Testing the Theory of Consumer Discrimination as an Explanation for the Lack of Minority Hiring in Hollywood Films.

Abstract

Is employment discrimination driven by consumer bias rather than employer bias? One explanation for the persistence of employment discrimination, despite considerable legal and social pressure, is that unbiased employers are penalized by biased customers. An equitable employer is therefore a less profitable one, and apparent employer bias is more accurately described as reflected consumer antipathy. The empirical challenge of relating consumer behavior to employee composition has limited prior tests of this hypothesis and focused attention largely on employer behavior or structural factors. We provide a rare direct test of the claim that consumers respond to employee composition by evaluating the commercial and artistic performance of films released theatrically within the United States between 2011-2015 as a function of the racial diversity of their cast. We find that films are not penalized for the diversity of their casts; instead employing multiple black actors in the principal cast achieves significantly higher domestic box-office revenues than films with no black actors. Moreover, we find that international audiences do not exhibit evidence of bias against diverse casts, and that the net returns to diversity remain positive when worldwide box-office revenues are considered. We confirm the robustness of these results in a survey and experimental setting that controls for film-level differences, and through an analysis of a novel dataset capturing the social media activity (on Twitter) for each film by users of different races. Our findings advance an alternative interpretation of the consumer bias thesis, where consumers prefer employers reflect their world or values, rather than their traits.

Keywords: racial discrimination, hollywood, customer, diversity, performance

JEL Classification: J15, L82, J7