Statistical Discrimination Revisited – The Role of Motivated Reasoning

Topic & Objectives

Systematically disparate treatment of individuals from different social groups is widespread and has been documented in various contexts, such as the labor market, healthcare, the justice system, policing, and education. While discrimination by any cause can have fatal consequences for the discriminated, precise identification of the cause of discrimination has important implications for policy, welfare analyses, and discrimination dynamics. In this project, I introduce a new explanation for discrimination: discrimination based on motivated reasoning. In a series of online experiments, my goal was to see whether and how individuals engage in motivated reasoning before they discriminate against particular subgroups. I study how individuals process information and form beliefs and how this translates into discrimination rates. To establish that resulting discrimination can be explained by motivated belief formation I vary individuals’ wiggle room to systematically process information.

Key Findings

• When provided with sufficient wiggle room to form motivated beliefs individuals significantly discriminate against Hispanics
• Individuals engage in systematic information search, depending on whether initial pieces of information contradict or support their motive
• Individuals are more likely to act consistently with acquired information if the information confirms their motive and this effect is larger if the wiggle room to interpret the information is larger
• Discrimination can effectively be decreased by limiting individuals’ wiggle room to form motivated beliefs

Policy Implications

These findings suggest a need to carefully take explanations for discrimination into account. Traditionally, observed discrimination in a setting such as the one provided in my experiments would be classified as taste-based discrimination, against which information provision has proven to be ineffective. However, I show that information provision can in fact be highly effective if it considers how individuals discriminate. By carefully limiting individuals’ wiggle room to systematically engage with information we can significantly reduce discrimination.