Past research indicates that increasing the economic consequences of evaluations should theoretically discourage discrimination by making it more costly. I theorize that such consequences may also encourage discrimination in settings… Click to show full abstract
Past research indicates that increasing the economic consequences of evaluations should theoretically discourage discrimination by making it more costly. I theorize that such consequences may also encourage discrimination in settings in which evaluators may be motivated by performance expectations, e.g., stereotypes. I explore this theory using data from an online lending platform whose loan guarantee policy reduced the potential economic consequences of using borrowers’ demographics during lending decisions. I find evidence that with the policy in place, lenders evaluated female borrowers less favorably than male borrowers. This finding is consistent with the theory that the policy discouraged performance-motivated discrimination (that driven by beliefs about performance abilities) and simultaneously encouraged consumption-motivated discrimination (that driven by a like or dislike of others because of their demographic traits). Because I theorize about underlying motives for discrimination, the insights developed here should apply to a wide range of types of discrimination that vary according to these motives, including classic taste-based discrimination, homophily-driven discrimination, statistical discrimination, and status-based discrimination. Economic consequences may therefore represent an important dynamic link between different types of discrimination.
               
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