ABSTRACT
Racism, the collection of negative perceptions and behaviors directed at members of groups with different identifiable physical characteristics, was once thought to be outside the domain of economics as a discipline. The concentration on market discrimination and avoidance of the role that discrimination plays in the larger social context is an unnecessary limitation on the role that economic analysis can play in understanding racism. In the racism analysis, discrimination is against blacks as a group, not as individuals. The discriminator explicitly concerns himself with the effects of his actions on blacks as a group. The chapter argues that economics has much to say about the market and nonmarket dimensions of racism. It focuses on the uses of economic methods to achieve the ends of the discriminator. Efficiency occupies a central place in economic analysis. An outcome is efficient if it is accomplished at minimum cost.
