(Translated by https://www.hiragana.jp/)
The Price of Prejudice
IDEAS home Printed from https://ideas.repec.org/p/cpr/ceprdp/9953.html
   My bibliography  Save this paper

The Price of Prejudice

Author

Listed:
  • Tyran, Jean-Robert
  • Hedegaard, Morten

Abstract

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.

Suggested Citation

  • Tyran, Jean-Robert & Hedegaard, Morten, 2014. "The Price of Prejudice," CEPR Discussion Papers 9953, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:9953
    as

    Download full text from publisher

    File URL: https://cepr.org/publications/DP9953
    Download Restriction: CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Chaim Fershtman & Uri Gneezy, 2001. "Discrimination in a Segmented Society: An Experimental Approach," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(1), pages 351-377.
    2. Joseph G. Altonji & Charles R. Pierret, 2001. "Employer Learning and Statistical Discrimination," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(1), pages 313-350.
    3. David Neumark & Roy J. Bank & Kyle D. Van Nort, 1996. "Sex Discrimination in Restaurant Hiring: An Audit Study," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 111(3), pages 915-941.
    4. Mariagiovanna Baccara & Allan Collard-Wexler & Leonardo Felli & Leeat Yariv, 2014. "Child-Adoption Matching: Preferences for Gender and Race," American Economic Journal: Applied Economics, American Economic Association, vol. 6(3), pages 133-158, July.
    5. Sebastian Kube & Michel André Maréchal & Clemens Puppe, 2013. "Do Wage Cuts Damage Work Morale? Evidence From A Natural Field Experiment," Journal of the European Economic Association, European Economic Association, vol. 11(4), pages 853-870, August.
    6. Levitt, Steven D, 2004. "Testing Theories of Discrimination: Evidence from Weakest Link," Journal of Law and Economics, University of Chicago Press, vol. 47(2), pages 431-452, October.
    7. John Yinger, 1998. "Evidence on Discrimination in Consumer Markets," Journal of Economic Perspectives, American Economic Association, vol. 12(2), pages 23-40, Spring.
    8. Claire L. Adida & David D. Laitin & Marie-Anne Valfort, 2010. "Identifying barriers to Muslim integration in France," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00618060, HAL.
    9. Jennifer L. Doleac & Luke C.D. Stein, 2013. "The Visible Hand: Race and Online Market Outcomes," Economic Journal, Royal Economic Society, vol. 123(11), pages 469-492, November.
    10. P. A. Riach & J. Rich, 2002. "Field Experiments of Discrimination in the Market Place," Economic Journal, Royal Economic Society, vol. 112(483), pages 480-518, November.
    11. Uri Gneezy & John List & Michael K. Price, 2012. "Toward an Understanding of Why People Discriminate: Evidence from a Series of Natural Field Experiments," NBER Working Papers 17855, National Bureau of Economic Research, Inc.
    12. List John A., 2007. "Field Experiments: A Bridge between Lab and Naturally Occurring Data," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 6(2), pages 1-47, April.
    13. Carlsson, Magnus & Rooth, Dan-Olof, 2007. "Evidence of ethnic discrimination in the Swedish labor market using experimental data," Labour Economics, Elsevier, vol. 14(4), pages 716-729, August.
    14. Sergio Currarini & Matthew O. Jackson & Paolo Pin, 2009. "An Economic Model of Friendship: Homophily, Minorities, and Segregation," Econometrica, Econometric Society, vol. 77(4), pages 1003-1045, July.
    15. Rooth, Dan-Olof, 2010. "Automatic associations and discrimination in hiring: Real world evidence," Labour Economics, Elsevier, vol. 17(3), pages 523-534, June.
    16. David Neumark, 2012. "Detecting Discrimination in Audit and Correspondence Studies," Journal of Human Resources, University of Wisconsin Press, vol. 47(4), pages 1128-1157.
    17. List, John A. & Rasul, Imran, 2011. "Field Experiments in Labor Economics," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 2, pages 103-228, Elsevier.
    18. Marianne Bertrand & Dolly Chugh & Sendhil Mullainathan, 2005. "Implicit Discrimination," American Economic Review, American Economic Association, vol. 95(2), pages 94-98, May.
    19. Hamermesh, Daniel S & Biddle, Jeff E, 1994. "Beauty and the Labor Market," American Economic Review, American Economic Association, vol. 84(5), pages 1174-1194, December.
