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Allport (1954) proposed a series of preconditions that have subsequently been shown to facilitate effects of intergroup contact on attitudes toward outgroups (Pettigrew & Tropp, 2006). The present study examines whether objective threat, in the form of the 2005 London 7/7 terror attack, can inhibit the positive effects of contact. We tested hypotheses that contact would affect prejudice toward Muslims regardless of the bombings (contact prevails) or that the bombings would inhibit the effects of contact on prejudice (threat inhibits). Data were collected through representative national surveys 1 month before and again 1 month after the attacks in London on July 7, 2005 (pre-7/7 N = 931; post-7/7 N = 1,100), which represent relatively low and relatively high salience of “objective threat.” Prejudice against Muslims significantly increased following the bombings. Psychological threats to safety (safety threat) and to customs (symbolic threat) mediated the impact of the bombings on prejudice, whereas perceived economic threat did not. All 3 types of psychological threat mediated between contact and prejudice. Multigroup structural equation modeling showed that, even though the objective threat did raise levels of psychological threats, the positive effects of contact on prejudice through perceived psychological threats persisted. Results therefore support a contact prevails hypothesis.