Selection neglect, i.e., the failure to account for selection in the information one receives, is one of the key drivers behind polarization. One important aspect that characterizes the information structures where selection neglect can arise is that social identity is often embedded in them. For example, only following news shows from certain partisan media and avoiding the rest could lead to distorted views. In this context, the news presenters on these shows could be viewed as in-group members as they share one’s political affiliation, while presenters on other channels could be perceived as out-group members. In this study, we investigate how social identity and selection neglect together affect belief formation. We design a novel paradigm where subjects guess a computer-generated number. For each estimation task, subjects observe the guesses of multiple senders who have privately received signals about the correct number. We manipulate whether i) the signal structure can induce selection neglect, and ii) whether social identity is present. We show that subjects suffer from selection neglect. Importantly, selection neglect is exacerbated when the observed signals predominantly come from in-group members. In contrast, if the observed signals come from out-group members, subjects become much better at accounting for selection. Moreover, we show that social identity alone causes no bias, but it is the combination of selection neglect and social identity that drives our results. Finally, we dig into the potential mechanisms that could drive our results. Our findings offer insights into the determinants of polarization and have important implications for the design of information structure and of policies aimed at reducing it.