We study inaccurate beliefs as a source of discrimination. Economists typically characterize discrimination as stemming from a taste-based (preference) or accurate statistical (belief-based) source. While individuals may have inaccurate beliefs about how relevant characteristics (e.g., productivity, signals) are correlated with group identity, fewer than 7% of empirical discrimination papers in economics consider the possibility of such inaccurate statistical discrimination . Using theory and a labor market experiment, we show that failing to account for inaccurate beliefs leads to a misclassification of source. We outline three methods to identify source: varying observed signals, belief elicitation, and an intervention to target inaccurate beliefs.

We conduct a field experiment with low-income shoppers to study how behavioral interventions can improve the effectiveness of healthy food subsidies. Our unique design enables us to deliver subsidies both before and during grocery shopping. We examine the effects of two non-restrictive changes to the choice environment: giving shoppers agency over the subsidy they receive and introducing a waiting period before a subsidized shopping trip to prompt deliberation about upcoming purchases. These interventions increase healthy food spending by 61% more than a healthy food subsidy alone, resulting in 199% greater healthy spending than in our unsubsidized control group.