It has been well-documented that minorities are subject to discrimination in product pricing and customer service. What is startling is the result of a new study professors at the USC Marshall School of business in conjunction with University of San Diego's School of Business Administration, that shows that sometimes ill-treatment can make African-American consumers voluntarily pay more for goods and services than they would normally, as well as pay more than their Caucasian counterparts.
Aarti S. Ivanic, assistant professor of marketing at the University of San Diego's School of Business Administration; and Jennifer R. Overbeck, assistant professor of management and organization along with Joseph C. Nunes, associate professor of marketing at the University of Southern California's Marshall School of Business, set out to understand inequities in transactions. In their study, "Status, Race and Money: The Impact of Racial Hierarchy on Willingness-to-Pay," forthcoming in Psychological Science, the researchers found that African-Americans who felt their status was threatened by poor service because of their race were willing to pay more for products and services to assert their social standing.
While Caucasians and African-Americans showed equal interest in products such as headphones or luxury hotel upgrades in two studies conducted, researchers found that when race was explicitly activated (subjects were made aware of the stereotypes affiliated with their race), most African-American survey participants indicated a willingness to pay more for products than either Caucasian participants or other African-Americans for whom race was not raised. Meanwhile, when race was implicitly raised, the researchers found that African-American participants were less likely to counteract negative stereotypes and decreased their willingness to pay for products.
However, what was also uncovered in this study was that African-American participants who strongly identified with their race had a lower "willingness to pay," suggesting that greater pride in group membership made them less vulnerable about their status.
In the concluding experiment with more than 500 participants, the researchers found that, as with Caucasians surveyed, when African-Americans were treated well, they did not indicate a willingness to pay more for goods or services even when race was made an issue. When African-American subjects were treated poorly, but race was not raised, they paid less.
Though the survey focused on African-Americans, USC Marshall Professor Jennifer Overbeck says the findings may be applicable to any group that has had a traditionally disadvantaged status throughout history.
"Minority consumers have tremendous buying power. We want to draw attention to the fact that these downstream forces of discrimination are important and to bring it to the attention of anyone who feels disadvantaged in the marketplace that he/she should not feel the need to prove themselves to people who don't deserve it by paying more," Overbeck said.
USC Marshall School of Business: http://www.marshall.usc.edu
This press release was posted to serve as a topic for discussion. Please comment below. We try our best to only post press releases that are associated with peer reviewed scientific literature. Critical discussions of the research are appreciated. If you need help finding a link to the original article, please contact us on twitter or via e-mail.
Surgeons in Australia say they have performed the first heart transplant using a "dead heart".
Ebola underlines the urgent need for a new way of responding to global epidemics, say Harvey Rubin and Nicholas Saidel
As researchers from Africa to China to America race to develop vaccines and treatments to fight Ebola, health experts are grappling with the economics of a disease that until this year had been off the drug industry's radar.
Is California's severe drought hurting the nutrient content of fruit? No, preliminary data on pomegranates suggest. The fruit may be smaller, but packed with more antioxidants, tests show.
The Food and Drug Administration has issued warning letters to companies marketing products claimed to be cures for Ebola. One firm says it will drop such claims — but it's still selling the product.
Parents of baby with fatal mitochondrial disease say techniques being considered by select committee could prevent them having another seriously ill child
Ultrasound has been used to open the brain's protective sheath in people with aggressive brain tumours – to deliver chemo drugs directly to cancer cells
The World Health Organization says two vaccine candidates now undergoing small-scale tests of dosage and safety in people might be ready for broader deployment in Africa by early 2015.
Just because the Food and Drug Administration recalls a supplement because it contains dangerous substances, doesn't mean the product disappears from the market.
9 million new cases and 1.5 million deaths in 2013