Tuesday, January 26, 2010

Identity Economics: Not a Review

This is not a review. Just an attempt to stir up some interest in advance of a bookclub. "Identity Economics, How our identities shape our work, wages and well-being" by George Akerlof and Rachel Kranton was published recently by Princeton University Press. It draws from and develops material published by the two authors, particularly articles in the QJE, JEL, JEP and AER published from 2000 to 2008, articles that will be familiar to a lot of readers here.

The book is divided into ten chapters and four sections. Section 1 Economics and Identity comprises (i) introduction (ii) identity economics (iii) identity and norms (iv) where we fit. In particular, this section advances the idea that incorporating identity into economics is an important step in economics, as important as the process largely already undertaken of incorporating human judgment processes. They argue that norms and social categorisation are fundamental components of human decision making and valuation in a way that is simply not characterised adaquately in standard accounts of utility and tastes.

Section 2 Work and Schooling comprises (v) Organisations and (vi) Schooling. This section applies the identity economics framework to these two key components of economic life. The first chapter argues that understanding economic organisations such as firms and factories requires a detailed understanding of the identity and roles played by individuals within the organisation. Their schooling chapter considers the key role of identity in how people make decisions about and transition through schooling.

Section 3 "Gender and Race" comprises (vii) "Gender and Work" and (viii) "Race and Poverty". The first of these chapters considers gender identity and work. The second examines ethnic identities and the relation to poverty, in particular advancing the idea of identity feedback loops between minority and majority that can lead to perpetuating cycles of poverty for affected ethnic groups.

Section 4 "Looking Ahead" comprises (ix) Methodology and (x) Looking Ahead. Chapter (ix) argues that methods such as IV and natural experiments cannot fully encapsulate what is driving the relation between identity and economic outcomes, and advocates for richer descriptive accounts of economic systems and subsystems. Chapter 10 concludes on how identity considerations may change economics.

This is not the place for a lengthy review. I recommend strongly that anyone with an interest in behavioural economics read the book. The extent to which identity as described by the authors truly adds to behavioural economics will be debated thoroughly as a result of this work. I really look forward to discussing this book in lectures and our bookclub and I am sure it will reoccur on this site as it begins to filter more into economic debate.

With respect to our policy debate in Ireland, the book raises a number of questions, a sample of which I list below purely to get the ball rolling. I would really welcome a chance to debate the ideas in this book with a wide variety of people, inside and outside economics.

- the extent to which identity considerations render ineffective jobs programmes aimed at areas where male unemployment is now the majority position.

- the extent to which men and women derive serious positive and negative utility through adherence or non-adherence to prescribed gender roles and the extent to which this matters for economic policy.

- the extent to which "working class" identities influence school and college choice and the extent to which this interacts to major government spending initiatives in promoting access to education.

- how identity interacts with working roles to lead to well-being.

- the extent to which Irish identity influences our economic behaviour in areas like consumption, saving, migration, working patterns and so on.


Leigh Caldwell said...

That explains it. Someone recommended this to me as the "Akerlof and Stanton" book. No wonder I was having difficulty finding some details of it.

Would love to come to the book club if I were in Dublin. Hope to get over and see you there some time soon.

Liam Delaney said...

yes, we will certainly see you in Dublin in the near future.