Social identity theory proposes that discrimination contributes favourably to group members' social identity. In minimal group paradigm (MGP) studies involving positive outcome distributions (e.g. money), discrimination is associated with a more positive social identity. But studies on the positive-negative asymmetry effect show that categorization leads to less discrimination when negative (salary cuts) than when positive outcomes (salary increases) are distributed. Using structural equation modelling, this study (N = 279) tested whether discrimination involving negative outcome distributions could contribute as much to group members' positive social identity as discrimination on positive outcomes. The study also tested if ideological beliefs (i.e. social dominance orientation, authoritarianism), measured one month before the MGP experiment, could predict positive and negative outcome discrimination. While the fit of the hypothesized model was adequate, only social dominance orientation predicted both positive and negative outcome discrimination. Also, discrimination on positive outcomes but not on negative ones contributed to positive social identity. Copyright © 2004 John Wiley & Sons, Ltd.