Researchers from Carnegie Mellon, NYU and Harvard reveal pronounced gender and racial disparities in NFT prices, urging the industry to adopt attributes and policies that counteract bias.
The United States has a long history of gender and racial disparities in wealth, education, employment and consumption, which has been mirrored in various modern marketplaces, including online rental and labor markets. Now, a groundbreaking study has turned its focus towards the non-fungible token (NFT) market, shedding light on deep-seated biases and recommending strategies to combat them.
Researchers from Carnegie Mellon University’s Tepper School of Business, New York University and Harvard University have delved into how gender and race impact transaction prices in the NFT marketplace. Despite expectations that the younger, more progressive demographics of these digital spaces might alleviate social bias, the findings suggest otherwise.
“Based on the observation that NFT investors often represent a younger, wealthier and more politically progressive demographic, we sought to determine whether this marketplace might be less susceptible to prejudice and social bias,” lead author Yuan Yuan, a doctoral student in marketing at Carnegie Mellon’s Tepper School of Business, said in a news release. “As the NFT market continues to grow and increasingly leverages digital communities as brand assets, such questions will become increasingly important.”
The study, published in the International Journal of Research in Marketing, reveals that female CryptoPunks avatars command 37% lower prices than their male counterparts. Similarly, Black CryptoPunks avatars see a 31% deduction compared to White avatars.
These disparities were not mere trends; a controlled lab experiment confirmed both gender and race price premiums, pointing to deep-rooted racial bias in purchasing behaviors.
While these findings are disheartening, the study offers a glimmer of hope. The researchers identified that avatars featuring attributes linked to high-tech environments or higher education, such as 3D virtual reality headsets or ‘nerd glasses,’ could mitigate these price disparities. This suggests that incorporating such features might help to counteract bias in the NFT marketplace.
“By considering our findings, NFT creators and platforms can promote a more balanced marketplace by introducing attributes that counteract bias,” co-author Kannan Srinivasan, a professor of management, marketing and business technology at Carnegie Mellon’s Tepper School of Business, said in the news release. “NFT platforms that want to harmonize efficiency with fairness can also adopt policies that discourage bias, providing more equitable guidelines for the creation and transaction of NFTs.”
This study challenges the preconceived notion that younger, technologically savvy demographics are less inclined to exhibit social biases. It instead reveals that persistent societal stereotypes still permeate digital marketplaces, underscoring the complexity and pervasiveness of racial and gender prejudices.
Despite its groundbreaking findings, the study acknowledges certain limitations. The difficulty in distinguishing between what features are perceived as valuable versus personally preferred traits, and the focus solely on human avatars, leaves room for further exploration.
Additionally, the diversity within their database may not fully represent the general population, suggesting an avenue for continued research.
As the NFT market continues to expand, leveraging digital communities as valuable brand assets, addressing and mitigating such biases will become crucial. The research sets the stage for pivotal policy changes and innovative solutions aimed at fostering a more inclusive and equitable digital marketplace.