the “treatment” group of the experiment.) But we would argue that the evidence on host photos in making race salient is already so strong that the time for experimentation may already have passed. We would push for further steps to make nondiscrimination—rather than race—more salient at the time of booking. Discrimination can often be unconscious, a case of individuals falling short of the values they aspire to for themselves. By reminding users of the site’s nondiscrimination policy when, for example, a guest enters the site to make a booking, the company can help users be more conscious of how race might affect the choices they make.
Airbnb’s reforms are a big disappointment in their omission of the final element mentioned above—transparency. Despite proposals of changes and promises for improvement, the extent of discrimination remains hidden within company databases. (This is of particular concern given the vagueness of many of the company’s new anti-discrimination prescriptions.) While the company now employs a product team to “fight bias and promote diversity,” it’s hard for outsiders to get beyond anecdote in assessing whether the company is doing a good job (or indeed anything at all). It would be straightforward to report publicly on the extent of discrimination, so Airbnb’s customers and the public at large could gauge progress and apply pressure if dissatisfied with the results. Sunlight, as the saying goes, can be the best disinfectant.
Combined, we have taught executives and MBAs for more than 20 years and consulted for a range of companies. We’ve seen business leaders do amazing things, such as Sheryl Sandberg leading the charge on gender equality while serving as the chief operating officer of Facebook. This takes courage. But we’ve also seen too many companies drag their feet and use regulatory loopholes to their advantage at the cost of customers.
This is especially prevalent in the tech world, where regulation is lagging behind a rapidly changing ecosystem. Airbnb now has the opportunity to lead the march toward a more inclusive society as it announces its changes. We hope that Airbnb can up its game and make the most of this important opportunity, to become an example of a business leading the charge to eliminate discrimination rather than making another set of hollow changes.