Why and under which conditions do people employ ethnic categories rather than others (such as age, class, gender, and so on) to conceptually organize their social environment? This article analyses an open-ended question on who is seen as responsible for neighbourhood problems taken from a recently conducted large-scale survey in Germany. By doing so, this study tries to give novel insight on native Germans' use of ethnic folk classifications and aims to identify contextual factors that might explain why people characterize problem-groups in ethnic terms. This article shows that drunkards, the elderly and especially teenagers are seen as problem-groups more frequently than any ethnic minority. Conditions of economic decline and out-group size are analysed as to whether they are associated with a higher likelihood of using ethnic categories. The findings suggest that the effects of out-group size are diminishing in their impact, whereas the effects of economic decline are accumulating in strength.