Becker's theory
Becker (1957) modelled prejudice as a 'discrimination coefficient', an implicit cost employers act as if they pay when hiring a group. Co-workers and customers can also hold such tastes.
Competition
Becker predicted discriminating firms lose profits and are competed away; Hellerstein and colleagues (2002) found lower profits in firms hiring fewer women. Arrow (1973) noted persistence and proposed statistical discrimination.
Evidence
Charles and Guryan (2008) linked state prejudice to Black–white wage gaps. Bertrand and Mullainathan (2004) used résumés and Goldin and Rouse (2000) blind auditions. Lang and Lehmann (2012) review the field, related to occupational segregation and aversive racism.
FAQ
- What is taste-based discrimination in simple terms?
- Treating equally able people worse because of dislike for their group.
- How does it differ from statistical discrimination?
- It stems from prejudice, while statistical discrimination stems from inferences about group averages.
Sources reviewed: 2026-10-26
References
- Becker, G. S. (1957). The economics of discrimination. University of Chicago Press. The founding book.
- Arrow, K. J. (1973). The theory of discrimination. In O. Ashenfelter & A. Rees (Eds.), Discrimination in labor markets (pp. 3–33). Princeton University Press. Critique and the statistical alternative.
- Charles, K. K., & Guryan, J. (2008). Prejudice and wages: An empirical assessment of Becker's The Economics of Discrimination. Journal of Political Economy, 116(5), 773–809. Tests Becker with prejudice data.
- Bertrand, M., & Mullainathan, S. (2004). Are Emily and Greg more employable than Lakisha and Jamal? A field experiment on labor market discrimination. American Economic Review, 94(4), 991–1013. Résumé field experiment.
- Goldin, C., & Rouse, C. (2000). Orchestrating impartiality: The impact of "blind" auditions on female musicians. American Economic Review, 90(4), 715–741. Blind auditions.
- Hellerstein, J. K., Neumark, D., & Troske, K. R. (2002). Market forces and sex discrimination. Journal of Human Resources, 37(2), 353–380. Do discriminating firms earn less?
- Lang, K., & Lehmann, J.-Y. K. (2012). Racial discrimination in the labor market: Theory and empirics. Journal of Economic Literature, 50(4), 959–1006. A broad review.