Economic consequences and the motive to discriminate

Stroube, B (2022) Economic consequences and the motive to discriminate. Administrative Science Quarterly, 67 (1). pp. 207-236. ISSN 0001-8392

Abstract

Past research indicates that increasing the economic consequences of evaluations should theoretically discourage discrimination by making it more costly. In this paper I theorize that such consequences should also encourage discrimination in settings where evaluators may be motivated by performance expectations (e.g., stereotypes). I explore this theory using data from an online lending platform where a loan guarantee policy reduced the potential economic consequences of using borrower demographics during lending decisions. I find evidence that lenders evaluated female borrowers less favorably than male borrowers after the policy. This is consistent with the theory that the policy discouraged performance-motivated discrimination, while simultaneously encouraged consumption-motivated discrimination. Because I theorize about underlying motives for discrimination, the insights developed here should apply to a wide range of specific types of discrimination that vary according to these motives, including classic taste-based discrimination, homophily-driven discrimination, statistical discrimination, and status-based discrimination. Economic consequences may therefore represent an important dynamic link between different types of discrimination.