    20. Marianne Bertrand & Sendhil Mullainathan, 2004. "Are Emily and Greg More Employable Than Lakisha and Jamal? A Field Experiment on Labor Market Discrimination," American Economic Review, American Economic Association, vol. 94(4), pages 991-1013, September.
    21. Daniel Zizzo, 2010. "Experimenter demand effects in economic experiments," Experimental Economics, Springer;Economic Science Association, vol. 13(1), pages 75-98, March.
    22. Jeffrey Grogger, 2011. "Speech Patterns and Racial Wage Inequality," Journal of Human Resources, University of Wisconsin Press, vol. 46(1), pages 1-25.
    23. Devin G. Pope & Justin R. Sydnor, 2011. "What’s in a Picture?: Evidence of Discrimination from Prosper.com," Journal of Human Resources, University of Wisconsin Press, vol. 46(1), pages 53-92.
    24. Cecilia Rouse & Claudia Goldin, 2000. "Orchestrating Impartiality: The Impact of "Blind" Auditions on Female Musicians," American Economic Review, American Economic Association, vol. 90(4), pages 715-741, September.
    25. Kaas Leo & Manger Christian, 2012. "Ethnic Discrimination in Germany’s Labour Market: A Field Experiment," German Economic Review, De Gruyter, vol. 13(1), pages 1-20, February.
    26. James J. Heckman, 1998. "Detecting Discrimination," Journal of Economic Perspectives, American Economic Association, vol. 12(2), pages 101-116, Spring.
    27. John A. List, 2004. "The Nature and Extent of Discrimination in the Marketplace: Evidence from the Field," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(1), pages 49-89.
    28. Ayres, Ian & Siegelman, Peter, 1995. "Race and Gender Discrimination in Bargaining for a New Car," American Economic Review, American Economic Association, vol. 85(3), pages 304-321, June.
    29. Jonathan Guryan & Kerwin Kofi Charles, 2013. "Taste‐based or Statistical Discrimination: The Economics of Discrimination Returns to its Roots," Economic Journal, Royal Economic Society, vol. 123(11), pages 417-432, November.
    30. Altonji, Joseph G. & Blank, Rebecca M., 1999. "Race and gender in the labor market," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 48, pages 3143-3259, Elsevier.
    31. Uri Gneezy & John A List, 2006. "Putting Behavioral Economics to Work: Testing for Gift Exchange in Labor Markets Using Field Experiments," Econometrica, Econometric Society, vol. 74(5), pages 1365-1384, September.
    32. Pager, Devah & Western, Bruce & Bonikowski, Bart, 2009. "Discrimination in a Low-Wage Labor Market: A Field Experiment," IZA Discussion Papers 4469, Institute of Labor Economics (IZA).
    33. Kerwin Kofi Charles & Jonathan Guryan, 2008. "Prejudice and Wages: An Empirical Assessment of Becker's The Economics of Discrimination," Journal of Political Economy, University of Chicago Press, vol. 116(5), pages 773-809, October.
    34. Phelps, Edmund S, 1972. "The Statistical Theory of Racism and Sexism," American Economic Review, American Economic Association, vol. 62(4), pages 659-661, September.
    35. Philip Oreopoulos, 2011. "Why Do Skilled Immigrants Struggle in the Labor Market? A Field Experiment with Thirteen Thousand Resumes," American Economic Journal: Economic Policy, American Economic Association, vol. 3(4), pages 148-171, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mauro Caselli & Paolo Falco, 2020. "As long as they are cheap. Experimental evidence on the demand for migrant workers," Discussion Papers 20-06, University of Copenhagen. Department of Economics.
    2. Alexandre Mas & Amanda Pallais, 2017. "Valuing Alternative Work Arrangements," American Economic Review, American Economic Association, vol. 107(12), pages 3722-3759, December.
    3. Halla, Martin & Kah, Christopher & Sausgruber, Rupert, 2021. "Testing for Ethnic Discrimination in Outpatient Health Care: Evidence from a Field Experiment in Germany," Department of Economics Working Paper Series 319, WU Vienna University of Economics and Business.
    4. Lange, Andreas & Miniesy, Rania & Nicklisch, Andreas & Rabie, Dina & Bock, Olaf & Ross, Johannes, 2023. "Sharing norms and negotiations across cultures: Experimental interactions within and between Egypt and Germany," Journal of Economic Behavior & Organization, Elsevier, vol. 210(C), pages 412-440.
    5. Ayaita, Adam, 2021. "Labor Market Discrimination and Statistical Differences in Unobserved Characteristics of Applicants," EconStor Preprints 236615, ZBW - Leibniz Information Centre for Economics.
