Explaining Southern California's economy

I predict a riot: Economists who studied the L.A. unrest made some troubling discoveries

LA Riots Collages

Mae Ryan/KPCC with archival photo by Gary Leonard

A fire blazes at 165 S. Vermont St. in Koreatown on April 29th, 1992. Did ethnic diversity and high unemployment cause the L.A. riots?

It's the 20th anniversary of the L.A. riots and here at KPCC we've been digging deep into the legacy of those bad days for the city. But it's also the 16th anniversary of just about the only serious economics paper I can find on why the riots might have happened. 

"The Los Angeles Riots and the Economics of Urban Unrest" was published in 1996 by Denise DiPasquale, then at the University of Chicago, and Edward Glaeser at Harvard. As far as I can tell — and I made a number of unsuccessful attempts to contact both authors — DiPasquale now runs an outfit called City Research. Glaeser, meanwhile, has become a pretty well-known economist, particularly for his work on urban economics. 

In 1996, the L.A. riots were fresh in the minds of most Americans, who had watched the chaos unfold in real time on T.V. after the Rodney King verdict was announced. Trying to figure out why the riots might have happened was important, especially because, as DiPasquale and Glaeser note in their paper, the country hadn't endured a large-scale riot since Miami in 1980. But the authors' conclusions were, and still are, controversial. 

Why do riots happen? Well, the quick and not necessarily accurate analysis says that bottled-up rage is released in a hot rush by some inciting event. But there also need to be conditions. What DiPasquale and Glaeser discovered was that poverty doesn't have much to do with it. But diversity does:

We find some support for the notions that the opportunity costs of time and the potential costs of punishment influence the incidence and intensity of riots. Beyond these individual costs and benefits, community structure matters. In our results, ethnic diversity seems a significant determinant of rioting, while we find little evidence that poverty in the community matters.

This is a politically fraught issue, but in the USA, we tend to like the idea that we have a diverse society. You know, give me your tired, your poor, your huddled masses yearning to breathe free... However, as DiPasquale and Glaeser learned after the L.A. riots, diversity, while advantageous in many ways, may lead to explosive unrest. It could just be one of the costs of doing business in a democracy. And for what it's worth, they found that dictatorships did a great job of keeping a lid on riots. 

Both researchers were at pains to place their findings in the proper context. This is from a Harvard Gazette article that came out when the paper was released:

Glaeser expanded on the element of diversity: "People with different ethnicities who live in close proximity to each other" can more easily get into conflicts where the "perception is that the different group is violating social contracts." These diverse groups, Glaeser noted, may be operating under incompatible social norms, so that seeds of hostility may find fertile ground. "Misunderstandings," said Glaeser, "are some of the stuff of riots."

DiPasquale noted that a community whose fabric is torn seems more vulnerable to riots: "Some community-level variables do seem to matter in our results, but we really weren't able to measure these variables very well." She emphasized that this paper's results call for more in-depth studies of community structure —analyses that may attempt to measure, for instance, community cohesiveness, and the impact of community institutions, as variables in violent outbursts. The paper, DiPasquale commented, "points us well beyond the question, 'Is it a poor community?' We need to look instead at how connected people are to each other."

What this all implies is that, in the areas of L.A. where the riots raged, all the economic development in the world isn't necessarily going to prevent another riot. Or, for that matter, prevent riots in other cities. "Urbanization is positively correlated with rioting," they wrote in 1996. And since then, urbanization has become much more of a global trend. Talk to many academics who study urbanity and they'll tell you that the future of the world will be found in the city. If the future of the world is also to be found in democracy and diversity, then we can look forward, potentially, to some more riots.

However, there are suggestive ways to mitigate that possibility. For example, DiPasquale and Glaeser found that high non-white unemployment in Los Angeles was correlated with rioting. There's an important distinction embedded there: it's non-white unemployment, especially among young men, that matters, not poverty. Given the extremely high levels of non-white unemployment in the L.A. region — African-American unemployment alone was running close to 20 percent in L.A. late last year — we have to look at job creation, rather than wealth elevation, as a critical component of, for wont of a better term, riot-prevention policy.

Failing that, there's always the dictatorship strategy. According to DiPasquale and Glaeser, dictatorships have almost 25 percent fewer riots per year on average than non-dictatorships. "Repression works," the authors dutifully note, borrowing a grim verdict from previous research (and in no way endorsing that plan of action). Obviously, converting L.A. or the nation to a dictatorship isn't on the table.

In 1996, DiPasquale and Glaeser did come to a troubling conclusion:

Miami and Los Angeles, the two big urban riots of the past 15 years in the U.S., occurred in two of the country's most ethnically diverse cities, and immediately followed race-related court decisions. We are still far from understanding why ethnic heterogeneity is so important in rioting behavior, but it does seem to be a central component of why riots occur.

Reading this research, and knowing that academics had had more than a decade to study the Miami riots — but really didn't — you can see how economists, of all people, could have seen the L.A. riots coming. Assuming that DiPasquale and Glaeser's research still holds water, we should have a much better ability to predict whether L.A. will ever again riot on the scale it did in spring of 1992.

Follow Matthew DeBord and the DeBord Report on Twitter.

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