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Controversy surrounding the use of race-conscious admissions can be partially resolved with improved empirical knowledge of the effects of racial diversity in educational settings. We use a national sample of law students nested in 64 law schools to test the complex and largely untested theory regarding the effects of educational diversity on student outcomes. Social scientists who study these outcomes frequently encounter both latent variables and nested data within a single analysis. Yet, until recently, an appropriate modeling technique has been computationally infeasible, and consequently few applied researchers have estimated appropriate models to test their theories, sometimes limiting the scope of their research question. Our results, based on disaggregated multilevel structural equation models, show that racial diversity is related to a reduction in prejudiced attitudes and increased perceived exposure to …