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Testing the Theory of Consumer Discrimination as an

Explanation for the Lack of Minority Hiring in Hollywood
Films
Venkat Kuppuswamy, Peter Younkin

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Venkat Kuppuswamy, Peter Younkin (2020) Testing the Theory of Consumer Discrimination as an Explanation for the Lack of
Minority Hiring in Hollywood Films. Management Science 66(3):1227-1247. https://doi.org/10.1287/mnsc.2018.3241

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 MANAGEMENT SCIENCE
Vol. 66, No. 3, March 2020, pp. 1227–1247
http://pubsonline.informs.org/journal/mnsc ISSN 0025-1909 (print), ISSN 1526-5501 (online)

Testing the Theory of Consumer Discrimination as an Explanation

for the Lack of Minority Hiring in Hollywood Films
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Venkat Kuppuswamy,a Peter Younkinb

a
D’Amore-McKim School of Business, Northeastern University, Boston, Massachusetts 02115; b Lundquist College of Business, University of
Oregon, Eugene, Oregon 97403
Contact: v.kuppuswamy@northeastern.edu, http://orcid.org/0000-0001-9881-8502 (VK); younkin@uoregon.edu,
http://orcid.org/0000-0002-9988-8534 (PY)

Received: July 1, 2016
Revised: September 25, 2017; September 21,
2018
Accepted: October 24, 2018
Published Online in Articles in Advance:
July 31, 2019
https://doi.org/10.1287/mnsc.2018.3241
Copyright: © 2019 INFORMS
Abstract. The underrepresentation of minorities in cultural industries is a widely pub-
licized problem with far-reaching economic and social significance. It is also one of many
industries in which employers suggest that the locus of bias is not within the organization
but with the consumer. The empirical challenge of relating consumer behavior to employee
composition has constrained prior efforts to test their claim and to test the theory of
consumer discrimination more broadly. As a result, employers have gradually expanded
the scope of the customer discrimination theory from one rooted in direct interaction to
include an aversion to simply seeing employees of a different ethnicity. We explore how
consumers respond to employee composition by evaluating the performance of films
released in the United States as a function of the racial diversity of their cast. We find that
films with a single black actor do not differ from those with zero black actors, and that films
with multiple black actors in the principal cast actually achieve significantly higher do-
mestic box-office revenues than either. To distinguish between competing explanations for
this result, we conduct a vignette-based experiment that allows us to identify a positive
influence of diversity on consumers’ assessments of quality, controlling for differences in
film or actor appeal. Collectively, these results help discredit one rationale for unequal
hiring in cultural industries and also suggest an important qualification to the theory of
consumer discrimination: in settings where employee race is visible but the consumer is
physically distant, diversity is more profitable than costly.

History: Accepted by Greta Hsu, organizations.

Supplemental Material: The online appendix is available at https://doi.org/10.1287/mnsc.2018.3241.

Keywords: customer discrimination • racial discrimination • employment discrimination • film industry

1. Introduction million people, amounting to over $139 billion in

Cultural industries offer an unusual coupling of high-
profile minority success stories with highly visible
rates of unequal employment. In recent years, the
underrepresentation of minority actors in film and
television roles has proven a rallying cry across the
industry and has been used to illustrate a persistent
inequality of opportunity in the United States. The
significance of disproportionate hiring in these spe-
cific industries is hard to overstate. Financially, the
movie industry is of considerable economic impor-
tance: sales of theatrical movie tickets totaled $11
billion in the United States and close to $40 billion
internationally in 2017, with revenues from ancil-
lary markets several times higher (Motion Picture
Association of America [MPAA] 2017). Moreover,
movies represent a key driver of the market for enter-
tainment products—the number one export market for
the United States (Eliashberg et al. 2006). As a driver
of the U.S. creative economy, the movie and television
industry represents a source of employment for 2.1
1227
wages annually (MPAA 2018). Importantly, occu-
pations in the industry—particularly those on the
screen—are well paid and represent coveted paths for
social mobility, especially for minority individuals
(Florida 2014). Furthermore, prevailing practices in
cultural industries have an outsized influence on
societal discourse and norms, particularly with re-
spect to gender and racial equity in the workplace. For
instance, public attention on a range of issues—
including the gender pay gap, the underrepresenta-
tion of racial minorities in high-status positions, and
sexual harassment at work—have been spurred on, in
part, by recent controversies in Hollywood. Finally,
the portrayal of minorities on film and television (or
lack thereof) has been linked to public beliefs and
perceptions regarding individuals belonging to these
groups (Wilson et al. 2012). Given the significance of
representation to organizational scholars, and the
broader significance of adequate representation in
these industries, the question remains: Why is there
 Kuppuswamy and Younkin: Consumer Discrimination and Minority Hiring in Hollywood
1228
such a persistent and obvious degree of unequal
employment in cultural industries?
Prior research on unequal rates of employment
has generally focused on either employer bias (Pager
and Quillian 2005, Pager et al. 2009, Tilcsik 2011)
or structural explanations for discrepant hiring
(Fernandez and Fernandez-Mateo 2006, Rivera 2012,
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Fernandez-Mateo and Fernandez 2016). Yet execu-
tives in cultural industries often offer an alternative
defense of their practice: it reflects the demands of
their customers (Becker 1957). The difficulty in re-
lating consumer discrimination to organizational
performance, controlling for all other factors, has
limited empirical tests of this hypothesis. The lack of
empirical evidence has allowed employers to expand
the scope of an aversion to interaction from direct
to indirect contact (Watkins 1997) and, finally, an
aversion to simply seeing employees of a different
ethnicity (Smith et al. 2016). The consequence of this
gradual extension is a reduction in the number of
employment opportunities for minority candidates.
However, this reduction may reflect employer mis-
understanding rather than outright bias. In this pa-
per, we test the role of customer discrimination as
an explanation for differential rates of employment
in one of the more prominent contemporary con-
texts: the underrepresentation of minorities in Hol-
lywood films.
At its core, the theory of customer discrimination
explains discriminatory hiring as an economically ef-
ficient response to changes in demand. Significantly,
this theory moves the locus of bias away from the
employer, treating the employer as a conduit of prej-
udice rather than the source. Unequal hiring in cultural
industries therefore becomes not an act of discrimi-
nation but one of economic necessity: the adoption of a
more equitable hiring process would, in theory, make
the organization less competitive. Although Becker
(1957) constrains his theory to explain the hiring of
employees who directly interact with consumers
(i.e., consumers should not care about the composi-
tion of the manufacturing facility), the broader claim
that consumers prefer to see people like them has been
used to justify employment practices in a far wider
range of occupations (Kanazawa and Funk 2001,
Leonard et al. 2010, Avery et al. 2015). Within cultural
industries, this assumption of visual preference is so
prevalent that, in addition to film and television, firms
in theater, magazines, music, and even comic books
have cited consumer bias as an explanation for their
differential hiring practices. However, it is both
theoretically and empirically unclear whether con-
sumers would act on their biases in such attenuated
settings and, therefore, whether employers are ig-
noring an important boundary on the core claim.
Furthermore, changes in both the demographic
Management Science, 2020, vol. 66, no. 3, pp. 1227–1247, © 2019 INFORMS
composition of the United States, and in the prefer-
ences of recent consumer cohorts challenge the as-
sumptions motivating the theory. In particular, the
thesis presumes a consumer preference for homo-
phily, but longitudinal surveys of public attitudes on
diversity and willingness to engage with people of
dissimilar backgrounds indicate that this preference
is declining (Bobo et al. 2012). Alternatively, if we
accept that consumers prefer homophily, then growth
in the population of minority consumers should
generate pressure to adopt more egalitarian practices
(Beckman and Phillips 2005) rather than more dis-
criminatory ones. As a result, this paper offers a
complement to recent work on implicit and conscious
bias in employment practices by testing the scope of
consumer preference as a rationale for discrimination
in cultural industries.
The empirical challenge of testing the influence and
scope of consumer racial attitudes on purchasing de-
cisions has constrained prior efforts to disentangle
managerial bias from consumer bias. Instead, past
studies generally relied on inferences of consumer
discrimination by showing that employee hiring often
matches local demographics (Holzer and Ihlanfeldt
1998) or that white employees earn more than black
employees in areas with larger white populations
(Kahn 1992, Hamilton 1997). Direct evidence that
consumers penalize organizations because they em-
ploy minorities is scarce. At best, this is assumed from
indirect evidence that consumers value minority
employees less than white ones (Nardinelli and
Simon 1990). We complement these studies by of-
fering a test of the relationship between the visible
diversity of a set of employees and consumers’ will-
ingness to pay.
Specifically, we leverage the fact that the feature film
industry represents a rare empirical setting where
employee composition1 is both visible to consumers
and assumed to influence their behavior. Using
project-level data on 925 feature films released be-
tween 2011 and 2016, we use an instrumental vari-
ables approach to estimate the relationship between a
cast’s racial composition and the film’s financial
performance. Contrary to the customer discrimina-
tion hypothesis, we find that films with a greater
number of black actors in the principal cast do not
suffer any evidence of a penalty. In fact, films with a
single black actor perform equal to those with all-
white casts, and films with multiple black actors
achieve significantly greater box-office returns than
comparable films without any black actors in the
principal cast.
Although we interpret these findings as evidence
that consumers are, in contrast to employer claims,
accepting of diverse casts, we recognize that there are
plausible alternative interpretations. Most obviously,
 Kuppuswamy and Younkin: Consumer Discrimination and Minority Hiring in Hollywood
Management Science, 2020, vol. 66, no. 3, pp. 1227–1247, © 2019 INFORMS
the audience composition may vary between film types
such that diverse casts do well not because white au-
diences are more tolerant than anticipated but because
there are more minority consumers than studios
anticipate.
To distinguish between competing explanations for
these results and to better identify one mechanism
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motivating the performance of diverse films, we
complement these analyses with a vignette-based ex-
periment to assess the influence of diversity on
consumers’ assessments of quality, controlling for
differences in film or actor appeal.2 Together, our re-
sults contradict employer claims and indicate that
unequal employment in the film industry does not
reflect demand-side pressure. These findings also
suggest an important qualification to the theory of
consumer discrimination: they show that in a setting
where employee race is visible but the consumer is
physically distant, diversity is more profitable than
costly.
2. Consumer Discrimination and
Cultural Industries
Studies of employment discrimination highlight the
role of structural features and individual-level biases in
reproducing racial inequality. Within these latter
studies, the predominant question is whether the bias
reflects conscious or unconscious bias (Bertrand et al.
2005, Quillian 2008) and, if conscious, whether these
are taste-based or statistical preferences (Heckman
1998). These distinctions capture an important differ-
ence in whether the locus of the bias is in individual-
level antipathy or group-level attributes—in other
words, whether we need to alter employer or em-
ployee behavior to affect change.
The wealth of research on these topics (Pager and
Shepherd 2008) has yielded many important insights
into the causes and consequences of unequal em-
ployment but has largely ignored a rationale the
employers themselves often invoke: that discrimination
is not driven by employers but by the preferences of
their customers. The theory of “consumer discrimi-
nation” (Becker 1957, p. 75) proposes that employ-
ment discrimination arises because white customers
favor businesses with white employees. This suggests
that, net of employer bias or assumptions of group
ability, there is a third driver for discriminatory hiring
practices: the biases of the consumer.
Consumer preferences may reflect prejudice or the
fact that homophilous hiring facilitates communication
(Leonard et al. 2004) and increases the likelihood of
social ties between the employee and customer
(Ibarra 1995). Either way, the theory requires the
acceptance of three assumptions: (1) Customers
1229
notice the racial or gender composition of a set of
employees. (2) Customers prefer homophilous hir-
ing. (3) Failure to respect this preference reduces
revenue. Despite the challenge of meeting these as-
sumptions, the theory remains intuitive enough to be
used as an affirmative defense by employers in class
action lawsuits across a wide range of industries and
involving hundreds of millions of dollars in lost
wages. The empirical challenge of testing these
claims has forced researchers to infer consumer at-
tention from evidence that employers attempt to
match their hiring practices to the demographic
composition of the local neighborhood (Holzer and
Ihlanfeldt 1998) and consumer preference from evi-
dence, largely taken from professional sports, that
fans value white players more than black ones (Kahn
and Sherer 1988).
These latter studies also reflect a critical extension of
the claim that consumers dislike interacting with
people of a different race to the broader assumption
that consumers dislike seeing people of a different
race. In recent years, this notion of a strong form of
consumer bias has been used to explain hiring in
Hollywood and Wall Street (Faux et al. 2016), the sale
of music albums (Roy 2004) and newspapers (George
and Waldfogel 2003), attendance at sporting events
(Hamilton 1997), and television ratings (Kanazawa
and Funk 2001, Aldrich et al. 2006), in addition to the
segregation of retail roles (Moss and Tilly 2001) that
Becker first described. In these settings, as in the film
industry, consumer bias is presumed to arise even in
the absence of physical interaction, an assumption
with direct consequences for who is hired and in what
capacity.
However, the assumption that the preference for
homophily is so strong that it extends beyond direct
interactions and justifies discriminatory employment
seems contrary to two significant changes. First, the
U.S. Census reports an increase in the population of
ethnic minorities, both relative to the white population
and in absolute size. An increasingly diverse pop-
ulation should mean that, to the extent that consumers
demand homophily, there is now pressure to increase
(rather than decrease) employee diversity. For exam-
ple, Beckman and Phillips (2005) find that law firms
are more likely to promote female attorneys if their
clients employ female executives. Although they do
not test for evidence that the clients exert direct
pressure on the firms, their findings indicate that
employers respond to changes in the demographics
of their clients by becoming more diverse themselves.
Studies of the retail sector provide similar evidence that,
to the extent that we find evidence of consumer pref-
erence for homophily, it is largely driven by minority
 Kuppuswamy and Younkin: Consumer Discrimination and Minority Hiring in Hollywood
1230
consumers favoring employers with diverse sets of
employees (Avery et al. 2012).
Second, longitudinal surveys of racial attitudes sug-
gest that white consumers may exhibit less preference
for homophily than in the past (Bobo et al. 2012).
Consistent with this decline, studies of consumer
attitudes find evidence of a preference for diversity
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(Aldrich et al. 2006). Even the evidence of bias among
sports fans, upon which many of these claims rely, has
eroded with time (McGarrity et al. 1999). These so-
cietal changes suggest a countervailing force that
could constrain or even reverse consumer prefer-
ences. Therefore, it is an open empirical question
whether the consumer discrimination hypothesis
continues to explain hiring differentials in cultural
industries or if it merely reflects the vestigial beliefs of
employers.
Consistent with recent work examining the incon-
sistent relationship employee diversity and retail
sales (Leonard et al. 2010), we propose that the scope
of the theory of consumer discrimination may be
narrower than its popularity would indicate. In
particular, we offer that unequal hiring in cultural
industries does not reflect demand-side factors.
Whereas consumer discrimination may occur in oc-
cupations where employees engage their customers
directly, we predict that consumers do not discrimi-
nate in a setting where ethnicity is evident but the
interactions are mediated.
3. Case: The Casting of Feature Films
There is a rich history of using the creation (Elsbach
and Kramer 2003) and distribution (Sorenson and
Waguespack 2006) of Hollywood films as a re-
search context to investigate organizational- and
individual-level questions. Because each film as-
sembles a team of temporary workers with spe-
cialized skills to create a single product that critics
and audiences then directly evaluate, it offers a
particularly rich environment for the study of em-
ployment practices (Zuckerman et al. 2003) and au-
dience receptivity (Hsu 2006; Hsu et al. 2009, 2012).
Most importantly, for our purposes, films are a case
where hiring decisions are especially public and ac-
cepted as a factor in the audience’s decision to attend.
The sentiment that white audiences are unwilling to
pay to see minorities perform is, in fact, the leading
explanation for the continued underrepresentation of
minorities in Hollywood (Smith et al. 2016). As a
result, it offers an ideal setting for the study of how
variations in hiring affect consumption. In addition,
given a wealth of economic analyses identifying the
primary drivers of film profitability (Brewer et al.
2009), we have an established model to compare
against the inclusion of our key variable of interest:
cast composition.
Management Science, 2020, vol. 66, no. 3, pp. 1227–1247, © 2019 INFORMS
3.1. Sample and Data
We construct our initial sample of feature films us-
ing Oscar “reminder lists” from the past six years
(i.e., 2011–2016). These lists capture the population of
all films that received nationwide release for each
calendar year, as well as some smaller films that only
received limited distribution. Specifically, a reminder
list for a particular year comprises every film with a
running time over 40 minutes that opened in a
commercial theater in Los Angeles County and began
a minimum run of seven consecutive days. Impor-
tantly, the reminder list also specifies the names of
cast members for each film in their order of impor-
tance for Academy members, who must select actors
for Oscar consideration in individual acting cate-
gories. After eliminating animated and foreign-
language films from these reminder lists, our sam-
ple consists of 925 films released between 2011 and
2016 with complete performance, production, and
marketing data. To analyze the influence of racial
diversity on a film’s commercial performance, we
restrict our focus to the principal cast members in-
volved with the film, rather than the entire cast. We
define the principal cast of the film as the top six billed
cast members3 from the cast list published in the
reminder list.4 Overall, our 925 films consisted
of 5,397 principal cast members and 2,539 distinct
actors.5
We determine the race of each actor using a com-
bination of automated facial recognition and hand
coding. For each actor, we extracted their profile pic-
ture from The Movie Database (TMDb) (http://www
.themoviedb.org) or IMDb (http://www.imdb.com)
and identified race through Kairos (http://www
.kairos.com), a facial recognition application that
can detect the ethnicity of an individual in a picture or
video. Kairos computes the probability that an in-
dividual is white, black, Hispanic, Asian, or other
(nonwhite).6 We assigned actors to a particular eth-
nicity category if they were assessed a probability of
0.9 or greater for that ethnicity. We verified these
high-probability assignments by comparing a ran-
dom subsample of actors to the manual coding of
trained research assistants (α > 0.9). In cases where an
individual was assessed a nonwhite ethnicity with a
probability of 0.17 or greater (but less than 0.9), we
examined the race of the actor in greater detail our-
selves. Specifically, we looked for more information
on the actor regarding his or her ethnicity and
background online. Using this information, we coded
the actor’s race to either be white, black, Hispanic,
Asian, or other. Overall, 10.6% of principal cast roles
in our sample were identified as black, 3.4% were
Hispanic, 6.42% were Asian, and <1% of roles were
played by other nonwhite actors.8 When one con-
siders leading roles (i.e., actors billed first or second),
 Kuppuswamy and Younkin: Consumer Discrimination and Minority Hiring in Hollywood
Management Science, 2020, vol. 66, no. 3, pp. 1227–1247, © 2019 INFORMS 1231

