Events

Professor Asaf Zussman
Department of Economics
The Hebrew University of Jerusalem

Affective political polarization is a growing concern in many countries. Among other things, polarization may adversely impact the willingness of individuals to conduct economic transactions with politically identified others. In an ongoing project, I ask: Does polarization lead to discrimination in the marketplace? How do political shocks affect politically based discrimination? What form does discrimination take, that is, who discriminates against or in favor of whom?

To provide answers to these questions, I focus on the case of Israel. The country has seen increasing political tensions over the last decade and has been in turmoil since 2023. In January 2023, the newly elected right-wing government introduced a sweeping legal reform, leading to mass demonstrations. Then, in October 2023, came the mass terrorist attack by Hamas. Since then, Israel has been in an almost constant state of war.

Since mid-2023, using a field experiment, I have been measuring the evolution of politically based discrimination in the Israeli online market for used cars. In the experiment, fictitious buyers send pairs of WhatsApp messages to sellers, where the political orientation of buyers is signaled with profile pictures that convey positions on the legal reform. In each case, this is followed up by a nominally independent survey of the seller, allowing me to gain insight into the sources of discrimination.

The main results obtained so far are the following: (1) Despite the extreme political tensions throughout the period analyzed, overall, only a small share of sellers discriminate in the market; (2) Contrary to what one would expect based on conventional wisdom – that an external threat would reduce internal divisions – the war initially led to a significant increase in discrimination, with a partial rebound later; (3) This increase was most substantial for Anti-reform (left-wing) sellers; (4) Breaking down discrimination into its components shows that, compared to Pro-Reform sellers, Anti-Reform sellers exhibit more in-group bias and especially out-group hate.