Two Solitudes For the fifty years since Gary Becker first applied economic techniques to social issues such as dysfunctional families and crime, the social sciences have been inhabited by two solitudes, seemingly incapable of communication.
Jump to navigation Jump to search Identity economics captures the idea that people make economic choices based on both monetary incentives and their identity: The fundamentals of identity economics was first formulated by Nobel Prize Identity economics economist George Akerlof and Rachel Kranton in their article "Economics and Identity,"  published in Quarterly Journal of Economics.
This article provides a framework for incorporating social identities into standard economics models, expanding the standard utility function to include both pecuniary payoffs and identity utility.
The authors demonstrate the importance of identity in economics by showing how predictions of the classic principal-agent problem change when the identity of the agent is considered. Research[ edit ] Akerlof and Kranton provide an overview of their work in the book "Identity Economics,"  published in In the book, they provide a layman's approach to Identity Economics and apply the concept to workplace organization, gender roles, and educational choice, summarizing several previous papers on the applications of Identity Economics.
Garai derived it from the principal's and, resp. A further special feature of Garai's theory on social identity is that it resolved the contradiction between the inter-individual phenomena studied by the social identity theories and the intra-individual mechanisms studied by the brain theories: Garai presented  a theory on an inter-individual mechanism acting in the world of social identity.
The theory that was referred in the beginning to the macro-processes based on a large-scale production later has been applied by Garai to the micro-processes of individual creativity. Moses Shayo uses the concept of social identity to explain why countries with similar economic characteristics might choose substantially different levels of redistribution.
Daniel Benjamin, James Choi, and Joshua Strickland examine the effect of social identity, focusing on ethnic identity, on a wide range of economic behavior.
Kranton, "Identity and Schooling: Soviet-Type societies and Bolshevik-Type Parties. Journal of Russian and East European Psychology, vol. On the meaning and its brain. The brain and the mechanism of psychosocial phenomena.
Journal of Russian and East-European Psychology.
Joshua Strickland"Social identity and preferences," American Economic Review, 4—Economics of Identity. Paper Abstract: Paper Details: Individuals and businesses are moving rapidly to a digital and mobile way of doing business with each other.
The more we interact and transact online, the more important online identity becomes. Without it the growth of online commerce – and therefore the economy as a whole – will be.
Identity economics captures the idea that people make economic choices based on both monetary incentives and their identity: holding monetary incentives constant, people avoid actions that conflict with their concept of self.
Identity Economics explains many persistent social patterns like gender-based segregation in the workforce or the high rates of dropout from school among African Americans.
It does so using the tools of rational choice – game theory, based on utility maximizing individuals and their interactions -- but it looks to the social phenomenon of identity as an important source of individual utility.
"Identity Economics blends elements of psychology with traditional economic analysis. The writing is clear, interesting, and light on jargon.
The writing is clear, interesting, and light on jargon. The interplay between theoretical predictions and concrete examples is particularly successful/5(4). "Identity Economics blends elements of psychology with traditional economic analysis.
The writing is clear, interesting, and light on jargon. The writing is clear, interesting, and light on jargon.
The interplay between theoretical predictions and concrete examples is particularly successful/5(25). Identity, she argued, was the missing element that would help to explain why people--facing the same economic circumstances--would make different choices.
This was the beginning of a fourteen-year collaboration--and of Identity Economics.