9.23% of such roles went to black actors, 2.54% went to
Hispanic actors, 2.89% were played by Asian actors,
and <1% were played by other nonwhite actors. As a
point of comparison, if we accept the industry-wide
claim that casting reflects demand, we might antic-
ipate casting would be proportionate to the de-
mographics of film consumers, or 14% Black, 21%
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those with 25% are the “high diversity”; Sommers
(2006) defines a diverse jury as one with at least two
minority members (out of six); and Turco (2010) de-
scribes 15% as the acknowledged threshold for “to-
kenism.” This research argues that recognition of
diversity proceeds nonlinearly and that there is a
fundamental difference in both the perception and

Hispanic, and 14% Asian/other (MPAA 2016).
4. Variables
4.1. Dependent Variables
Our primary outcome of interest is the commercial
performance of the film in the domestic marketplace
(i.e., the United States). We obtained box-office data for
each film from a combination of three sources: IMDb,
Box Office Mojo (http://www.boxofficemojo.com),
and The Numbers (http://www.the-numbers.com).
We measure the commercial performance of the film
(Box-Office) by the total domestic box-office gross in
U.S. dollars. Because of the highly (right) skewed
nature of this variable, we log-transform it before we
include it in our empirical models. Apart from di-
rectly measuring a critical source of revenue, a film’s
domestic box-office performance is also considered a
primary driver of revenue from ancillary sources,
such as television broadcast licenses and film mer-
chandising (Epstein 2006).
response to low and high levels of representation.
Given this stream of research, we sought to distinguish
between films with a “token,” or single minority cast
member, and those that crossed the “representative”
threshold for that minority group (i.e., two or more
members). The use of these categories allows us to
test whether any significant effects identified for Black
Actors, Hispanic Actors, Asian Actors, or Other Actors
are indeed nonlinear in nature. As we see from Table 1,
the mean values of Black Actors, Hispanic Actors, Asian
Actors, and Other Actors are 0.62, 0.19, 0.33, and 0.06,
respectively. As a result, for each category of ethnicity,
films have fewer than one principal cast member on
average.
4.3. Control Variables
In addition to the racial diversity of the principal cast,
our empirical models control for a number of addi-
tional factors that can influence the commercial per-
formance of a film (Hsu 2006, Brewer et al. 2009).

