The New Palgrave Dictionary of Economics Online

Economists typically account for differences in economic outcomes between ethnic groups with explanations having to do with differences in skill, explanations emphasizing informational problems associated with accurately assessing skill, as in statistical discrimination models, or explanations that rely on the presence of prejudice, the key element of taste-based discrimination models. This article defines taste-based discrimination and briefly outlines the economics of associated models. It discusses empirical implications of these models, and reviews empirical tests from the literature. It speculates about possible avenues for future research likely to enrich the insights forthcoming from the standard taste-based model. Although this article focuses on discrimination arising from racial prejudice, taste-based discrimination subsumes negative preferences towards groups of individuals of many alternative types, including different age, gender or religious groups.