Using proprietary loan-screening data, we document that loan o!cers exhibit statistical discrimination due to how they allocate attention. Discrimination happens at the early stage of information acquisition: officers exert less effort reviewing ex-ante unfavorable applicants and thus end up rejecting them at a higher rate than justified by credit quality. In other words, ex-ante unfavorable applicants are more likely to be rejected without careful review. Further, when loan o!cers are distracted by heavier workloads, the degree of discrimination increases. Relative to the lowest workload decile, the approval rate for ex-ante unfavorable applicants drops from 14.7% to 8.8% when o!cers are in the top workload decile. Overall, the results show that attention constraints magnify discrimination. Our findings suggest that reducing decision-maker attention constraint can help reduce statistical discrimination.
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