Beautiful or White? Discrimination in Group Formation

We explore the importance of appearance in group formation using a series of experiments with a non-student population of mixed racial heritage. In order to test for discrimination, we ask subjects to choose partners. We manipulate the amount of payoff-relevant information on behavior, thereby making it costly to discriminate based on appearance. To further strengthen our test, we increase the cost of discrimination by manipulating incentives at the individual level so as to make people behave counter to stereotypes. While behavior is not correlated with personal, socio-economic or racial characteristics, people do use personal characteristics to sort themselves into groups. For instance, beauty is a robust predictor of being a desirable group member. Interestingly, white subjects are three times more likely to be classified as attractive, suggesting that beauty might mask racial discrimination. While we find that the availability of payoff-relevant information reduces discrimination a great deal, discrimination based on appearance remains. Unattractive subjects have a one in ten chance of making it to the most preferred group, whereas attractive subjects have a one in three chance. The evidence in this case is most consistent with taste-based, rather than statistical, discrimination. To our knowledge, this is the first time that this type of discrimination has been reported using experimental methods in a non-student population