4.2. Independent Variables Table 1. Summary Statistics

The key explanatory variables in our study are counts
of the number of minority actors in the principal cast of Variable N Mean SD Min Max
a film. Specifically, Black Actors, Hispanic Actors, Asian Black Actors 925 0.629 1.176 0.000 6.000
Actors, and Other Actors measure the number of black, Single Black 925 0.229 0.421 0.000 1.000
Hispanic, Asian, and other (nonwhite) actors in the Multiple Black 925 0.123 0.329 0.000 1.000
principal cast, respectively. In addition, for both Hispanic Actors 925 0.195 0.531 0.000 4.000
Asian Actors 925 0.325 0.678 0.000 5.000
theoretical and empirical reasons we create categorical Other Actors 925 0.058 0.257 0.000 2.000
versions of these count variables by distinguishing National Advertising 925 15.689 2.154 0.000 17.902
between the presence of a single actor from a minority Production Budget 925 16.902 1.378 11.513 24.055
group and multiple actors from the same group (e.g., Plot: Monster 925 0.211 0.397 0.000 4.300
Single Black Actor and Multiple Black Actors in the case Plot: Rags 925 0.134 0.323 0.000 4.450
Plot: Quest 925 0.508 0.588 0.000 7.070
of Black Actors). This is partially motivated by prior Plot: Voyage 925 0.342 0.355 0.000 2.620
studies on visible diversity that consistently find a Plot: Comedy 925 0.246 0.377 0.000 3.450
significant difference between two forms of inclusion: Plot: Tragedy 925 0.151 0.234 0.000 2.500
tokenism and representation. Kanter (1977) advanced Plot: Rebirth 925 0.203 0.298 0.000 3.640
the theory that numerical representation matters and Typecast Role 925 0.143 0.350 0.000 1.000
Oscar Appeal 925 0.300 0.641 0.000 3.045
that the effect is nonlinear, specifying 15% repre- Opening Theaters 925 6.751 2.244 0.000 8.390
sentation as a threshold beyond which the effects of Female Actors 925 2.174 1.129 0.000 6.000
being a “numerical rarity” shift. Whereas subsequent Critic Rating 925 55.242 26.988 0.000 100.000
work clarified the boundaries of these claims (Ely Critic Rating: Nonconservative 917 58.664 14.973 14.000 97.500
1994, Ely and Thomas 2001), research on visible di- Runtime 925 4.690 0.145 4.357 5.193
Cast Star Power 925 6.427 1.437 1.609 11.579
versity has continued to use a 15% threshold as the Director Prior Films 925 1.430 0.776 0.000 3.434
standard for delineating high and low degrees of Director Star Power 925 8.644 1.305 0.693 13.322
representation. For example, Unzueta and Binning Director Past Oscar 925 0.054 0.226 0.000 1.000
(2012) conduct a series of experiments in which Seasonality 925 0.646 0.136 0.380 1.000
groups with less than 15% minority representation Black Director 925 0.052 0.222 0.000 1.000
Black Producer 925 0.056 0.230 0.000 1.000
constitute the “low diversity” condition, whereas
 Kuppuswamy and Younkin: Consumer Discrimination and Minority Hiring in Hollywood
1232
Our first control variable, Opening Screens, is the
logarithm of the number of screens on which the
movie is released in its opening week (or the week of
wide release in the case of films with an initial limited
release). Distributors negotiate screen allocations with
theater owners in advance of their release and seek to
maximize the initial exposure of their films. We also
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control for the awareness of the film generated through
distributor advertising (Elberse and Eliashberg 2003,
Joshi and Hanssens 2009). Using data from Ad$pender,
we measure the national advertising budget (National
Advertising) for each film through the dollar amount
spent on national advertising (in thousands)—the
vast majority of which is spent on advertising through
broadcast and cable TV networks. Apart from the num-
ber of screens on which a film opens and its advertis-
ing budget, we also control for the seasonality (Season)
associated with the date of release (i.e., whether it re-
leased on a high-demand weekend). Season is mea-
sured using Vogel’s (2014) seasonality index ranging
from 0 to 1.
Our models also control for the overall quality of the
film, captured by the critical reviews it received. Critic
Rating measures the aggregated critic review score
ranging from 0 to 100 from Rotten Tomatoes, and it
represents the percentage of critic reviews that were
positive.9 Apart from the movie’s critical reception,
we also control for the logarithm of the film’s pro-
duction budget (Production Budget). The budget of a
film includes the salaries of the director, producer,
cast, and crew, as well as the costs associated with film
sets, special effects, and postproduction editing.
Additional product characteristics we control for
include the Genre of the film (comedy, drama, action,
etc.); whether the film was rated PG, PG-13, or R by
the MPAA (MPAA Rating); the year of release; the
logarithm of the movie’s runtime (Runtime); and an
indicator for whether the movie is a sequel to an
earlier production (Sequel).
We also include additional controls for the compo-
sition and commercial appeal of the principal cast.
Whereas Female Actors controls for the number of
women in the principal cast, Cast Star Power is our
measure of the principal cast’s star power. Cast Star
Power is calculated as the average STARmeter rank
(log-transformed) of the movie’s lead actors (i.e.,
the top two billed principal cast members). 10 The
STARmeter rank of an actor represents the relative
popularity rank of the actor at a given point in time
(lower values indicate a more popular actor) and is a
function of how often the actor has been searched for on
IMDb.com. Measuring an actor’s popularity using
STARmeter ranks is complicated by the fact that
STARmeter ranks decrease significantly (i.e., relative
popularity increases) in the run-up to a film’s release,
as the public becomes more aware of the upcoming
Management Science, 2020, vol. 66, no. 3, pp. 1227–1247, © 2019 INFORMS
film from prerelease advertising. Prior research has
shown that prerelease advertising begins to increase
significantly 10 weeks prior to the film’s scheduled
release date (Elberse and Anand 2007). As a result, to
ensure our measure of cast star power is independent
of increased search activity derived from prerelease
advertising, Cast Star Power is calculated using the
STARmeter ranks of a movie’s lead actors 10 weeks
prior to its release.
In addition, we take several steps to control for the
appeal and expertise of the film’s director, who con-
trols (and is ultimately held responsible for) the
creative decisions made on behalf of the film. First, we
control for the director’s prior artistic success using a
binary indicator for whether the director had pre-
viously won an Academy Award for Best Director
(Director Past Oscar). Second, we capture the com-
mercial appeal of the director through the director’s
STARmeter rank (log-transformed) on IMDb.com,
10 weeks prior to the film’s release (Director Star
Power). Finally, prior research has shown that director
ability is linked to career longevity in Hollywood
(John et al. 2017). As a result, we also control for (the
logarithm of) the number of feature films the direc-
tor had made prior to the current project (Director
Prior Films).
Our final set of control variables attempt to capture
differences in plot elements across films. In a widely
cited analysis on narrative structures in literary work,
Booker (2004) argues that plots largely fall into seven
distinct categories: “Overcoming the Monster,”
“Rags to Riches,” “The Quest,” “Voyage and Return,”
“Rebirth,” “Comedy,” and “Tragedy.” For each film
in our sample, we extracted plot summaries from
Wikipedia and used text analysis software (Linguistic
Inquiry and Word Count) to derive a movie’s score
along each of these seven plot narratives (Plot:
Monster, Plot: Rags, Plot: Quest, Plot: Voyage, Plot:
Comedy, Plot: Tragedy, and Plot: Rebirth). In addition to
these measures of plot narrative, we also sought to
account for differences in the “prestige” associated
with each film. Specifically, movie plots may differ in
the extent to which they are positioned for Academy
Award consideration (Rossman and Schilke 2014).
The “Oscar appeal” of a movie can be measured by the
degree to which the distributor purchased “For Your
Consideration” advertisements in the Hollywood
trade journals (e.g., Variety Magazine, The Hollywood
Reporter) in order to appeal to award voters. Conse-
quently, we used digital press archives and identified
every “For Your Consideration” advertisement for
movies in our sample. Our prestige measure, Oscar
Appeal, is a log-transformed count of the number of
such ads taken out on behalf of a movie. Our final plot
control is an indicator for whether the film’s plot
contains a role that minority actors consider typecast
 Kuppuswamy and Younkin: Consumer Discrimination and Minority Hiring in Hollywood
Management Science, 2020, vol. 66, no. 3, pp. 1227–1247, © 2019 INFORMS
for them. Minority actors—particularly those who are
black—argue that they are often typecast as “slaves,
servants, ghetto moms and thugs” (Burnette 2015). And
recent qualitative work (Yuen 2010, Erigha 2015) has
found evidence to support the popular assumption
that black actors are strongly associated with a nar-
row set of roles. Therefore, to capture plots that include
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such roles, we follow prior work and rely on crowd-
sourced plot keywords as listed on a film’s IMDb page
(Rossman and Schilke 2014), and we construct the
binary indicator Typecast Role, which takes the value 1
if the movie’s IMDb plot keywords include the fol-
lowing variants: “inner-city,” “ghetto,” “slavery,”
“slave,” “servant,” “civil-war,” “civil-rights,” “seg-
regation,” “gang,” “gangsta,” and “gangster.” Table 1
contains summary statistics for our key variables, and
their correlation table can be found in Online Ap-
pendix A.
5. Analysis and Results
5.1. Preliminary OLS Analysis
To examine the relationship between racial diversity
and the commercial performance of our films, we first
model Box-Office as a function of Black Actors, Hispanic
Actors, Asian Actors, Other Actors, and the other
control variables described earlier using a linear re-
gression model. The results of this estimation are pre-
sented in Table 2.
In model (2) of Table 2, we observe that Black Actors
has a positive coefficient that is significant at the 0.1%
level. As a result, we do not find evidence consistent
with the theory that consumers discriminate against
movies with a higher representation of black cast
members. Instead, the reverse is true: movies with
more black actors perform better than comparable
movies with fewer black actors. In addition, we find
no evidence of a significant relationship between the
number of Hispanic (Hispanic Actors) or Asian (Asian
Actors) actors in the principal cast and commercial
performance. Interestingly, we find that the co-
efficient for Other Actors is negative and significant at
the 5% level. However, because this racial category
represents less than 1% of principal cast roles, we note
the correlation and continue to control for Other
Actors, but we focus the rest of our analysis on the
positive relationship observed between Black Actors
and Box-Office. Consistent with prior research, several
of our control variables have a statistically significant
effect on the domestic box-office performance of a
film. Additionally, we note that our large collection of
model covariates together explain a large percentage
of the variation in box-office performance; R2 values
in Table 2 range near 0.85.
Given the significant coefficient of Black Actors in
model (2), we proceed to explore whether the re-
lationship between visible diversity and box-office
1233
performance is indeed nonlinear as prior research
suggests (Kanter 1977). The distribution of Black
Actors reveals that 64.8% of movies in our sample
have zero black actors in the principal cast, 22.9% of
films have exactly one black actor in the principal cast,
and only 12.3% of films have more than one black
actor (for summary statistics of films distinguished by
the number of black actors in the principal cast, see
Online Appendix B). In model (3) of Table 2, we re-
place Black Actors with two binary indicators—the
first that takes the value 1 if the principal cast has
exactly one black actor (Single Black) and the second
that takes the value 1 when the principal cast has two
or more black actors (Multiple Black). The results of
model (4) in Table 2 show that the positive relation-
ship between black cast members and commercial
performance is nonlinear. Specifically, we observe
that the coefficient on Single Black is not statistically
significant. However, the coefficient on Multiple Black
is positive and statistically significant at the 0.1%
level. Put simply, these results provide initial evi-
dence that whereas the performance of films with one
black actor in the principal cast does not differ from
those without any black actors, casts with at least two
black actors perform significantly better than those
without black actors. Therefore, the positive associ-
ation between black actors and commercial perfor-
mance documented in model (2) of Table 2 can be
attributed to those films with at least two black actors
in the principal cast.
Models (4) and (5) of Table 2 attempt to factor role
prominence into the observed relationship between
black actors and box-office performance. First, we
split Single Black into two separate binary variables:
Single Black: No Lead, which takes the value 1 if the
principal cast has a single black actor who is not a
lead, and Single Black: Lead, which takes the value 1 if
the principal cast has a single black actor who plays a
lead role. Similarly, we split Multiple Black into two
separate binary variables: Multiple Black: No Lead,
which takes the value 1 if the principal cast has a
multiple black actors, none of whom play a lead; and
Multiple Black: With Lead, which takes the value 1 if the
principal cast has a multiple black actors and at least
one of them plays a lead role. In model (5), Multiple
Black: With Lead is further divided into an indicator for
films with multiple black actors and exactly one black
lead (Multiple Black: 1 Lead) and an indicator for films
with multiple black actors and exactly two black leads
(Multiple Black: 2 Leads). The results of models (4) and
(5) indicate that the relationship between multiple
black actors and box-office performance is statisti-
cally significant across all variations of role promi-
nence (even when black actors play supporting roles)
but that it is strongest when at least one of the black
actors also plays a lead role. To ease interpretation,
 Kuppuswamy and Younkin: Consumer Discrimination and Minority Hiring in Hollywood
1234 Management Science, 2020, vol. 66, no. 3, pp. 1227–1247, © 2019 INFORMS

