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Taste-based Discrimination: Empirical Evidence from a Shock to Preferences during WWI

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  • Petra Moser

    () (Department of Economics, Stanford University)

Abstract

A significant challenge to empirically testing theories of discrimination has been the difficulty of identifying taste-based discrimination and of distinguishing it clearly from statistical discrimination. This paper identifies taste-based discrimination through a two-part empirical test. First, it constructs quantitative measures of revealed preferences, which establish that World War I created a persistent change in ethnic preferences that switched the status of German Americans from a mainstream ethnicity to an ethnic minority until the late 1920s. Second, the paper uses this shock to preferences to identify the effects of taste-based discrimination on traders at the New York Stock Exchange (NYSE). A new data set of more than 5,000 applications for membership in the NYSE reveals that the War more than doubled the probability that applicants with German-sounding names would be rejected (relative to Anglo-Saxons).

Suggested Citation

  • Petra Moser, 2009. "Taste-based Discrimination: Empirical Evidence from a Shock to Preferences during WWI," Discussion Papers 08-019, Stanford Institute for Economic Policy Research.
  • Handle: RePEc:sip:dpaper:08-019
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    File URL: http://www-siepr.stanford.edu/repec/sip/08-019.pdf
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    Keywords

    Taste-Based Discrimination; World War I; Shock to Preferences;

    JEL classification:

    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination

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