Prejudice or Price

There is a lot of debate about the government's role is in regulating social norms like discrimination in business. Separate from that ideological debate, is the factual one of whether that discrimination is actually happening. Economist Tim Harford recently described what business prejudice looks like:

if a company’s management is willing to give up profits to exercise a prejudice, then the discrimination is real

Company’s who are willing to exercise prejudice must give up profits. Whether it's not hiring cheaper black labor in the early 1900's or not hiring qualified female labor in the late 1900's, discrimination is costly. However, the higher rate of unemployment for African Americans or the lower pay of women do not necessarily mean discrimination is occurring. It many cases it may be that businesses are making choices based on prices and not prejudice.