Table 2. OLS Models of Box-Office as a Function of Cast Racial Diversity (and Other Controls)

Dependent variable: Box-Office

(1) (2) (3) (4) (5)

Black Actors 0.0856***

(0.0258)
−0.0783
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Single Black
(0.0675)
Multiple Black 0.388***
(0.0822)
Single Black: No Lead −0.122+ −0.122+
(0.0725) (0.0725)
Single Black: Lead 0.0758 0.0750
(0.138) (0.138)
Multiple Black: No Lead 0.237* 0.236*
(0.119) (0.119)
Multiple Black: With Lead 0.454***
(0.0985)
Multiple Black: 1 Lead 0.353**
(0.108)
Multiple Black: 2 Leads 0.556***
(0.149)
Hispanic Actors −0.0444 −0.0448 −0.0453 −0.0475 −0.0464
(0.0472) (0.0470) (0.0464) (0.0466) (0.0464)
Asian Actors −0.00370 −0.000548 −0.000212 −0.00301 −0.00168
(0.0428) (0.0427) (0.0423) (0.0427) (0.0428)
Other Actors −0.198* −0.208* −0.207* −0.198* −0.199*
(0.0874) (0.0857) (0.0859) (0.0872) (0.0875)
National Advertising 0.456*** 0.459*** 0.454*** 0.456*** 0.457***
(0.0657) (0.0660) (0.0650) (0.0653) (0.0654)
Production Budget 0.0593 0.0616 0.0660 0.0696 0.0701+
(0.0426) (0.0422) (0.0422) (0.0425) (0.0425)
Typecast Role 0.111 0.0822 0.0589 0.0445 0.0541
(0.0842) (0.0848) (0.0851) (0.0847) (0.0848)
Oscar Appeal 0.123* 0.130* 0.120* 0.121* 0.121*
(0.0567) (0.0565) (0.0565) (0.0563) (0.0563)
Opening Theaters 0.296*** 0.286*** 0.289*** 0.287*** 0.286***
(0.0401) (0.0403) (0.0397) (0.0397) (0.0398)
Female Actors 0.0498+ 0.0461+ 0.0463+ 0.0455 0.0453
(0.0283) (0.0280) (0.0281) (0.0280) (0.0279)
Critic Rating 0.0155*** 0.0154*** 0.0156*** 0.0157*** 0.0156***
(0.00132) (0.00130) (0.00130) (0.00130) (0.00130)
Runtime 0.137 0.0997 0.132 0.0919 0.0981
(0.273) (0.272) (0.271) (0.270) (0.271)
Cast Star Power −0.0206 −0.0371 −0.0378 −0.0421+ −0.0445+
(0.0248) (0.0248) (0.0246) (0.0247) (0.0246)
Director Prior Films 0.0360 0.0372 0.0319 0.0289 0.0279
(0.0430) (0.0426) (0.0424) (0.0424) (0.0424)
Director Star Power −0.0400 −0.0405 −0.0412 −0.0428 −0.0434+
(0.0263) (0.0264) (0.0262) (0.0260) (0.0262)
Director Past Oscar −0.328** −0.285* −0.290* −0.277* −0.277*
(0.119) (0.118) (0.115) (0.116) (0.115)
Seasonality 0.681*** 0.694*** 0.658** 0.658** 0.662**
(0.203) (0.201) (0.201) (0.201) (0.201)
Sequel 0.552*** 0.547*** 0.553*** 0.568*** 0.567***
(0.0823) (0.0825) (0.0821) (0.0832) (0.0830)
MPAA rating indicators Yes Yes Yes Yes Yes
Plot narrative variables Yes Yes Yes Yes Yes
IMDb genre indicators Yes Yes Yes Yes Yes
 Kuppuswamy and Younkin: Consumer Discrimination and Minority Hiring in Hollywood
Management Science, 2020, vol. 66, no. 3, pp. 1227–1247, © 2019 INFORMS
Table 2. (Continued)
(1) (2)
Release year indicators Yes Yes
Major studio indicators Yes Yes
N
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925 925
R2 0.844 0.847
Note. Robust standard errors are in parentheses.
***p < 0.001; **p < 0.01; *p < 0.05; +p < 0.1.
in the analyses that follow, we focus on the treatment
effect of Multiple Black rather than Multiple Black: With
Lead. However, we note that our results are similar if
we instead examine the treatment effect of Multiple
Black: With Lead. We include that analysis in Online
Appendix C.
5.2. Instrumental Variable Estimation
Despite our efforts to control for the most influential
types of variation between films, one possible limita-
tion to the analysis above is omitted variable bias.
Therefore, to further identify whether the presence of
multiple black actors has a positive effect on com-
mercial performance, we turn to an instrumental var-
iables approach (Angrist and Pischke 2008) where
binary indicators for a black producer (Black Producer)
and a black director (Black Director) function as our
instruments.11 We discuss the relevance and exoge-
neity of these instrumental variables below (Wool-
dridge 2002).
We first consider the relevance of Black Producer and
Black Director. Interviews with industry executives
confirm that directors and producers occupy critical
roles in the hiring process, occasionally exhibiting
unilateral power to cast a given actor. Given that bias
is generally depicted as being exhibited against a
person that differs on a salient dimension, the pres-
ence of black producers or directors should reduce
this out-group bias and result in a greater likelihood
of hiring multiple black actors. We validate the rel-
evance of Black Producer and Black Director as in-
struments by examining the significance of these
variables in the first stage of the instrumental variables
(IV) estimation model (where the outcome is Multiple
Black). Both Black Director and Black Producer should
be significantly correlated with Multiple Black, and
the F-statistic of these indicator variables should be
greater than 10—the typical threshold required to
establish instrument relevance (Stock and Yogo 2005).
An instrument is exogenous if it is uncorrelated with the
error term associated with an outcome, when the en-
dogenous variable and the other control variables are
used as independent variables (Wooldridge 2002, p. 83).
In their recent review of endogeneity biases and the
1235
Dependent variable: Box-Office
(3) (4) (5)
Yes Yes Yes
Yes Yes Yes
925 925 925
0.849 0.849 0.849
use of IV models, Semadeni et al. (2014) use simula-
tions to illustrate the significant benefits that arise
from identifying multiple instrumental variables.
Multiple instruments help decrease standard er-
ror estimates, and their exogeneity can be tested
using Hansen’s (1982) J-statistic. For these reasons,
Semadeni et al. (2014, p. 1078) “cannot overemphasize
the importance of identifying multiple—as opposed
to single—instruments,” as we do in the present study.
We base our selection of Black Producer on the as-
sumption that a producer has minimal direct influ-
ence over a film’s final performance—a producer’s
effect is largely indirect—but significant influence
over the cast. The producer functions primarily to
assemble the project; to secure financing; and to
oversee the hiring of the director, cast, and crew. As a
result, after accounting for the characteristics of the
cast, plot, director, critical reception, marketing, and
release, we do not expect the race of the producer to
remain correlated with the error term in a model of
box-office performance. We took particular care to
focus on a film’s “producers” rather than the movie’s
“executive producers,” “associate producers,” and
“line producers” (who each vary in their responsi-
bilities, ranging from a pure vanity credit to onset
production supervision). It is the film’s “producer(s)”
who supervise the overall management of the project
and who are ultimately credited with an Oscar if
the film wins the Academy Award for Best Picture.
Moreover, because a movie may have multiple pro-
ducers, some of whom are also involved in a creative
capacity (e.g., actor, director), we limit our focus to
producers without a direct creative role.
The use of a director’s race is more prone to ques-
tions as a director is typically held responsible for the
creative decisions made on behalf of the film. As a
result, it is likely that directors influence a film’s
performance, perhaps even making artistic choices to
the detriment of commercial box office (Caves 2003).
Consequently, we made a concerted effort to account
for the distinct influence of director expertise on box-
office outcomes by including multiple control vari-
ables that account for the director’s past critical and
commercial success (Director Past Oscar, Director Star
 Kuppuswamy and Younkin: Consumer Discrimination and Minority Hiring in Hollywood
1236
Power, and Director Prior Films). Moreover, to the
extent that directors differ in the type and scale of their
preferred projects, our models include several controls
for project scale (Production Budget) as well as key plot
elements (e.g., Typecast Role, plot narrative and genre
indicators). We propose that after controlling for
director skill, plot characteristics, casting decisions,
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and other movie-level attributes in our models, the
actual ethnicity of the director (Black Director) should
not be correlated with the residual of box-office
performance in any significant way.
This presumption of director race exogeneity is
consistent with the logistical challenges posed by the
film production process. Given the transitional nature
of all film crews, arranging the schedules of the prin-
cipals is nontrivial, and producers frequently explain
hiring as driven by availability, recent performance,
historical performance, and genre fit in descending
order. A director’s ethnicity is therefore rarely a direct
consideration in hiring, and it is not uncommon
for scheduling changes to create situations where a
white director replaces a black one, or vice versa. As
explained in Online Appendix E, we further tested
the independence of director race by having re-
spondents watch a random selection of films with
white or black directors from our sample and then
asking them to predict the race of the director. If the
films of black directors were different in some no-
ticeable (but empirically unobserved) way, then we
would expect that viewers would detect this and
accurately predict the race of a film’s director. How-
ever, consistent with our findings, respondents were
no more accurate than random guessing, suggesting
that there is nothing identifiably distinct about the
films helmed by black directors.
What is ultimately critical for exogeneity is the lack of
correlation between these instrumental variables and
the error term of box-office performance (controlling
for other variables). Nevertheless, in Online Appendix
F we take this opportunity (using linear probability
models12) to document how films with black directors
and black producers differ along our range of movie
covariates. We note that whereas films with black
directors (producers) are largely similar to films with
nonblack directors (producers), certain significant
differences are observed. Black directors are signifi-
cantly less likely to possess an Oscar and more likely
to work on movies with smaller budgets, longer
runtimes, less favorable release dates, a tragedy
narrative, and those in the science fiction genre. Because
of well-documented career obstacles facing female and
minority directors (Smith et al. 2016), one might expect
black directors (who have overcome these obstacles)
to possess superior expertise or past success (relative
to their nonblack peers). However, the results in
Management Science, 2020, vol. 66, no. 3, pp. 1227–1247, © 2019 INFORMS
Online Appendix F do not support that inference.
Movies with black producers are also significantly
less likely to possess an Oscar winning director or
casts with high star power.
5.3. Instrumental Variable Model Results
The results of our two-stage IV estimation procedure
are shown in Table 3. In IV Model 1, Multiple Black is
instrumented with Black Producer in the first stage
(column (1)) and the causal effect of Multiple Black on
Box-Office is estimated in the second stage (column
(2)). We observe that Black Producer is significantly
correlated with Multiple Black in column (1) at the
0.1% level. The F-statistic on the excluded instrument
from the first stage (Black Producer) is 39.14, sur-
passing the threshold of 10 often used as a rule
of thumb for an instrument not to be considered
“weak” (Stock and Yogo 2005). After instrumenting
for Multiple Black, we observe that it continues to have
a strong positive and significant effect on Box-Office in
column (2) of IV Model 1. In IV Model 2 of Table 3, we
use Black Director as our instrumental variable rather
than Black Producer. Black Director is significantly
correlated with Multiple Black (column (3)) at the 0.1%
level, and the corresponding F-statistic is 69.11. Using
Black Director as our instrumental variable, we again
observe a strong positive and significant effect of
Multiple Black on Box-Office in the second stage of IV
Model 2.
In IV Model 3, we use both Black Producer and Black
Director as instrumental variables. Now that the
equation is overidentified, we can test the exogeneity
of our instruments as recommended using the Hansen
J-statistic (Hansen 1982, Semadeni et al. 2014). The
null hypothesis of this test is that all the instrumen-
tal variables are uncorrelated with the error term
(i.e., they are exogenous). A rejection of the null hy-
pothesis would indicate that at least one of our in-
strumental variables is invalid. The p-value associated
with the Hansen J-statistic is 0.729, and therefore, we
cannot reject the null hypothesis that our instruments
are indeed exogenous. This statistical test increases
our confidence in our instrumental variables and
lends support to our earlier theoretical arguments. In
the remainder of this paper, we will use both Black
Producer and Black Director as instruments to estimate
the treatment effect of Multiple Black. In Online Ap-
pendix G, we reestimate our IV model (IV Model 3 of
Table 3) excluding the movie reviews of critics from
conservative-leaning newspapers. We find that our ear-
lier results are robust to potential racial biases within
the movie reviewer pool. Furthermore, in Online Ap-
pendix H, we reestimate our IV models using a broader
definition for Typecast Role that includes positive-
valence roles with potentially higher minority
 Kuppuswamy and Younkin: Consumer Discrimination and Minority Hiring in Hollywood
Management Science, 2020, vol. 66, no. 3, pp. 1227–1247, © 2019 INFORMS 1237

