Loss Aversion in Taste-Based Employee Discrimination: Evidence from a Choice Experiment

Arbeitspapier

Using a choice experiment, we test whether taste-based employee discrimination against ethnic minorities is susceptible to loss aversion. In line with empirical evidence from previous research, our results indicate that introducing a hypothetical wage penalty for discriminatory choice behaviour lowers discrimination and that higher penalties have a greater effect. Most notably, we find that the propensity to discriminate is significantly lower when this penalty is loss-framed rather than gain-framed. From a policy perspective, it could therefore be more effective to financially penalise taste-based discriminators than to incentivise them not to discriminate.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 14438

Classification and Topics

• Classification: Wirtschaft ; Labor Discrimination: General ; Human Capital; Skills; Occupational Choice; Labor Productivity ; Mobility, Unemployment, Vacancies, and Immigrant Workers: General ; Design of Experiments: Laboratory, Group Behavior
• Subject: taste-based discrimination ; employee discrimination ; loss aversion ; ethnicity

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Lippens, Louis ; Baert, Stijn ; Derous, Eva
• Event: Veröffentlichung
• (who): Institute of Labor Economics (IZA)
• (where): Bonn
• (when): 2021

Further information

• Handle: http://hdl.handle.net/10419/236469
• Last update: 10.03.2025, 11:41 AM CET