    6. Hou, Yue & Liu, Chuyu & Crabtree, Charles, 2020. "Anti-muslim bias in the Chinese labor market," Journal of Comparative Economics, Elsevier, vol. 48(2), pages 235-250.
    7. Marius Brülhart & Gian-Paolo Klinke & Andrea Marcucci & Dominic Rohner & Mathias Thoenig, 2023. "Price and Prejudice: Housing Rents Reveal Racial Animus," CESifo Working Paper Series 10369, CESifo.
    8. Lippens, Louis & Baert, Stijn & Derous, Eva, 2021. "Loss aversion in taste-based employee discrimination: Evidence from a choice experiment," Economics Letters, Elsevier, vol. 208(C).
    9. Achard, Pascal & Suetens, Sigrid, 2023. "The Causal Effect of Ethnic Diversity on Support for Redistribution and the Role of Discrimination," Other publications TiSEM a5e6e0cd-5e07-4a24-a15c-a, Tilburg University, School of Economics and Management.
    10. Bajzíková, Stanislava & Cingl, Lubomír, 2023. "Measuring stereotypes in effort tasks: A multiple-price list approach," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 105(C).
    11. Élisabeth Tovar & Matthieu Bunel, 2019. "Profit vs morality: how unfair is labor market discrimination? Results from a survey experiment," Working Papers hal-04141860, HAL.
    12. Broockman, David E. & Soltas, Evan J., 2020. "A natural experiment on discrimination in elections," Journal of Public Economics, Elsevier, vol. 188(C).
    13. Batsaikhan, Mongoljin & Gørtz, Mette & Kennes, John & Lyng, Ran Sun & Monte, Daniel & Tumennasan, Norovsambuu, 2021. "Discrimination and Daycare Choice: Evidence from a Randomized Survey," IZA Discussion Papers 14874, Institute of Labor Economics (IZA).
    14. Elena Cettolin & Sigrid Suetens, 2019. "Return on Trust is Lower for Immigrants," The Economic Journal, Royal Economic Society, vol. 129(621), pages 1992-2009.
    15. Doerrenberg, Philipp & Duncan, Denvil & Li, Danyang, 2024. "The (in)visible hand: Do workers discriminate against employers?," Journal of Public Economics, Elsevier, vol. 231(C).
    16. Elisabeth Tovar & Mathieu Bunel, 2019. "Profit vs morality: how unfair is labor market discrimination? Results from a survey experiment," Post-Print hal-02459378, HAL.
    17. Gallen, Yana & Wasserman, Melanie, 2023. "Does information affect homophily?," Journal of Public Economics, Elsevier, vol. 222(C).
    18. Kertesi, Gábor & Köllő, János & Szabó, Lajos Tamás & Károlyi, Róbert, 2022. "Hogyan lesz az etnikai előítéletből foglalkoztatási diszkrimináció? A kisvállalatok szerepe [How does ethnic prejudice turn into employment discrimination? The role of small companies]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(11), pages 1345-1376.
    19. Achard, Pascal & Suetens, Sigrid, 2023. "The Causal Effect of Ethnic Diversity on Support for Redistribution and the Role of Discrimination," Discussion Paper 2023-013, Tilburg University, Center for Economic Research.
    20. Chen Liang & Jing Peng & Yili Hong & Bin Gu, 2023. "The Hidden Costs and Benefits of Monitoring in the Gig Economy," Information Systems Research, INFORMS, vol. 34(1), pages 297-318, March.
    21. Mongoljin Batsaikhan & Mette Gørtz & John Kennes & Ran Sun Lyng & Daniel Monte & Norovsambuu Tumennasan, 2019. "Daycare Choice and Ethnic Diversity: Evidence from a Randomized Survey," Economics Working Papers 2019-02, Department of Economics and Business Economics, Aarhus University.
    22. Emma von Essen & Jonas Karlsson, 2019. "The effect of competition on discrimination in online markets—Anonymity and selection," PLOS ONE, Public Library of Science, vol. 14(8), pages 1-18, August.
    23. Ilić, Dragan, 2018. "Prejudice in naturalization decisions: Theory and evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 150(C), pages 1-18.
    24. Élisabeth Tovar & Matthieu Bunel, 2021. "Attitudes on past-in-present educational discrimination. Insights from a representative factorial survey," EconomiX Working Papers 2021-28, University of Paris Nanterre, EconomiX.
    25. Schütt, Christoph A. & Pipke, David & Detlefsen, Lena & Grimalda, Gianluca, 2023. "Does ethnic heterogeneity decrease workers’ effort in the presence of income redistribution? An experimental analysis," European Journal of Political Economy, Elsevier, vol. 79(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Marianne Bertrand & Esther Duflo, 2016. "Field Experiments on Discrimination," NBER Working Papers 22014, National Bureau of Economic Research, Inc.