Table 3. IV Models of Box-Office as a Function of Multiple Black

IV Model 1 IV Model 2 IV Model 3

(1) Multiple Black (2) Box-Office (3) Multiple Black (4) Box-Office (5) Multiple Black (6) Box-Office

Multiple Black 0.807** 0.905*** 0.874***

(0.278) (0.230) (0.208)
Black Producer 0.427*** 0.262***
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(0.0683) (0.0720)
Black Director 0.559*** 0.459***
(0.0672) (0.0763)
Critical Rating −3.71e-05 0.0156*** −0.000109 0.0156*** −4.86e-05 0.0156***
(0.000471) (0.00126) (0.000449) (0.00127) (0.000441) (0.00127)
Hispanic Actors −0.00583 −0.0462 −0.00743 −0.0464 −0.0107 −0.0464
(0.0203) (0.0453) (0.0193) (0.0457) (0.0199) (0.0455)
Asian Actors −0.00189 0.00323 −0.0121 0.00407 −0.00738 0.00380
(0.0157) (0.0415) (0.0163) (0.0417) (0.0159) (0.0416)
Other Actors 0.0314 −0.227** 0.0535 −0.231** 0.0473 −0.230**
(0.0520) (0.0843) (0.0472) (0.0854) (0.0504) (0.0849)
National Advertising 0.00378 0.453*** 0.00558 0.453*** 0.00531 0.453***
(0.00839) (0.0628) (0.00858) (0.0626) (0.00829) (0.0627)
Production Budget −0.00516 0.0685+ 0.000341 0.0697+ 0.00208 0.0693+
(0.0121) (0.0406) (0.0118) (0.0407) (0.0118) (0.0407)
Typecast Role 0.124** 0.00524 0.106** −0.00758 0.106** −0.00353
(0.0383) (0.0932) (0.0390) (0.0896) (0.0382) (0.0891)
Oscar Appeal 0.00820 0.122* 0.0120 0.122* 0.0143 0.122*
(0.0168) (0.0552) (0.0160) (0.0556) (0.0157) (0.0555)
Opening Theaters 0.0118 0.281*** 0.00981 0.279*** 0.00700 0.279***
(0.00773) (0.0386) (0.00785) (0.0391) (0.00760) (0.0388)
Female Actors 0.00632 0.0426 0.0116 0.0417 0.00955 0.0420
(0.00991) (0.0276) (0.00998) (0.0277) (0.00972) (0.0276)
Runtime −0.0224 0.125 −0.0928 0.123 −0.0964 0.124
(0.0927) (0.267) (0.0941) (0.269) (0.0912) (0.268)
Cast Star Power 0.0300*** −0.0565* 0.0333*** −0.0608* 0.0264** −0.0595*
(0.00897) (0.0271) (0.00863) (0.0265) (0.00858) (0.0261)
Director Prior Films 0.00658 0.0327 −0.000178 0.0323 0.00213 0.0325
(0.0140) (0.0410) (0.0128) (0.0412) (0.0130) (0.0411)
Director Star Power 0.00580 −0.0429+ 0.00884 −0.0432+ 0.00926 −0.0431+
(0.00928) (0.0258) (0.00923) (0.0260) (0.00886) (0.0259)
Director Past Oscar −0.0734 −0.242* −0.0591 −0.232* −0.0472 −0.235*
(0.0458) (0.116) (0.0455) (0.115) (0.0446) (0.115)
Seasonality 0.0766 0.641** 0.144+ 0.636** 0.143+ 0.637**
(0.0798) (0.197) (0.0754) (0.198) (0.0754) (0.198)
Sequel 0.0312 0.541*** 0.0216 0.539*** 0.0311 0.540***
(0.0359) (0.0809) (0.0338) (0.0817) (0.0338) (0.0814)
MPAA rating ind. Yes Yes Yes Yes Yes Yes
Plot narrative var. Yes Yes Yes Yes Yes Yes
IMDb genre ind. Yes Yes Yes Yes Yes Yes
Release year ind. Yes Yes Yes Yes Yes Yes
Major studio ind. Yes Yes Yes Yes Yes Yes
N 925 925 925 925 925 925
R2 0.223 0.845 0.271 0.843 0.296 0.843

Note. Robust standard errors are in parentheses. ind., indicator or binary variable.
***p < 0.001; **p < 0.01; *p < 0.05; +p < 0.1.

representation (e.g., athlete, musician).13 The IV model 5.4. Coarsened Exact Matching
results in Online Appendix H are robust to this We also examine the robustness of our findings to an
broader definition and are very similar to those in alternative (non-IV) estimation approach to identify
Table 3. treatment effects. Underlying differences in movie
 Kuppuswamy and Younkin: Consumer Discrimination and Minority Hiring in Hollywood
1238
characteristics can lead to significant selection biases
when examining the treatment effect of casting choices
on box-office performance (Heckman 1979). To reduce
selection bias, we implement a nonparametric matching
approach called “coarsened exact matching” (CEM)
(Blackwell et al. 2009, Iacus et al. 2012). CEM involves
“coarsening” a set of observed covariates, performing
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exact matching on the coarsened data, “pruning”
observations so that strata have at least one treatment
and one control unit, and then running estimations
using the original (but pruned) uncoarsened data
(Aggarwal and Hsu 2013, Younkin and Kuppuswamy
2017). An additional benefit of CEM is its ability to
accommodate multicategory treatment variables—
that is, treatment variables with more than two cat-
egories (Iacus et al. 2011). As a result, CEM analysis
allows us to evaluate the distinct effects of both Black
Actors = 1 (Single Black) and Black Actors ≥ 2 (Multiple
Black) in the same model.
To determine which covariates to match on, we
identified the variables that differed significantly be-
tween movies with zero, one, and multiple black ac-
tors. To do so, we ran a multinomial logit on our
categorical measure of Black Actors as the outcome of
interest. Again, this categorical measure had three
categories: Black Actors = 0, Black Actors = 1 (Single
Black), and Black Actors ≥ 2 (Multiple Black) (the ref-
erence category for the multinomial logit is movies
with Black Actors = 0). In columns (1) and (2) of Table 4,
the results of the multinomial logit provide insight
into the differences (or lack thereof) between movies
with different levels of Black Actors. Our first ob-
servation is that movies with a single black actor are
very similar to those with none—there are no vari-
ables with significant coefficients (p ≤ 0.05) in column
(1) of Table 4. By contrast, there are a few significant
differences between movies with multiple black ac-
tors and those with none—Multiple Black movies
possess less cast star power and more typecast roles
for minority actors (column (2) of Table 4). In addition,
we observed significant differences in a few genre cate-
gories (e.g., horror, westerns, history) and that Multiple
Black movies were released in more theaters on their
opening weekend (marginally significant). For uni-
variate mean comparisons, see Online Appendix I.
To remove these underlying differences in movie
characteristics, we matched on all these covariates.
Specifically, we exact matched on the binary var-
iables, and for continuous variables, used coarse
buckets defined by their 25th, 50th, and 75th per-
centiles (Singh and Agrawal 2011). Our matched
sample consisted of 690 movies: 424 movies with
Black Actors = 0, 160 movies with Single Black = 1, and
106 movies with Multiple Black = 1. We checked
whether the matched sample consisted of a more com-
parable set of movies by reestimating the multinomial
Management Science, 2020, vol. 66, no. 3, pp. 1227–1247, © 2019 INFORMS
logit model using the matched sample instead of the
original full sample (columns (3) and (4) in Table 4). As
expected, none of the movie covariates remain significant
predictors of Single Black or Multiple Black in the
matched sample; as a result, earlier significant dif-
ferences have been eliminated. In column (5) of Table
4, we use OLS to model Box-Office as a function of
Single Black and Multiple Black (and our other controls)
with the matched sample. We find that Multiple Black
has a positive and significant coefficient (at the 0.1%
level), which is consistent with the positive treatment
effect identified earlier using the IV approach. Fur-
thermore, we again observe an insignificant co-
efficient for Single Black, indicating the lack of a
treatment effect from casting a single black actor.
The results are consistent across multiple specifi-
cations and alternative subsamples of the films we
include. Furthermore, for robustness we conducted
our CEM analysis separately for binary treatments
Single Black and Multiple Black (i.e., in contrast to using
CEM with a three-category treatment variable, as we
did here). These results are available in Online Ap-
pendices J and K, and the coefficients are similar in
both direction and significance to those in Table 4. The
net effect of these casting decisions for both actors and
studios is relatively clear. On average, we estimate
that black actors lost out on as many as 50 leading
roles and 184 total roles during the period of obser-
vation. This likely underestimates the true cost, as an
inability to land a role today makes it more difficult to
land a role in the future. On the production side,
incorrect assumptions about audience preferences
conservatively cost the studios an average of $18
million per film. It is plausible that the even greater
underrepresentation of Hispanics and Asian Ameri-
cans is equally costly (for both the studio and the
ethnic groups); however, the underrepresentation of
these groups is so extreme we cannot empirically
assess it (i.e., there are simply too few such films to
analyze systematically).
5.5. Discussion
It is important to emphasize that our results do not
indicate a linear effect where each additional minority
cast member yields a proportionate increase in box
office. Instead, contrary to the anticipated negative
effect of inclusion, the results provide evidence that
films with one black cast member are so similar to films
with all-white casts that audiences do not treat them
any differently. However, films with multiple black
actors appear to benefit from their diversity. This is
important for two reasons: First, it suggests that
among the films that are most similar (e.g., those
without minority cast members or with one minority
cast member), audiences are unaffected by the casting
of a minority actor. In other words, despite claims that
 Kuppuswamy and Younkin: Consumer Discrimination and Minority Hiring in Hollywood
Management Science, 2020, vol. 66, no. 3, pp. 1227–1247, © 2019 INFORMS 1239

