Hedegaard and Tyran publishes in American Economic Journal

"The Price of Prejudice"

The paper, forthcoming in American Economic Journal: Applied Economics, presents the results of a novel field experiment designed to study how ethnic prejudice and discriminative behavior depends on the cost of discrimination.

The research received financial support from the Rockwool Foundation Research Unit. The abstract is reprinted below.

“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.”