The economic impact of racial violence: Lisa Cook

The impacts of racism and discrimination have long been measured in terms of the harm done to the affected group—lower wages, lower educational attainment, or poorer health, for example.

Dr. Lisa Cook
Dr. Lisa Cook

Those measures alone are too narrow for Professor Lisa Cook, who argues that that racial, ethnic, and gender discrimination damages the economy as a whole, and not just those who face discrimination. And she’s found a way to prove it.

Cook, a professor of economics and international relations at Michigan State University and a graduate of the Berkeley Economics PhD program, shared her research as part of the “New Thinking at Berkeley Haas” speaker series. Her lecture, “The Cost of Racism,” was hosted by Laura Tyson, distinguished professor of the graduate school and former dean.

In path-breaking research, Cook linked the surge in segregation laws, lynchings, and other racial violence in the U.S. from 1870 to 1940 to a significant decline in patenting and innovation among African Americans. The economic impact of that decline was equivalent to the GDP of a medium-sized European country at the time, and the impact is still felt today, she calculated. 

“Violence diminishes innovation and economic activity, with persistent effects,” says Cook. “The year 1899 is still the peak year for patenting-per-capita for African-Americans—and that’s even using 2010 patent data.”

Cook, PhD 97, recently served as a member of President Biden’s transition team. Like Tyson, she also served on the President’s Council of Economic Advisers. Cook was a senior economist under the Obama Administration, working on innovation and the Eurozone crisis, while Tyson chaired the council under the Clinton Administration. Cook’s wide-ranging research covers economic growth and development in emerging economies, international trade, financial institutions and markets, and economic history. She is also an advocate for increasing diversity in the field of economics, serving as director of the American Economics Association Summer Training Program.

Cook has examined the implications of racial and gender disparities in income and wealth inequality at all stages of the innovation process, and developed new ways to study the long-term economic impact of race-related violence, which Tyson noted is an issue we’re very much still grappling with today. 

“This is very important, very original research showing that there are costs for our entire society, and our entire economy because of these barriers,” Tyson said. “They have personal effects on the individual, on the family, on the community, but they also have macro, aggregate, big effects.”

In order to conduct her analysis, Cook had to first compile data on race and patents, which did not previously exist. She has also helped develop a national database of lynchings that can be used in empirical research going forward. 

At the end of her talk, Cook laid out a long list of policy prescriptions to eliminate barriers for talented people to fully participate in the economy. She also said it’s a time for “big ideas and blue sky thinking” to combat persistent, systemic racism, sexism, and discrimination.

Watch the full lecture.