Additional information added June 27, 2020. The materials after the three asterisk is comprehensive material showing that the lower and income or credit score requirement, while the smaller will tend to be the relative difference in meeting the requirement, while the larger will tend to be relative racial differences in failure to meet the requirement. Table Into 1 and Intro 2 are abbreviated versions of Table 1 and 2 after the asterisks. These abbreviated versions version also appear, with explanation, as Table 4 and 5 of the Materials Associated with Federalist Society Teleforum titled “Is Federal Civil Rights Enforcement Based on an Understanding of Statistics that is the Opposite of Reality” (July 24, 2017), Tables 2 and 3 to D Letter to Department of Justice (Apr. 13, 2017), Tables 1 and 2 to Letter to Comptroller General of the United States (Apr. 17, 2018), and Tables 1 and 2 to Letter to Department of Housing and Urban Development (Dec. 13, 2018). The three letters were effort to explain the recipients that contrary to the belief underlying federal fair lending policy since the early 1990s, lowering income and credit score requirements for securing a loan tens to increase, not reduce relative racial differences in rates of failure to meet the requirements.
Intro Table 1. Illustration of effects of lowering an income requirement on relative
differences in meeting the requirement and relative differences in failing to meet the requirement
Income
(1)
Perc of Wh Abv
(2)
Perc of Bl Abv
(3)
Perc of Wh Bel
(4)
Perc of Bl Bel
(5)
Wh/Bl Abv Ratio
(6)
Bl/Wh
Bel Ratio
$100,000
27.0%
12.1%
73.0%
87.9%
2.23
1.20
$85,000
34.6%
17.3%
65.4%
82.7%
2.00
1.26
$75,000
41.1%
22.7%
58.9%
77.3%
1.81
1.31
$60,000
52.5%
31.3%
47.5%
68.7%
1.68
1.45
$50,000
61.0%
39.2%
39.0%
60.8%
1.56
1.56
Intro Table 2. Illustration of effects of lowering a credit score requirement on relative differences in meeting the requirement and relative differences in failing to meet the requirement
Score
(1)
Perc of Wh Abv
(2)
Perc of Bl Abv
(3)
Perc of Wh Bel
(4)
Perc of Bl Bel
(5)
W/B Abv Ratio
(6)
B/W Bel Ratio
740
46.80%
19.50%
53.20%
80.50%
2.40
1.51
720
57.77%
27.01%
42.23%
72.99%
2.14
1.73
700
67.83%
35.67%
32.17%
64.33%
1.90
2.00
680
76.73%
45.42%
23.27%
54.58%
1.69
2.35
660
83.90%
55.70%
16.10%
44.30%
1.51
2.75
***
The purpose of this page is to show in one place that lowering an income or credit score requirement to secure some desired outcome will tend to increase relative racial difference in failing to meet the requirement while reducing relative racial difference in meeting the requirement. The two tables show in the third and fourth final columns (a) the ratio the black rate of falling below each level to the white rate of falling below each level (b) the ratio of the white rate of falling at or above the black rate of falling at or above the level.[i]
Table 1 is based on 2009 income data for black (alone) and white (alone) families in Table 695 of the 2012 Statistical Abstract of the United States. The table shows, for example, that lowering an income requirement from $75,000 to $60,000 would increase the ratio of the black rate of failing to meet the requirement to the white rate of failing to meet the requirement from 1.31 to 1.45 (an increase in the relative difference from 31 percent to 45 percent), while reducing the ratio of the white rate of meeting the requirement from 1.81 to 1.68 (a reduction in the relative difference from 81 percent to 68%). A slightly different illustration with different income data may be found in the Income Illustrations subpage of the Scanlan’s Rule page (SR).
