From the standpoint of basic theory and social policy it is important to understand the extent to which expectancies contribute to social problems. Naturalistic and meta-analytic evidence is reviewed showing that (a) expectations influence social reality and may contribute to social problems such as prejudice and inequities in educational and occupational opportunity, but (b) the influence of expectations on social reality generally is more limited than often claimed. One of the most important limitations on the contribution of expectations to social problems may be that they are often accurate (i.e., they predict others' behaviors and attributes without influencing those others' behaviors and attributes). Accurate expectations create neither cognitive biases nor self-fulfilling prophecies, and this article reviews evidence showing that people are often quite accurate. Nonetheless, even relatively modest expectancy effects may contribute to some social problems in important ways. Further, research suggests that certain conditions facilitate or inhibit the occurrence of expectancy effects. Consequently, under some conditions, the contribution of expectancy effects to social problems may be larger than the current empirical evidence suggests. The article concludes by discussing how to “harness Pygmalion effects” to develop interventions for alleviating particular social problems.