Why are white people less likely to live with other whites of similar income? People live where they can afford housing and other expenses. Therefore, they will naturally live in areas with other people that have similar incomes to them. If I make $50,000/year, I'm not likely to be competing for status with people in my neighborhood making $100,000/year. Those people will live in a completely different area with more expensive housing.

Excellent point. The author argues that whites who make as much income as median income blacks are less likely than median income blacks to compete for status with their neighbors because the median income for whites is much higher, resulting in whites who make a black median income (smaller than white median income) unable to compete with their neighbors who, presumably, are making significantly more money. But the author provides no evidence to support this assumption. I agree with the previous poster - that people tend to live in areas they can afford. If true, then whites would make a black median income would tend to live with other whites who also make a black median income. If so, then there wouldn't be the disincentive to opt out of the status game. I think this is the linchpin of the author's arguement, and makes it more likely that some other reason is the explanation for black conspicuous consumption.

This article, frankly, is a bunch of nonsense motivated by a desire to explain away phenomena that have no comfortable explanation.

Is acquisition of conspicuous goods motivated by a human desire - one for which we evolved - to further one's status? Of course it is. This does not make costly status-seeking behavior by a poor individual, of whatever race, any more responsible. Suppose the (quite dubious) hypothesis that whites are locked out of the game altogether while blacks are not is actually true. So what? Should we then forgive the irresponsible behavior as "natural"? We are not mere peacocks or animals otherwise incapable of making intelligent choices that run counter to certain evolutionary incentives. If you buy sneakers with your last $100 while your kids are eating EZ cheese for dinner, you are irresponsible, period. Your race and social status are irrelevant.

Atanos

Suppose homes were grouped according to their value based on the following scale: 60-80K, 80-100K, 100-300K. This distribution could make the author's arguments plausible. A family living in a 60K home wouldn't be that much different than there neighbor living in an 80K home (only 33% more expensive). However, a family just making the cutoff in a 100K home would be considerably behind (financially speaking) a neighbor at the end of the block in a 300K home (3-fold more expensive). It's a possibility; but I agree, the author wasn't specific in his explanation of disparaging wealth amongst neighbors of the same race.

Sasha

At no time did the author say this was "responsible behavior"; most would agree with you that it's not. Don't mistake the author's attempt at explanation or rationalization for a phenomenon to be the same as justification or endorsement. This article is a classic example of an economist's thinking and writing style.