THE market is not politically correct. It often assigns lower values to humans (their wages) based on their race or sex, even after controlling for education and experience.It's just as cruel to children. A few years ago I was disturbed to learn that it's cheaper to adopt black American children than white. I recently had lunch with NYU Stern School economist Allan Collard-Wexler, who has estimated adoption price sensitivity. He found just how much adoption fees are sensitive to the race and gender of a baby. It's about $8,000 cheaper to adopt a black baby than a white or Hispanic child and girls tend to cost about $2,000 more than boys.

The data is just for domestic adoptions. But about 13% of adoptions by American parents are international. Given how many Americans look abroad for babies, it is surprising how many prospective parents are foreign (typically from Europe or Canada) hoping to adopt American babies. The foreign parents tend to be less race and gender biased. Before the ratification of the Hague Conventions in 2008, which limited international adoption, many of the surplus black children were adopted by non–Americans. The new restrictions on international adoption shrunk this pool of prospective parents. The paper finds that removing foreign parents from the adoption lowers the chance a baby will be adopted by 33%.

What can explain the preference for non-black girls? The preference for girls is interesting because people tend to favour male biological children. The authors speculate this may be because girls are considered “safer” in terms of dysfunctional behaviour. The data also includes same-sex couples, which tend to favour girls (both male and female partners), even more than heterosexual couples.

The race preference could stem from the desire that the adopted child resemble the parents (most adoptive parents are white), and perhaps even pass for a biological child. But this does not always seem to be the motivation. Prospective parents like Hispanic babies as much as white, non-Hispanic ones. Mr Collard-Wexler noted that he even found a weak (but insignificant) preference for Asian overwhite babies. His sample did not include international adoptions so it's hard to measure the true demand for Asian babies. International adoption can be more expensive, so there appears to be in many cases a preference for foreign Asian babies over black American babies.

The preferences may be based on social norms that make inter-racial adoptions (with the exception of white-Asian) taboo. White-Asian adoption seems more common and there are many support networks for these families. The paper did not find any evidence of an Angelina Jolie effect; the timing of her and other celebrity inter-racial adoptions did not have a noticeable affect on prospective parents' preferences.

It is hard to know exactly how many black newborns in the sample are not adopted and wind up in foster care. Black children make up 32% of the foster care population, but just 16% of adoptees (including domestic and international adoptions). Finding homes for these children, or sparing them the foster system all together, is an important policy goal. Foster care can not only be a worse outcome for the child, but can be costly to society. The costs involve both raising the child and the long-term psychological impact of growing up in foster care, which may handicap the child's future.

The paper found that price does play a significant role in choosing a child to adopt—perhaps enough to overcome racial bias. But for the black child market to clear, prices must fall further. The paper finds the cost of adopting a black baby needs to be $38,000 lower than the cost of a white baby, in order to make parents indifferent to race. Boys will need to cost $16,000 less than girls. No doubt, the idea of placing a lower value on children based on race or sex is repugnant. But if it results in finding a loving home for children, and sparing them years in foster care, it may be the lesser of two evils. This suggests that subsidising the adoption of certain kinds of children may be worthwhile. And so far there is evidence that subsidies have increased the rate of adoption out of foster care. Food for thought.