    2. Marianne Bertrand & Esther Duflo, 2016. "Field Experiments on Discrimination," NBER Working Papers 22014, National Bureau of Economic Research, Inc.
    3. David Neumark, 2018. "Experimental Research on Labor Market Discrimination," Journal of Economic Literature, American Economic Association, vol. 56(3), pages 799-866, September.
    4. Rich, Judy, 2014. "What Do Field Experiments of Discrimination in Markets Tell Us? A Meta Analysis of Studies Conducted since 2000," IZA Discussion Papers 8584, Institute of Labor Economics (IZA).
    5. Anthony Edo & Nicolas Jacquemet & Constantine Yannelis, 2019. "Language skills and homophilous hiring discrimination: Evidence from gender and racially differentiated applications," Review of Economics of the Household, Springer, vol. 17(1), pages 349-376, March.
    6. Carlsson, Magnus & Fumarco, Luca & Rooth, Dan-Olof, 2013. "Artifactual Evidence of Discrimination in Correspondence Studies? A Replication of the Neumark Method," IZA Discussion Papers 7619, Institute of Labor Economics (IZA).
    7. Castillo, Marco & Petrie, Ragan & Torero, Maximo & Vesterlund, Lise, 2013. "Gender differences in bargaining outcomes: A field experiment on discrimination," Journal of Public Economics, Elsevier, vol. 99(C), pages 35-48.
    8. Gaddis, S. Michael, 2018. "An Introduction to Audit Studies in the Social Sciences," SocArXiv e5hfc, Center for Open Science.
    9. Katherine B. Coffman & Christine L. Exley & Muriel Niederle, 2021. "The Role of Beliefs in Driving Gender Discrimination," Management Science, INFORMS, vol. 67(6), pages 3551-3569, June.
    10. Chowdhury, Shyamal & Ooi, Evarn & Slonim, Robert, 2020. "Racial Discrimination and White First Name Adoption: Evidence from a Correspondence Study in the Australian Labour Market," IZA Discussion Papers 13208, Institute of Labor Economics (IZA).
    11. John A. List, 2004. "The Nature and Extent of Discrimination in the Marketplace: Evidence from the Field," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(1), pages 49-89.
    12. John M. Nunley & Mark F. Owens & R. Stephen Howard, 2010. "The Effects of Competition and Information on Racial Discrimination: Evidence from a Field Experiment," Working Papers 201007, Middle Tennessee State University, Department of Economics and Finance.
    13. Roland G. Fryer, Jr. & Devah Pager & Jörg L. Spenkuch, 2013. "Racial Disparities in Job Finding and Offered Wages," Journal of Law and Economics, University of Chicago Press, vol. 56(3), pages 633-689.
    14. David Masclet & Emmanuel Peterle & Sophie Larribeau, 2012. "The Role of Information in Deterring Discrimination: A New Experimental Evidence of Statistical Discrimination," Economics Working Paper Archive (University of Rennes & University of Caen) 201238, Center for Research in Economics and Management (CREM), University of Rennes, University of Caen and CNRS.
    15. John M. Nunley & Adam Pugh & Nicholas Romero & Richard Alan Seals, Jr., 2014. "An Examination of Racial Discrimination in the Labor Market for Recent College Graduates: Estimates from the Field," Auburn Economics Working Paper Series auwp2014-06, Department of Economics, Auburn University.
    16. Brit Grosskopf & Graeme Pearce, 2020. "Do You Mind Me Paying Less? Measuring Other-Regarding Preferences in the Market for Taxis," Management Science, INFORMS, vol. 66(11), pages 5059-5074, November.
    17. Galarza, Francisco B. & Yamada, Gustavo, 2014. "Labor Market Discrimination in Lima, Peru: Evidence from a Field Experiment," World Development, Elsevier, vol. 58(C), pages 83-94.
    18. Laouénan, Morgane & Rathelot, Roland, 2017. "Ethnic Discrimination on an Online Marketplace of Vacation Rental," CAGE Online Working Paper Series 318, Competitive Advantage in the Global Economy (CAGE).
    19. Peter Younkin & Venkat Kuppuswamy, 2018. "The Colorblind Crowd? Founder Race and Performance in Crowdfunding," Management Science, INFORMS, vol. 64(7), pages 3269-3287, July.
    20. Grossman, Shelby & Honig, Dan, 2017. "Evidence from Lagos on Discrimination across Ethnic and Class Identities in Informal Trade," World Development, Elsevier, vol. 96(C), pages 520-528.

    More about this item

    Keywords

    Discrimination; Field experiment; Labor market;
    All these keywords.

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:9953. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://www.cepr.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.