Main Page Contact Register Log In


People are willing to pay money for intangibles. People will pay more for a meal in a restaurant with good food and service than a restaurant with bad food and service, even if they come away from the restaurant equally fed in both cases. The employer gains disutility from hiring blacks/women, and will only hire them if the decrease in salary compensates the employer for the loss in utility from the intangible of having undesirables around.

The fact that the employee will be better off from not discriminating will not stop this, for the same reason that people will not stop visiting good expensive restaurants (and such restaurants will not go out of business) because they'd be "better off" visiting a cheap one of poor quality--the cheap one doesn't provide the same experience, and experiences are subject to market forces.