The price of prejudice

TY - JOUR

T1 - The price of prejudice

AU - Hedegaard, Morten

AU - Tyran, Jean-Robert Karl

PY - 2018/1/1

Y1 - 2018/1/1

N2 - 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 co-worker of the other ethnic type. The evidence suggests that animus rather than statistical discrimination explains observed behavior.

AB - 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 co-worker of the other ethnic type. The evidence suggests that animus rather than statistical discrimination explains observed behavior.

U2 - 10.1257/app.20150241

DO - 10.1257/app.20150241

M3 - Journal article

SN - 1945-7782

VL - 10

SP - 40

EP - 63

JO - American Economic Journal: Applied Economics

JF - American Economic Journal: Applied Economics

IS - 1

ER -