![]() Area 1 gets redlined (put into a D-grade area). Take two areas, which we'll name 1 and 2, which are geographically close to each other and similar in racial composition. The idea can be a little tricky at first, but it's fundamentally pretty simple. Having found those islands, the authors then looked at the difference in percentages of African-American residents between D and C areas before and after the creation of the HOLC maps. A prototypical example is a small island of, say, C-type streets within a larger ocean of D," the authors write. "The idea is that there may have been difficulties in constructing polygons that fully reflected homogeneous neighborhoods-especially if there were small areas within larger neighborhoods that had fundamentally different characteristics. The big swaths of grading clustered small areas of higher grades, like yellow C grades (more creditworthy), within large red D grade areas. To do so, they used potential weaknesses in the HOLC maps. The authors-Daniel Aaronson, Daniel Hartley, and Bhashkar Mazumder-use the data created by the big HOLC digital-mapping project in order to test it. The significance of this study, which was recently released as a working paper by the Chicago Fed, attempts to answer this question. Did it influence private lending? Was redlining a symptom of racial fears that drove segregation, or did it play a role in driving segregation? (It's obviously not just an either-or question.) But there's some debate about what that meant. Related: Chicago Isn’t Just Segregated, It Basically Invented Modern Segregationīasically, the federal government determined that much of the nation's great cities were poor investments. I spoke to one of the researchers involved, Virginia Tech's LaDale Winling, who called them the "Rosetta stone" of American cities. It's shocking how much of major cities were given D grades, the lowest possible credit-risk score, and outlined in red (hence, it's believed, the origin of the term "redlining"). Not long ago, a team of academics digitized many of these maps. Given the period, its metrics for creditworthiness were heavily based on the racial composition of neighborhoods-white flight meant that the presence of non-whites, particularly African Americans, brought the specter of housing-value collapse-and for a lot of reasons, these calculations were grounded in the work of Chicago economists and real estate professionals. In short, in the 1930s, the Home Owners' Loan Corporation attempted to figure out the creditworthiness of properties within wide swaths of American cities. It might sound like an arcane subject, but it's gotten a surprising amount of attention in the popular press over the last few years (driven in large part by the attention of The Atlantic's Ta-Nehisi Coates), and something I've turned my attention to a few times.
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