Animus, Beliefs, and Social Media in Uncertain Times

Distinguishing belief-driven from preference-driven discrimination encounters an identification challenge in observational settings: many combinations of beliefs and preferences---both unobserved---may result in the same discriminatory response. This study overcomes this challenge by examining a unique setting where the two discriminator types respond differently. I examine consumer discrimination against Chinese restaurants following the first COVID-19 case in the US. To separate health-related fears from ethnic animus, I adopt a simple identification strategy: a belief-driven discriminator avoids Chinese restaurants only when concerns over contracting the virus are salient, whereas a preference-driven discriminator avoids Chinese restaurants regardless of health concerns. I use variation in cuisine type, service type, Chinese share of customers, and local covid cases to distinguish aversion to perceived health risks from aversion to the ethnic group. To strengthen the empirical investigation, I explore the role of covid-related content on a major social media platform in exacerbating consumer discrimination. This paper provides four main results: 1) consumers discriminated against Chinese dine-ins but not take-outs, 2) consumers did not avoid non-Chinese dine-ins with typically many Chinese customers, 3) local covid cases reduced visits to foreign restaurants---not just Chinese---associated with higher cases abroad, and 4) greater salience of covid on Twitter exacerbated discrimination. The results indicate that belief-driven discrimination was the dominant type and provide novel evidence of off-platform market effects of social media