We show that racial perceptions are fluid; how individuals perceive their own race and how they are perceived by others depends in part on their social position. Using longitudinal data from a representative sample of Americans, we find that individuals who are unemployed, incarcerated, or impoverished are more likely to be seen and identify as black and less likely to be seen and identify as white, regardless of how they were classified or identified previously. This is consistent with the view that race is not a fixed individual attribute, but rather a changeable marker of status.
Though it's a new paper, this certainly isn't news--at least, the idea that "how they are perceived by others depends in part on their social position" isn't new. We've known that since before the Civil War. In fact, it was the basis of court decisions trying to decide people's race. From an 1835 South Carolina case, State v. Cantey:
We cannot say what admixture of negro blood will make a colored person, and by a jury one may be found a colored person while another of the same degree may be declared a white man. In general, it is very desirable that rules of law should be certain and precise; but it is not always practicable, nor is it practicable in this instance, nor do I know that it is desirable. The status of the individual is not to be determined solely by the distinct and visible mixture of negro blood, but by reputation, by his reception into society, and his having commonly exercised the privileges of a white man. But his admission to these privileges, regulated by the public opinion of the community in which he lives, will very much depend on his own character and conduct; and it may be well and proper that a man of worth, honesty, industry, and respectability, should have the rank of a white man, while a vagabond of the same degree of blood should be confined to the inferior caste. It will be a stimulus to the good conduct of these persons, and security for their fidelity as citizens.
A 1914 case, Tucker v. Blease, quoted the above section and gave it this introduction:
The law recognizes that there is a social element, arising from racial instinct, to be taken into consideration between those with and those without negro blood. The statutes and provisions of the Constitution hereinbefore quoted show that the law not only recognizes a classification, but makes it mandatory, and provides a penalty for failure to observe the laws in this respect, in the instances therein mentioned. The decisions prior to the abolition of slavery show that the classification between white and colored persons did not depend upon the extent of the mixed blood.
Again, emphasis mine.
So a person's legal race, which was supposedly defined in terms of blood and ancestry, was recognized to actually be based (in part at least) on social status. Two people with the same amount of black "blood" could be legally assigned to different races based on whether they exhibited particular good traits or were considered to be in good social standing, his "reception into society."