Airbnb

Of all the incremental innovations that have made companies like Airbnb and Uber work, paramount is the picture. Seeing a photo of the person you're renting a room from or hopping into a car with creates at bare minimum the illusion of trust.

But on Airbnb, at least, it may also engender racism, according to a new study out of Harvard Business School.

The researchers created 20 identical Airbnb profiles with 20 different names, 10 of which would lead you to believe the person was white, and 10 of which would suggest the person was black. They then tried booking thousands of Airbnb rentals in Baltimore, Dallas, LA, St. Louis and D.C. They found that "requests from guests with distinctively African-American names are roughly 16% less likely to be accepted than identical guests with distinctively White names."

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For plenty of Airbnb users, this academic study will come as no surprise as they have experienced first-hand the site's built-in biases:

As per @tressiemcphd's timeline, AirBnB was almost certainly conceived by people who have never experienced or encountered racism.

— Jamelle Bouie (@jbouie) September 20, 2015

that thing where your white friend has to rent the airbnb ☺️😊

— Aminatou Sow (@aminatou) December 3, 2015

"Online marketplaces increasingly choose to reduce the anonymity of buyers and sellers in order to facilitate trust," the researchers wrote. "We demonstrate that this common market design choice results in an important unintended consequence: racial discrimination."

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The study was a follow-up to a study out of Harvard Business School last year that found that black hosts, in general, make significantly less on the site. In that study, researchers found that if you have two comparable listings, the one owned by a non-black host will cost on average 12 percent more.

A limitation of the current investigation of how hard it might be for people to book a rental depending on their race is that the researchers did not put photos on their 20 different accounts. They only suggested race using people's names. "To avoid the confounds that would result from pictures, we use only names," wrote study authors Benjamin Edelman, Michael Luca and Dan Svirsky.

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But even with sketchy photo-less accounts, it was easier for white people to book an Airbnb rental. Hosts, interestingly, discriminate equally, regardless of their own race or gender. It also didn't matter whether the property for rent was an entire home, or one that guests would share with their host.

The researchers compare this to "the discrimination-free setting of competing short-term accommodation platforms such as Expedia." They refer, of course, to hotel-booking sites where all you need is a credit card, of any color, to be assured a place to rest your head for the night.

"With the rise of the sharing economy," the researchers wrote, "comes a level of racial discrimination that is unheard of in a hotel. Clearly, the manager of a Holiday Inn cannot examine names of potential guests and reject them based on race. Yet, this is commonplace on Airbnb, which now accounts for a growing share of the hotel market."

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In response to the study, an Airbnb spokesman said that" "We are committed to making Airbnb one of the most open, trusted, diverse, transparent communities in the world. We recognize that bias and discrimination are significant challenges, and we welcome the opportunity to work with anyone that can help us reduce potential discrimination in the Airbnb community."

The company said that it has reached out to the authors of the study.

The study is not optimistic: while businesses often have economic incentives (like selling more stuff to more people) for quelling discrimination, it notes that Airbnb's disparate hosts might be fine trading revenue for guest preference.

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"One might have hoped that online markets would cure discrimination, and it seems a different design might indeed do so," the researchers wrote. "Regrettably, our analysis indicates that at Airbnb, this is not yet the case."

But solving the problem seems tricky —  how do you facilitate business between online strangers and at the same time weed out inevitable bias?  One suggestion they make is for regulators to audit Airbnb hosts.

In the early days of e-commerce, most online transactions were anonymous. If you bought something on eBay, neither buyer nor seller had very much information about each other, other than location and whether payments and packages arrived in due time. Such anonymous transactions promised the potential to create fairer markets.

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We now live in a reputation economy, and that means that when you do business online, people usually know who you are. This seems a necessity for both business and safety—most people wouldn't be willing to stay the night at a stranger's apartment without at least some sense of who they are. But that puts the onus on platforms to come up with a way to surface this kind of discrimination. Perhaps Airbnb hosts don't even realize that they're privileging white guests over black ones. Airbnb surely has the data to open their eyes. Maybe it should show it to them.

This story was updated to include a response from Airbnb.