From Diversifying Economic Quality: A Wiki for Instructors and Departments
Stereotype threat occurs when an individual is at risk of confirming a negative stereotype about his or her own group. The individual may not perform according to his or her true ability; rather, performance can be adversely impacted by concern about generally held beliefs regarding this individual's grouping, whether it is by sex, age, gender, race, etc. Click Here to learn more.
Evidence of Stereotype Threat
Steele & Aronson (1995) found that "Black college freshmen and sophomores performed more poorly on standardized tests than White students when their race was emphasized. When race was not emphasized, however, Black students performed better and equivalently with White students. The results showed that performance in academic contexts can be harmed by the awareness that one's behavior might be viewed through the lens of racial stereotypes." from 
Aronson, Fried, & Good (2002) showed that "encouraging students to see intelligence as malleable (i.e., embrace an incremental theory of intelligence) can raise enjoyment and performance in academic contexts." from 
Ambady, Paik, Steele, Owen-Smith, & Mitchell (2004) showed that "individuation (priming an individual to recall her distinct interests and abilities) can serve as a buffer against stereotype threat, perhaps because it allows a means for individuals to distance the self from identities linked to the stereotype in question." from 
Click here for a more complete listing of studies that document the existence, mediation, and moderation of stereotype threat.
How to Reduce Stereotype Threat
- Reframing the task
- Deemphasizing threatened social identities
- Encouraging self-affirmation
- Emphasizing high standards with assurances of capability
- Providing role models
- Providing external attributions for difficulty
- Emphasizing an incremental view of ability
Click Here for details in how to implement the above solutions.
What Economists Have to Say about Stereotype Threat
Christina Günther (MPI of Economics, Evolutionary Economics Group), Neslihan Arslan Ekincib, Christiane Schwieren (University of Heidelberg, Department of Economics AWI), and Martin Strobel (Universiteit Maastricht, Department of Economics) conducted experiments supporting a stereotype threat explanation for the wage gap between men and women. "Women tend not to compete with men in areas where they (rightly or wrongly) think that they will lose anyway – and the same holds for men."  Their findings can be linked to the performance of women in the economics classroom. Since the field of economics is perceived as a "male" field, women may underperform or be discouraged from the field due to the perception that they do not belong.
In "Stereotype Threat and the Student-Athlete" (NBER Working Papers: 14705, 2009), Thomas S. Dee "presents an economic model of stereotype threat [as well as] empirical evidence from a laboratory experiment in which students at a selective college were randomly assigned to a treatment that primed their awareness of a stereotyped identity (i.e., student-athlete). This treatment reduced the test-score performance of athletes relative to non-athletes by 14 percent (effect size = -1.0)." 
There is very little literature from economists concerning stereotype threat itself, let alone stereotype threat in the classroom. Only 9 publications show up in an Econlit search for "stereotype threat." There are findings yet to be discovered concerning this topic.
In order to create a more inclusive classroom environment, economics professors should be aware of stereotype threat and its potential effects upon students. To explore more information concerning stereotype threat, please go to this website
Stroessner, Steven, and Catherine Good. ReducingStereotypeThreat.org. Consortium of High Achievement and Success (CHAS) and Barnard College. Web. 11 July 2011. <http://www.reducingstereotypethreat.org/>.