Taste-based or Statistical Discrimination: the Economics of Discrimination Returns to Its Roots*

We briefly review the evolution of empirical work on discrimination. We discuss why traditional regression-based approaches neither convincingly measure market discrimination nor disentangle the relative importance of animus versus statistical discrimination in explaining such discrimination as exists. We describe the development of modern correspondence studies. We argue that these studies have the promise to credibly identify the presence of discrimination if not its magnitude, can inform us about the underlying mechanism generating discrimination and can also point to avenues for new theoretical and empirical work on discrimination. We discuss two articles with exemplary applications of these new methods.