A novel theoretical development in recent years is the analysis of the consequences of stereotyped reasoning or statistical discrimination (see Phelps [1972], and Arrow [1973]). This analysis suggests that the beliefs of employers, teachers, and other influential groups that minority members are less productive can be self-fulfilling, for these beliefs may cause minor- ities to underinvest in education, training, and work skills, such as punctual- ity. The underinvestment does make them less productive (see a good recent analysis by Loury [1992])