Table 4. CEM to Estimate the Treatment Effects of Single Black (Black Actors = 1) and Multiple Black (Black Actors ≥ 2)
on Box-Office

Multinomial logit (Reference category: Black Actors = 0)

OLS
Full sample CEM sample
(5) CEM sample
(1) Single Black (2) Multiple Black (3) Single Black (4) Multiple Black DV: Box-Office
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Single Black 0.0219

(0.0974)
Multiple Black 0.468***
(0.108)
Critical Rating 0.00429 −0.00149 −0.000393 −0.00116 0.0132***
(0.00386) (0.00557) (0.00589) (0.00695) (0.00169)
Hispanic Actors 0.0175 −0.0201 0.000627 −0.0625 −0.0889
(0.195) (0.168) (0.284) (0.249) (0.0819)
Asian Actors −0.00448 −0.151 0.0444 −0.198 0.133*
(0.140) (0.168) (0.187) (0.236) (0.0533)
Other Actors 0.443 0.542 0.121 0.372 −0.283*
(0.295) (0.426) (0.346) (0.423) (0.114)
National Advertising −0.0343 0.0622 −0.0368 −0.0253 0.558***
(0.0689) (0.167) (0.140) (0.229) (0.0584)
Production Budget 0.168 −0.107 0.00968 0.00835 −0.0467
(0.121) (0.169) (0.180) (0.180) (0.0473)
Typecast Role 0.167 1.294*** −0.0306 0.292 0.255*
(0.283) (0.327) (0.441) (0.446) (0.108)
Oscar Appeal −0.226 −0.0325 −0.678 0.215 0.0609
(0.191) (0.250) (0.443) (0.456) (0.0926)
Opening Theaters 0.0702 0.279+ 0.130 0.210 0.249***
(0.0697) (0.143) (0.131) (0.203) (0.0477)
Female Actors 0.0102 0.126 −0.0365 0.203 0.0477
(0.0918) (0.108) (0.139) (0.131) (0.0386)
Runtime 0.172 −0.333 0.700 −1.270 0.817*
(0.842) (1.166) (1.376) (1.282) (0.332)
Cast Star Power 0.0810 0.577*** 0.0693 0.188 −0.0689*
(0.0761) (0.109) (0.111) (0.153) (0.0333)
Director Prior Films −0.204 −0.0320 0.0413 −0.182 0.0553
(0.128) (0.166) (0.189) (0.202) (0.0532)
Director Star Power 0.0335 0.0196 0.128 0.0805 −0.0352
(0.0991) (0.122) (0.128) (0.135) (0.0315)
Director Past Oscar −0.530 −1.654+ 0.124 −1.459 −0.567**
(0.487) (0.961) (0.562) (1.074) (0.181)
Seasonality −0.267 0.711 −0.836 1.052 0.638*
(0.674) (0.909) (1.087) (1.092) (0.278)
Sequel 0.470+ 0.254 0.383 0.123 0.513***
(0.275) (0.378) (0.453) (0.524) (0.132)
MPAA rating ind. Yes Yes Yes Yes Yes
Plot narrative var. Yes Yes Yes Yes Yes
IMDb genre ind. Yes Yes Yes Yes Yes
Release year ind. Yes Yes Yes Yes Yes
Major studio ind. Yes Yes Yes Yes Yes
N 925 690 690
Pseudo R2 0.150 0.161
R2 0.840

Notes. Robust standard errors are in parentheses. DV, dependent variable.

***p < 0.001; **p < 0.01; *p < 0.05; +p < 0.1.

filmgoers are sensitive to any presence of minorities Second, we find evidence of audience sensitivity for
and that casting directors face demand-side pressure movies with multiple black cast members, but this
to select white actors, our models return no evidence response also counters executive claims. Specifically,
to support this claim. the results indicate a preference for, rather than a
 Kuppuswamy and Younkin: Consumer Discrimination and Minority Hiring in Hollywood
1240
rejection of, diverse films. Although we did not ex-
plicitly hypothesize a difference between single and
multiple minority member films prior to investigation,
the results are consistent with established work on
perceived diversity (Kanter 1977) and on recent work
suggesting that audiences respond differently to
“tokenism” than to representation (Unzueta and
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Binning 2012). For example, Chang et al. (2019)
conducted an experiment on what constitutes gen-
der diversity on a board and found that respondents
perceived a fictional “corporate board” as equally low
in diversity when it had either no women or just 1
female member and as equally high in diversity when
it had 2 or 3 women (out of 10). Critically, the dif-
ference between the two sets (i.e., low/high) is sig-
nificant, suggesting that perceptions of diversity do
not increase linearly but as a step function with a clear
distinction between “token” and “nontoken” forms of
representation. Similarly, Windscheid et al. (2016)
show that respondents do not perceive a group
with one woman as more diverse than a group
without women, but the respondents do identify any
group with two or more women as gender diverse.
This evidence of a diversity threshold is consistent
with our finding and may help to explain why there is
a benefit to casting multiple black actors but no box-
office benefit to casting a single black actor. Specifi-
cally, this research would suggest that films with a
single minority are not perceived as different from
films with all-white casts and therefore do not war-
rant additional consumer attention, either positive or
negative. By contrast, it would hold that audiences
perceive films with multiple black actors in the prin-
cipal cast as unique and diverse, even controlling for
the plot, budget, marketing, and other observable
differences.
6. The Influence of Cast Diversity: An
Experimental Approach
6.1. Description
The initial analyses provide evidence that, despite fre-
quent claims of demand-side pressure to cast white ac-
tors, films with recognizably diverse casts outperform
expectations based on established models for film per-
formance. However, before we consider this evidence
against a presumed strong form of consumer discrimi-
nation, we need to better identify the mechanisms
driving the general support for diverse films. In par-
ticular, evidence of national-level support may occur
despite resistance from white consumers, rather than
reflecting a change in their attitude. In addition, it re-
mains possible that the results reflect an audience pre-
ference for an alternative unobserved shared feature
of diverse films. To clarify the mechanism behind the
observed pattern, we therefore designed a vignette-
based experiment that allowed us to test the influence
Management Science, 2020, vol. 66, no. 3, pp. 1227–1247, © 2019 INFORMS
of cast diversity controlling for film- and actor-level
differences.
6.2. Subject Recruitment
For the experiment, we recruited 2,000 participants on
Amazon’s Mechanical Turk service via a script asking
them to “evaluate two movie proposals” and paid
$0.50 for the activity. We restricted the sample to
participants who did not repeat, passed the manipu-
lation check, completed the full survey, and reported
no problems, yielding a total of 1,605 respondents for
use in our analyses. Respondents self-reported as
majority male (58%), white (80%), under 35 (65%), and
attending at least five or six movies per year (57%).
6.3. Design
After agreeing to participate, each respondent was
instructed as follows: “We are trying to assess the
viability of two potential film projects slated to start
production in the spring of 2017. Each film stars two
new actors discovered through open casting calls
across the country. We will show you a brief pro-
spectus for each film, including a description of the
plot, title, prospective cast and director. We would
like you to look at each of these and then answer a
few questions about your impression of each.” Re-
spondents then read a movie prospectus consistent
across all conditions, followed by one of six possible
film descriptions. After each prospectus, they were
asked the likelihood they would recommend the film to
a friend. After reading both, they were asked which film
they preferred, to compare the two films on six di-
mensions, and then, to answer questions about their
movie preferences, two attention checks (i.e., “How
many women were in the cast?” and “The film was
about. . .”), a manipulation check (“How many
members of the cast were African American?”), and
finally a set of demographic questions. This between-
subjects design allows us to compare the effect of
three different cast compositions in two genres of
movies (action/drama and romantic comedy).
Subjects in the Control condition received a film
that included the names and pictures of six white
actors for the six listed “Proposed Principal Cast”
positions, including a fictitious “Matthew Johnson”
and “Amanda Stone” in the two lead roles. Subjects in
the Black Actor condition received an identical de-
scription with an identical cast except for one change:
replacing the white lead with a black lead actor
(“Malik Johnson”). Subjects in the Black Actress con-
dition received a description and cast identical to the
control except the white lead actress was replaced
with a black lead actress (“Brianna Stone”). Subjects
in the Multiple Black condition received the identical
prospective, but both the lead actor and actress were
 Kuppuswamy and Younkin: Consumer Discrimination and Minority Hiring in Hollywood
Management Science, 2020, vol. 66, no. 3, pp. 1227–1247, © 2019 INFORMS
black. An example of the Control and Black Actress
condition for the romance film are presented in Figure 1.
To increase the plausibility of each description and
enhance the reliability of the comparison, we chose
three film abstracts from the “black list” of the top
unmade scripts in Hollywood as voted by industry
professionals. Many past inclusions have gone on to
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win awards (Argo, Slumdog Millionaire, Spotlight) or
been large commercial successes (e.g., The Hangover,
Sherlock Holmes, The Fault in Our Stars). To create a
proposed cast, we divided our list of actors appearing
in films in 2011–2016 by race and gender, and then we
randomly selected five white men and five white
women from the subset. To reduce the influence of
“star power,” we discarded any actors/actresses who
were nominated for a Golden Globe or Oscar or who
were among the top three billed actors/actresses in a
film that grossed over $100 million. These actors were
then randomly assigned parts in the comparison film
and the two prospectuses used for the experiment.
The names for the fictional lead actor and actress
were identified by examining the most common names,
by race, of babies born in Texas and New York City in
Figure 1. (Color online) Vignette-Based Experiment Conditions: Control (Left) and Treatment (Black Actress) (Right)
1241
1990. In keeping with past research, names were
identified as popular with African Americans if they
were among the 10 most common names for that group
but not among the 10 most common for Caucasians,
Asians, or Hispanics. Each name was also accompanied
by a small (200 × 200 pixel) color photograph of each
actor/actress. The photographs for the white and
black actor/actress were taken from a database of
photos taken under identical conditions and estab-
lished in prior research as eliciting identical emotions
(Simonoff and Sparrow 2000, Hsu 2006).
To identify suitable photographs and ensure that the
primary difference tested was the race of the proposed
actor, prior to the experiment, we conducted a pretest
using an array of 12 male and 12 female photos drawn
from the database. For this we asked 400 respondents
to sequentially rate the attractiveness, likeability, and
age of four random photos from our array. Through
this process we identified one male black/white pair
and one female pair with no statistically significant
differences in their perceived in age (mean = 25.0),
attractiveness (4.20), and likeability (4.10) that we
then used in our experiment.
 Kuppuswamy and Younkin: Consumer Discrimination and Minority Hiring in Hollywood
1242 Management Science, 2020, vol. 66, no. 3, pp. 1227–1247, © 2019 INFORMS