Table 1. Proportions of Blacks and Whites Falling Below and Above Each Income Level and Standard Measures of Difference [Ref b4223 a 5 a (NC)]
IDX
Income
% of B Below
% of B Abv
% of W Below
% of W Abv
B/W Bel Ratio
W/B Ratio Abv
AbsDf
OR
17
$250,000
99.10%
0.90%
97.20%
2.80%
1.02
3.11
1.9
3.17
16
$200,000
98.40%
1.60%
94.70%
5.30%
1.04
3.31
3.7
3.44
15
$150,000
96.00%
4.00%
88.70%
11.30%
1.08
2.83
7.3
3.06
14
$100,000
87.90%
12.10%
73.00%
27.00%
1.20
2.23
14.9
2.69
13
$85,000
82.70%
17.30%
65.40%
34.60%
1.26
2.00
17.3
2.53
12
$75,000
77.30%
22.70%
58.90%
41.10%
1.31
1.81
18.4
2.38
11
$60,000
68.70%
31.30%
47.50%
52.50%
1.45
1.68
21.2
2.43
10
$50,000
60.80%
39.20%
39.00%
61.00%
1.56
1.56
21.8
2.43
9
$45,000
56.30%
43.70%
34.90%
65.10%
1.61
1.49
21.4
2.40
8
$40,000
51.40%
48.60%
30.20%
69.80%
1.70
1.44
21.2
2.44
7
$35,000
45.60%
54.40%
25.30%
74.70%
1.80
1.37
20.3
2.47
6
$30,000
39.40%
60.60%
20.50%
79.50%
1.92
1.31
18.9
2.52
5
$25,000
32.30%
67.70%
15.70%
84.30%
2.06
1.25
16.6
2.56
4
$20,000
25.20%
74.80%
11.00%
89.00%
2.29
1.19
14.2
2.73
3
$15,000
17.90%
82.10%
7.30%
92.70%
2.45
1.13
10.6
2.77
2
$10,000
11.30%
88.70%
4.30%
95.70%
2.63
1.08
7.09
2.84
Table 2 is based on data on black and white credit scores among mortgage applicants at Wells Fargo Mortgage, as presented in the Table 4 of the report of plaintiffs’ expert Howell E. Jackson submitted in support of class certification in In re Wells Fargo Mortgage Litigation, No. 8-CV-01930-MMC (JL) (M.D. Cal.).[ii] These data differ from the data in Table 1, inasmuch as the data are limited to persons who had credit scores of 300 or above and thus the population covered in the table is a truncated portions of the larger population. Such fact has implications akin to those discussed in the ICHPS 2008 presentation and the Truncation Issues subpage of the Measuring Health Disparities page and Life Tables Illustrations subpage of SR. But it ordinarily will not affect the patterns where the lower the credit score the greater will tend to be the relative difference in failing to achieve the score, while the smaller will tend to be the relative difference in achieving the score.
The table, shows that, among persons receiving mortgages, lowering a credit score requirement from 700 to 680 would increase the ratio of the black rate of failing to meet the requirement to the white rate of failing to meet the requirement from 2.00 to 2.35 (an increase in the relative difference from 100 percent to 135 percent), while reducing the ratio of the white rate of meeting the requirement from 1.90 to 1.69 (a reduction in the relative difference from 90 percent to 69 percent).
Table 2. Proportions of Blacks and Whites Falling Below and Above Each Credit Score Level and Standard Measures of Difference [Ref b2711 a 8a (NC)]
RefID
Score
%of B Below
% of B Abv
%W Below
% W Abv
B/W Ratio Bel
W/B Ratio Abv
AbsDf
OR
16
800
98.35%
1.65%
94.85%
5.15%
1.04
3.12
3.50
3.23
15
780
93.68%
6.32%
81.10%
18.90%
1.16
2.99
12.58
3.45
14
760
87.50%
12.50%
66.03%
33.97%
1.33
2.72
21.47
3.60
13
740
80.50%
19.50%
53.20%
46.80%
1.51
2.40
27.30
3.63
12
720
72.99%
27.01%
42.23%
57.77%
1.73
2.14
30.77
3.70
11
700
64.33%
35.67%
32.17%
67.83%
2.00
1.90
32.16
3.80
10
680
54.58%
45.42%
23.27%
76.73%
2.35
1.69
31.31
3.96
9
660
44.30%
55.70%
16.10%
83.90%
2.75
1.51
28.21
4.15
8
640
34.20%
65.80%
10.76%
89.24%
3.18
1.36
23.44
4.31
7
620
24.33%
75.67%
6.72%
93.28%
3.62
1.23
17.61
4.46
6
600
16.83%
83.17%
4.11%
95.89%
4.10
1.15
12.72
4.72
5
580
10.82%
89.18%
2.39%
97.61%
4.52
1.09
8.43
4.95
4
560
6.33%
93.67%
1.28%
98.72%
4.95
1.05
5.05
5.21
3
540
3.48%
96.52%
0.63%
99.37%
5.52
1.03
2.85
5.69
[i]See note 15 (at 14) of my letter to American Statistical Association (Oct. 8, 2015) regarding my preference for using the larger figure in the numerator of both rate ratios.
[ii]Data from the table also have or will be used to illustrate the patterns illustrated with income data in the Adjustment Issues sub-page of the Lending Disparities page.