Taste-Based Discrimination - Empirical Evidence from a Shock to Preferences after WWI

Abstract:     
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 at the example of 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 changes in ethnic preferences after the war more than doubled the probability that applicants with German-sounding names would be rejected.

Keywords: Ethnic Discrimination, Taste-Based Discrimination, NYSE, Economic History, World War I

JEL Classifications: J71, J78, N22

Working Paper Series