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

Louis Lippens, Stijn Baert and Eva Derous
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Eva Derous: Ghent University

No 14438, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: 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.

Keywords: ethnicity; loss aversion; employee discrimination; taste-based discrimination (search for similar items in EconPapers)
JEL-codes: C92 J24 J60 J70 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2021-06
New Economics Papers: this item is included in nep-cbe, nep-dcm, nep-exp, nep-upt and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published - revised version published in: Economics Letters , 2021, 208, 110081

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Journal Article: Loss aversion in taste-based employee discrimination: Evidence from a choice experiment (2021)
Working Paper: Loss aversion in taste-based employee discrimination: Evidence from a choice experiment (2021)
Working Paper: Loss aversion in taste-based employee discrimination: Evidence from a choice experiment (2021)
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