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To enhance their own self-image, members of the group often then systematically exaggerate differences with other groups, while emphasizing similarities within their own. 11 Perhaps most important of  7  Goldin et al (2011). 8  Further details available on the http://www.etymonline.com/index.php?term=diversity. 9  It uses Google’s Ngram Viewer. 10  For example, Tajfel et al (1971). 11  Karlan and List (2007). BIS central bankers’ speeches  Online  Etymology  Dictionary  at  3  all, people may discriminate or negatively stereotype the “out-group”, as a means of enhancing the image of the “in-group” and hence their own self-image. Behaviour consistent with social identity theory has since been detected in a wide range of social settings: in families, sports teams, schools, gangs, colleges and organisations. It generates important, but often subtle, biases in decision-making which may discriminate against members of the out-group. Despite laws against racial discrimination in most developed countries, there is evidence that racial stereotyping and discrimination in everyday decision-making has persisted, in everything from selling cars to making loans. 12 While deeply undesirable, these behaviours cannot be dismissed as entirely irrational. Indeed, economists and psychologists have developed models to show this behaviour may indeed be rational once the role of social identity and social norms are recognised. 13 And because a multicultural society gives rise to greater numbers of distinct groups and identities, this sociallydiscriminatory behaviour might even have become more, not less, powerful over time.