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Workplace discrimination is a costly business. Personal biases against someone's ethnicity, age, gender, or other differences can shape hiring decisions and workplace relationships, even if
Workplace discrimination is a costly business. Personal biases against someone's ethnicity, age, gender, or other differences can shape hiring decisions and workplace relationships, even if it means working with someone who is less productive. And yet, these damaging prejudices persist. But to what extent do our discriminatory actions harm our economic self-interest? And at what point do we decide the price we pay for our prejudice is too high? A recent paper in the American Economic Journal: Applied Economics puts a price on ethnic prejudice and finds that discriminators are willing to forego 8 percent of their earnings to avoid working with someone of a different ethnicity. And it wasn't just majorities discriminating against minorities: minorities paid a premium to avoid working with a majority person. The paper introduces a novel way to measure the price-sensitivity of workplace discrimination and offers potential lessons for employers that want to address it. "There is quite a strong reaction to this price (of discrimination)," said Jean-Robert Tyran, a professor of economics and director of the Vienna Center for Experimental Economics, in an interview with the AEA. "In some sense, this is good news because it gives you an instrument to clamp down on this discrimination." Researchers have used field experiments to study the causes of discrimination for 40 years. One common approach has been to send hypothetical resumes to employers, measuring their reactions to qualified
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