6.4. Preference for Diversity
The results of the experiment (Table 5) indicate a
preference for diversity in action films and an in-
difference to diversity in romantic films. As shown in
model (5) of Table 5, relative to the control, re-
spondents were more likely to prefer a prospectus for
an action film with a black actress (0.43, 0.13), black
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contain diverse casts. Instead, and consistent with our
observational results, we find that individuals are ei-
ther indifferent to cast diversity or favor it. Although
we do not suggest that an audience preference for
diversity is the sole cause for the higher performance of
diverse films, the object of the experiment was to assess
whether individuals do exhibit a preference for diverse

actor (0.49. 0.14), or multiple black actors (0.31, 0.12)
and also more likely to recommend these movies to
their friends (model (6)). Furthermore, we found that
respondents perceived the romantic film as more
realistic if it included a black actress (0.40, 0.12) or
multiple black actors (0.31, 0.12) and the action film
(which was generally seen as unrealistic) as more
unique if it had a black actress (0.38, 0.13) or multiple
black actors (0.36, 0.13). The results do not vary with
the race or gender of the respondent, suggesting that
they are not driven by homophily and reinforcing the
prior findings that diversity does not cost employers
and may actually enhance the perceived value of their
product.
6.5. Discussion
The experiment provides significant additional evi-
dence that, controlling for potential film-level differ-
ences, audiences do not reject films because they
casts that might help explain the positive returns ob-
served earlier. Therefore, the experimental results help
rule in one potential mechanism and also help provide
a more direct test of employers’ specific claim that
audiences are averse to diversity. Furthermore, these
results support the inference that the superior per-
formance of diverse films identified earlier is due (in
part) to this diversity, and not despite it.
7. Explanations for Hollywood’s Lack
of Diversity
7.1. Poor Performance Abroad?
The results above show that although only 10.62% of
roles in the principal cast are given to black actors, films
with multiple black actors achieve superior performance
in the domestic marketplace. Given their superior
commercial performance within the United States, one
unanswered question remains: Why are there so few

Table 5. The Effect of Cast Diversity on Consumer Perceptions of Quality

Romantic movie Action movie

(1) Prefer (2) Recommend (3) Unique (4) Realistic (5) Prefer (6) Recommend (7) Unique (8) Realistic

Condition
Black Actress 0.01 0.12 0.12 0.40** 0.43** 0.55*** 0.38** 0.13
(0.13) (0.16) (0.13) (0.12) (0.13) (0.16) (0.13) (0.11)
Black Actor 0.06 0.01 0.05 0.21+ 0.49*** 0.54** 0.07 0.02
(0.14) (0.16) (0.13) (0.13) (0.14) (0.17) (0.13) (0.12)
Multiple Black 0.12 0.18 0.10 0.31* 0.54*** 0.56*** 0.36** 0.10
(0.13) (0.15) (0.12) (0.12) (0.14) (0.17) (0.13) (0.12)
Respondent characteristics
Male −0.38*** −0.58*** −0.29*** 0.09 0.28** −0.06 0.07 0.11
(0.09) (0.10) (0.08) (0.08) (0.10) (0.12) (0.09) (0.08)
Age 0.02 0.04 0.03 −0.01 −0.19* −0.21* −0.15 −0.03
(0.09) (0.10) (0.08) (0.08) (0.08) (0.10) (0.08) (0.07)
White −0.09 0.07 0.04 0.14 −0.03 0.03 0.17 −0.06
(0.11) (0.13) (0.10) (0.10) (0.12) (0.14) (0.11) (0.10)
Movie Attendance −0.01 0.14* −0.02 0.11* 0.03 0.25*** 0.14** 0.06
(0.05) (0.06) (0.05) (0.05) (0.05) (0.06) (0.05) (0.04)
Democrat 0.31** 0.11 0.25* 0.01 0.16 −0.09 0.12 −0.04
(0.12) (0.14) (0.11) (0.11) (0.12) (0.15) (0.12) (0.10)
Independent 0.22 0.04 0.16 0.04 0.33* 0.02 0.04 −0.12
(0.14) (0.17) (0.14) (0.13) (0.16) (0.19) (0.15) (0.14)
Constant 3.55*** 3.22*** 3.84*** 2.87*** 3.44*** 3.28*** 3.57*** 2.06***
(0.24) (0.28) (0.22) (0.22) (0.24) (0.29) (0.23) (0.21)
Respondents 814 814 814 814 773 773 773 773
Adjusted R2 0.04 0.05 0.03 0.02 0.05 0.05 0.04 0.01

Note. The reference category for the conditions is an all-white cast.

***p < 0.001; **p < 0.01; *p < 0.05; +p < 0.1.
 Kuppuswamy and Younkin: Consumer Discrimination and Minority Hiring in Hollywood
Management Science, 2020, vol. 66, no. 3, pp. 1227–1247, © 2019 INFORMS 1243

of these films? One answer is that hiring reflects bias Table 6. OLS Model of Foreign Box-Office as a Function of
among foreign consumers. Given the claim14 that in- Multiple Black
ternational box office is an increasingly important
DV: Foreign Revenue
source of revenue, evidence of bias among foreign con-
sumers could generate consumer-induced hiring dis- (1) (2)
crimination, despite evidence of tolerance in the domestic Multiple Black 0.317 1.060*
marketplace. (0.289) (0.416)
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Historically, this question would be nearly impossible Hispanic Actors 0.457+

to resolve, as foreign box-office data are notoriously (0.237)
incomplete. In particular, films vary widely in whether Asian Actors 0.661*
they are released in foreign markets and the extent of (0.269)
support they receive for each market. These variations Other Actors −0.283
(0.750)
are difficult to predict a priori as they depend heavily on
Female Actors −0.0956
perceptions of whether a given country will appreciate a
(0.160)
particular style of comedy, topic, or actor. For instance,
Foreign Marketing & Distribution 1.254*** 1.255***
movies can face restricted releases if they are deemed (0.0500) (0.0697)
“too dark” or “too sexual,” or if the villain is from that Production Budget −0.116 −0.0286
region. The “Sony Hack”15 exposed these variations (0.0900) (0.115)
and also provided a wealth of internal data on the Typecast Role −0.126 −0.966+
specific breadth of international release and amount of (0.376) (0.488)
support (marketing/promotion) that each Sony film re- Oscar Appeal 0.0238 −0.605
(0.120) (0.368)
ceived abroad (Davis 2015). We leverage this source
Critic Rating 0.00403 0.00930
of publicly available data to address potential omit-
(0.00367) (0.00659)
ted variable bias and to examine the effect of cast Runtime 0.824 2.140+
diversity on foreign box-office performance (control- (0.695) (1.198)
ling for the extent of distributor support). If the un- Cast Star Power −0.0516 −0.278+
derrepresentation of black actors were the result of sig- (0.0570) (0.157)
nificant consumer discrimination in foreign markets, Director Prior Films −0.0196 0.0752
then we would expect the foreign revenue of non- (0.0788) (0.301)
Multiple Black films to be significantly greater than Director Star Power −0.0797 −0.0361
(0.0719) (0.104)
that for Multiple Black films.
Director Past Oscar 0.833* 1.964*
The foreign box-office data span movies released
(0.384) (0.770)
internationally by Sony between 2005 and 2014. Two
Seasonality 0.742 −1.455
variables were generated from this data source. First, (0.529) (1.516)
Foreign Box-Office is a log-transformed measure of the Sequel 0.430+ 0.696
foreign box-office revenue a Sony movie obtained in (0.232) (0.594)
U.S. dollars. Second, Foreign Marketing & Distribution MPAA rating indicators Yes Yes
Plot narrative variables Yes Yes
is the log-transformed measure of the total dollar
IMDb genre indicators Yes Yes
amount (in U.S. dollars) spent marketing and dis- Release year indicators Yes Yes
tributing prints of the movie across the foreign Major studio indicators Yes Yes
markets in which it was released. In models (1) and (2) N 208 78
of Table 6, we model Foreign Box-Office as a function R2 0.949 0.982
of Multiple Black, Foreign Marketing & Distribution,
Notes. Robust standard errors in parentheses. DV, dependent variable.
and other control variables using a simple OLS. Model ***p < 0.001; **p < 0.01; *p < 0.05; +p < 0.1.
(1) contains a more limited set of variables (for the
entire Sony sample), whereas model (2) represents the 7.2. Commercial Performance at the Expense of
Sony films in our main sample (and for which our full Artistic Success?
set of variables is defined). As we expected, Foreign A second alternative explanation for the underrepre-
Box-Office is found to be highly correlated with For- sentation of minority actors is that although they may
eign Marketing & Distribution, However, in both cases not harm the commercial performance of the film, they
(models (1) and (2) of Table 6), the coefficient of significantly diminish the potential artistic success of
Multiple Black is not negative, and it is actually pos- these films. To the extent that such artistic success is
itive and significant in model (2). As a result, there is valued in Hollywood, employers may continue to dis-
no evidence that foreign audiences react negatively to criminate against black actors rather than risk losing
movies with multiple black actors. an Oscar. We explore this possibility by analyzing the
 Kuppuswamy and Younkin: Consumer Discrimination and Minority Hiring in Hollywood
1244 Management Science, 2020, vol. 66, no. 3, pp. 1227–1247, © 2019 INFORMS

determinants of Academy Award nominations, a prom- Table 7. Model of Oscar Nomination as a Function of
inent signal of the superior artistic quality of a film. Multiple Black
We define Oscar Nomination as a binary indicator
DV: Oscar Nomination
for whether the film received an Academy Award
nomination in at least one of the four key acting Logit IV probit (second stage)
categories: Best Actor, Best Actress, Best Supporting
Multiple Black −0.945 −0.0962
Actor, or Best Supporting Actress. We note here (0.974) (1.024)
Downloaded from informs.org by [128.103.147.149] on 01 April 2024, at 16:24 . For personal use only, all rights reserved.

