The Price of Prejudice | Zendy

Morten Hedegaard | Zendy; JeanRobert Tyran | Zendy

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The Price of Prejudice

Author(s) -

Morten Hedegaard,

JeanRobert Tyran

Publication year - 2018

Publication title -

american economic journal applied economics

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 12.996

H-Index - 82

eISSN - 1945-7782

pISSN - 1945-7790

DOI - 10.1257/app.20150241

Subject(s) - prejudice (legal term) , ethnic group , earnings , social psychology , statistical discrimination , ethnic discrimination , racism , demographic economics , psychology , economics , political science , sociology , gender studies , law , accounting

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 remarkably responsive to the "price of prejudice", i.e. to the opportunity cost of choosing a less productive worker on ethnic grounds. In addition, we find that the standard theory of statistical discrimination fails to explain observed choices, and that taking ethnic prejudice into account helps to predict the incidence of discrimination.

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