This paper identifies the individual components of social harm associated with a hypothetical racially targeted police encounter. Individuals who believe they are being targeted by police because they are members of a racial minority may suffer from fear of physical harm and humiliation by the encounter itself. However, the very fact that individuals will be racially targeted for a police encounter also causes harm to other members of the minority group even if they are not directly subject to an unwarranted encounter. In addition to fear and anxiety over the risk of such an encounter, they will often undertake costly avoidance behaviors to reduce their risk, or to mitigate the risk of any harm if such an encounter occurs. In addition, other members of society who value a nondiscriminatory policing policy might be willing to pay to reduce such unwarranted police encounters, and hence suffer a loss from this policing policy. In addition to discussing possible methodologies for estimating these cost components, this paper raises several issues that must be resolved – such as how to deal with the difference between perceived and actual racially targeted police encounters.