Police-Involved Killings and the Black-White Gap in Economic Expectations

Abstract

Expectations about macroeconomic variables vary substantially by race, most notably between Black and White individuals. Our results suggest that one factor affecting the difference in expectations is that Black expectations are influenced by negative experiences with the criminal justice system. We find evidence for one channel through which these negative experiences influence expectations by showing that, relative to White respondents, Black respondents became more pessimistic about both their own economic circumstances and their inflation expectations following highly-publicized incidents related to police-involved killings. This suggests a channel through which non-economic events can affect the economy via their impact on consumer expectations.

Keywords: Police Killing, Racial Differences, Consumer Expectations

JEL Classification: E30, D84, D14