The illusion of transparency: the political double standard in city credit ratings

Abstract

Ratings proliferate in social life though underlying biases in how ratings are constructed are obscured. Rating criteria—formal a priori standards about the relevant factors for an evaluation—hold promise for creating transparency, eliminating biases and generating meritocratic evaluations through standardization and uncertainty reduction. Yet, little is known about whether criteria in fact eliminate biases or introduce new complexities. Using original data on credit ratings for 109 US city governments from 2002 to 2009, I test whether a rating agency’s rating criteria is applied evenly across cities. Results provide evidence of a political double standard where liberal-leaning cities are evaluated according to a more strict application of rating criteria requiring these cities to have higher performance for similar ratings compared to their conservative counterparts. These findings highlight a mechanism producing inequality between cities and demonstrate how generating meritocratic and unbiased evaluations requires more than the existence and transparency of rating criteria.

Performing Social Control: Poverty Governance, Public Finance, and the Politics of Visibility

“…But bond finance also reshaped the substance-not just the optics-of social control. Through revenue bonds, marginalized groups have been incorporated into a world where bondholders and ratings agencies "rule over" people and places in draconian fashion, exercising "supremacy" but flying under the public radar (Jenkins 2021; see also Hackworth 2007;Norris 2023aNorris , 2023bSinclair 2014). In the housing case, revenue bonds fastened the needs of low-income renters to "the rhythms of an extractive [bond] market" (Jenkins 2021), thereby incentivizing displacement (Lubell 2016).…”

A Sociological Analysis of Structural Racism in “Student List” Lead Generation Products

“…We highlight three findings from sociological scholarship on product utilization. First, scholars tend to find that administrative discretion over selection devices causes structural inequality to increase (Castilla, 2008; Cotter et al, 2021; Norris, 2023b). Discretionary selection devices are sensitive to racialized inputs and allow explicit or implicit individual bias to affect selection decisions (Burrell & Fourcade, 2021; Korver-Glenn, 2018).…”

“…The utilization literature suggests that admissions standards are not the sole driver of inequality in student list purchases. Scholarship finds that two safeguards against structural inequality in discretionary selection devices are transparency —selection criteria are clear to all stakeholders—and accountability —consequences for using biased selection criteria (Castilla, 2008; Norris, 2023b). The process of purchasing student lists is opaque to most internal and external stakeholders.…”

“…The process of purchasing student lists is opaque to most internal and external stakeholders. There can be no accountability without transparency (Norris, 2023b). Whereas admissions readers are trained and normed before they evaluate applications (Bastedo, 2016), student list purchases can be executed by any person affiliated with a Title IV institution.…”