The Price of Prejudice

We present a new type of field experiment to investigate ethnic prejudice in the workplace. Our design allows us to study how potential discriminators respond to changes in the cost of discrimination. We find that ethnic discrimination is common but highly responsive to the “price of prejudice,” i.e...

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Bibliographic Details
Published inAmerican economic journal. Applied economics Vol. 10; no. 1; pp. 40 - 63
Main Authors Hedegaard, Morten Størling, Tyran, Jean-Robert
Format Journal Article
LanguageEnglish
Published American Economic Association 01.01.2018
Assoc
Subjects
Averages
Behavior
Discrimination
Earnings
Minority & ethnic groups
Prejudice
Workplace diversity
Workplaces
Online AccessGet full text
ISSN1945-7782
1945-7790
DOI10.1257/app.20150241

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Summary:We present a new type of field experiment to investigate ethnic prejudice in the workplace. Our design allows us to study how potential discriminators respond to changes in the cost of discrimination. We find that ethnic discrimination is common but highly responsive to the “price of prejudice,” i.e., to the opportunity cost of choosing a less productive worker on ethnic grounds. Discriminators are on average willing to forego 8 percent of their earnings to avoid a coworker of the other ethnic type. The evidence suggests that animus rather than statistical discrimination explains observed behavior.
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ISSN:1945-7782
1945-7790
DOI:10.1257/app.20150241