that our results are robust to including additional Hispanic Actors −1.205+ −0.665+
Oscar categories, such as Best Picture, Best Direc- (0.675) (0.349)
tor, etc. Asian Actors 0.0927 0.0686
In Table 7, we modeled the likelihood of an Oscar (0.400) (0.186)
nomination with a logit estimator as well as an IV Other Actors 0.678 0.365
probit model. Across both models, we find no evi- (0.656) (0.332)
dence that casting multiple black actors adversely National Advertising 1.604*** 0.854***
(0.482) (0.221)
impacts the chances of a film receiving an Oscar nomi-
Production Budget −0.307 −0.189
nation. As a result, the increased box-office perform-
(0.316) (0.168)
ance of films with multiple black actors does not occur
Typecast Role 1.040 0.434
at the expense of artistic success. (0.877) (0.450)
Oscar Appeal 1.781*** 1.021***
8. Conclusion (0.336) (0.167)
The unequal rate of employment of minorities in cul- Opening Theaters −0.391* −0.202*
tural industries represents a significant cultural and (0.196) (0.0945)
economic issue, as well as a puzzling empirical ques- Female Actors 0.247 0.118
tion. Whereas most studies on disproportionate hiring (0.237) (0.114)
investigate either employer bias or structural impedi- Critic Rating 0.112*** 0.0598***
(0.0267) (0.0119)
ments, employers in cultural industries frequently offer
Runtime 4.466+ 2.419*
an alternative mechanism: consumer bias. However,
(2.385) (1.120)
the application of consumer discrimination to settings
Cast Star Power 0.0699 0.0290
such as films, where the employees are visible but (0.222) (0.112)
physically distant, merits examination as it may re- Director Prior Films 0.683+ 0.370*
flect intuitive appeal rather than empirical evidence. (0.355) (0.179)
We use such employer claims as an opportunity to Director Star Power 0.404+ 0.226*
determine whether the theory continues to explain (0.214) (0.104)
consumer behavior in mediated environments and to Director Past Oscar 0.820 0.506
help clarify the role of audience preference in film (0.875) (0.427)
casting. Seasonality 2.763+ 1.378+
(1.519) (0.758)
Specifically, we use a combination of observational
Sequel −2.661 −1.627*
and experimental data to test the influence of cast racial
(1.718) (0.704)
composition on consumer perceptions and the film’s MPAA rating indicators Yes Yes
performance. In contrast to an expectation that the Plot narrative variables Yes Yes
presence of black actors would reduce film revenues IMDb genre indicators Yes Yes
and consumer appraisals, we find no significant Release year indicators Yes Yes
Major studio indicators Yes Yes
difference between films with a single black actor and
N 841a 841a
those with all-white casts. Although it remains pos-
Pseudo R2 0.705
sible that there is some unobserved cost to this Chi-squared 204.02***
casting, it does not yield a significant difference in
any observable metric: revenue, critical reviews, or Notes. Robust standard errors are in parentheses. DV, dependent
variable.
consumer ratings. Furthermore, we find that casting a
Eighty-four horror films were dropped from this analysis because
multiple black actors increases domestic sales with- the horror genre indicator perfectly predicts the lack of an Oscar
out harming international appeal or the odds of nomination.
***p < 0.001; **p < 0.01; *p < 0.05; +p < 0.1.
winning a critical award. Therefore, casting multiple
black actors in a film, and thereby crossing a threshold
from token representation to diverse casting, yields and suggests that audiences do not exhibit the aversion
significant positive effects. The results of an experi- that employers claim. Instead, audiences evince an in-
mental test, which controlled for unobserved differences difference to token minority casting and even a pref-
between actors and films, corroborates these findings erence in favor of identifiably diverse casts.
 Kuppuswamy and Younkin: Consumer Discrimination and Minority Hiring in Hollywood
Management Science, 2020, vol. 66, no. 3, pp. 1227–1247, © 2019 INFORMS
There are, however, multiple limitations to our
findings and reason to use caution when trying to
generalize from the results described here. First, and
most obviously, we describe employment within cul-
tural industries, a setting in which the audience and
employee have an unusual interaction—one that is
indirect and one where the employee is often higher
Downloaded from informs.org by [128.103.147.149] on 01 April 2024, at 16:24 . For personal use only, all rights reserved.
status. In other settings, in which the interactions are
direct or in which the status is inverted (and the
consumer is higher status than the employee), we may
see a reversion where diversity is penalized. In ad-
dition, there are multiple alternative explanations
for the observational findings that we cannot fully
eliminate. For example, it remains possible that au-
dience composition varies widely and that we are not
documenting evidence of broad shifts in consumer
disposition, but rather evidence of outsized support
by minorities, for minorities. Second, although we
conduct analyses to test the effect of diversity on
international box office, the data were not randomly
drawn from the full population of films. Because these
data are specific to a single studio, there may be
something unique about this studio’s films that make
them more accessible to foreign audiences or that
somehow biases the results. Third, because we do not
account for the political orientation of respondents in
our experiment, it remains possible that they were
more liberal than a random draw from the U.S.
population. This may have biased them to be more
favorable to diverse casting than would be the case for
the population at large. Finally, the present data do not
allow us to fully explore why studios continue to
disadvantage minority actors absent pressure from the
audience. In particular, we cannot distinguish between
arguments that employers themselves are biased, that
the pipeline of minority actors is insufficient, or that
executives fall prey not to overt bias but rather to a
common cognitive failing—confirmation bias. Specif-
ically, by assuming that audiences will reject diverse
casts, executives may discount contradictory evi-
dence and give excess significance to confirming in-
stances. In addition, whereas our findings reflect a
test of a single form of conscious discrimination,
discriminatory employment practices may actually
involve a range of additional motivations. Although
employers often cite consumer discrimination as their
primary rationale, future research is required to ac-
curately assess the role of consumer bias relative to
either unconscious or other conscious forms of bias
in film casting.
Despite these constraints, we believe that the findings
still offer insight into the basis for hiring discrepancies in
the cultural industries and also suggest an important
boundary on future applications of the theory of con-
sumer discrimination. Although the intuitive appeal of
the theory of consumer bias has led employers to invoke
1245
it to justify hiring choices across a range of occupations,
our findings suggest that it may not extend as far
outside of the direct interactions Becker originally de-
scribed. In a wide variety of settings, from entertain-
ment to telephone call centers, an employee’s ethnicity
can be evident while they remain physically distant
from the consumer. In such settings, we anticipate
that consumer-level biases will also be attenuated and
subordinate to an interest in the quality of perfor-
mance. Future research is required to determine
whether the evidence presented here reflects a
broader increase in acceptance of diversity or if it
primarily demonstrates the mediating role of con-
sumer distance.
Acknowledgments
The authors thank Sulzhan Bali, Diane Burton, Lisa Cohen,
Daphne Demetry, Laura Doerring, Matissa Hollister, Elena
Obukhova, and Jed Simmons for their help on earlier drafts.
Venkat Kuppuswamy and Peter Younkin contributed equally
to the manuscript. Any errors are the authors’.
Endnotes
1
Although film actors are not long-term employees in the traditional
sense (i.e., governed by long-term employment contracts), they are
clearly considered short-term employees hired by the film’s producer.
The term “employee” and matters related to employment (safety,
payroll, etc.) are ubiquitous in the theatrical agreement signed be-
tween the film’s producers and the Screen Actors Guild union, which
governs conduct between the producers and actors (accessed Feb-
ruary 8, 2019, https://www.sagaftra.org/files/2014_sag-aftra_cba.pdf).
2
Additional analyses of regional variation in movie showtime allo-
cations and Google search behavior provide complementary evidence
that white audiences are indifferent to cast composition and that cities
with more diverse populations exhibit strong pro-diversity prefer-
ences. These results are available from the authors upon request.
3
Although there is no precise definition for exactly who constitutes
the principal cast of a film (and films can vary significantly in this
regard), we adopted the top six cast members because 90% (45 of 50)
of supporting actor/actress Oscar nominations over 2011–2015 were
for cast members within this limit. Although we could have selected
the wider threshold of nine cast members to include all nominations
over this period, most movies have much smaller principal casts. As a
result, limiting analysis to a principal cast size of six was an ap-
propriate balance between large ensemble principal casts and smaller
productions with fewer principals.
4
Reminder lists from 2014 do not specify an overall billing order and
instead specify separate billing order by gender. Therefore, we
generate the overall billing order for these films by integrating the
gender-specific cast ranks with overall credit listings from IMDb,
Rotten Tomatoes, and TMDb.
5
Following the terminology of the Screen Actors Guild, we use
“actor” as a gender-neutral term to refer to both male and female
individuals in the principal cast.
6
More specifically, the “Asian” category refers to East Asian and South
East Asian ethnicities, and the majority of actors classified as “other”
represent those with Middle East or North African backgrounds.
7
For the probability that the actor was black, the 75th percentile was
0.003 and the 90th percentile was 0.36. Therefore, to be conservative,
we selected a probability of 0.1 (the 88th percentile) as our threshold
for manual examination.
 Kuppuswamy and Younkin: Consumer Discrimination and Minority Hiring in Hollywood
1246
8
The low percentage of black principal actors in our sample is
consistent with the low representation of black actors (12.2%) across
speaking roles in TV and film more broadly (Smith et al. 2016).
9
To control for the potential biases of movie reviewers, we ran ad-
ditional analyses that controlled for newspaper political orientation
(Online Appendix G).
10
Our results are robust to using the average STARmeter ranking of the
movie’s entire principal cast. For more details of the STARmeter rank,
Downloaded from informs.org by [128.103.147.149] on 01 April 2024, at 16:24 . For personal use only, all rights reserved.
see http://www.imdb.com/help/show_leaf?prowhatisstarmeter, accessed
February 8, 2019.
11
As we show in Online Appendix D, indicators for a black producer
(Black Producer) and a black director (Black Director) are not suitable
instruments for Single Black because they are not significantly cor-
related with the latter. As a result, we focus on using the instrumental
variables approach to estimate the treatment effect of Multiple Black.
We explore the treatment effect of Single Black through CEM in the
following section.
12
We use linear probability models rather than logit models because
certain variables perfectly predict the outcome and result in dropped
observations.
13
The specific IMDb keywords we added for our broader definition of
Typecast Role are as follows: “baseball-movie,” “football-movie,”
“basketball-movie,” “sports-team,” “track-and-field,” “olympic-
games,” “runner,” “professional-athlete,” “amateur-athlete,” “r&b-
music,” “musician,” “gangsta-rap,” “hip-hop-music,” “hip-hop,”
“jazz,” “jazz-music,” “jazz-musician,” “soul-music,” “blues,” “blues-
music,” and “gospel-music.”
14
This claim itself is frequently challenged as foreign countries limit
the number of international releases per year and also withhold
higher percentages of the revenue. For instance, whereas China is the
second-largest market in the world, and three times the third largest,
it only allowed 32 U.S. films and retained 75% of sales (versus 50% in
the United States). As a result, these U.S. films earned less than 8% of
their total revenue from the Chinese market (Horwitz 2017).
15
On November 24, 2014, confidential data from Sony, including
emails and financial information from the film studio Sony Pictures,
were released to the public.
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