Identity Economics: How Our Identities Shape Our Work, Wages, and Well-Being

by George A . Akerlof (Author), RachelE.Kranton (Author)

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Paperback
2011
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Identity Economics provides an important and compelling new way to understand human behavior, revealing how our identities--and not just economic incentives--influence our decisions. In 1995, economist Rachel Kranton wrote future Nobel Prize-winner George Akerlof a letter insisting that his most recent paper was wrong. 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. The authors explain how our conception of who we are and who we want to be may shape our economic lives more than any other factor, affecting how hard we work, and how we learn, spend, and save. Identity economics is a new way to understand people's decisions--at work, at school, and at home. With it, we can better appreciate why incentives like stock options work or don't; why some schools succeed and others don't; why some cities and towns don't invest in their futures--and much, much more. Identity Economics bridges a critical gap in the social sciences. It brings identity and norms to economics. People's notions of what is proper, and what is forbidden, and for whom, are fundamental to how hard they work, and how they learn, spend, and save. Thus people's identity--their conception of who they are, and of who they choose to be--may be the most important factor affecting their economic lives. And the limits placed by society on people's identity can also be crucial determinants of their economic well-being.

Synopsis

Identity Economics provides an important and compelling new way to understand human behavior, revealing how our identities--and not just economic incentives--influence our decisions. In 1995, economist Rachel Kranton wrote future Nobel Prize-winner George Akerlof a letter insisting that his most recent paper was wrong. 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. The authors explain how our conception of who we are and who we want to be may shape our economic lives more than any other factor, affecting how hard we work, and how we learn, spend, and save. Identity economics is a new way to understand people's decisions--at work, at school, and at home. With it, we can better appreciate why incentives like stock options work or don't; why some schools succeed and others don't; why some cities and towns don't invest in their futures--and much, much more. Identity Economics bridges a critical gap in the social sciences. It brings identity and norms to economics. People's notions of what is proper, and what is forbidden, and for whom, are fundamental to how hard they work, and how they learn, spend, and save. Thus people's identity--their conception of who they are, and of who they choose to be--may be the most important factor affecting their economic lives. And the limits placed by society on people's identity can also be crucial determinants of their economic well-being.

$20.03

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More Information

Format: Paperback
Pages: 192
Publisher: Princeton University Press
Published: 26 Sep 2011
ISBN 10: 0691152551
ISBN 13: 9780691152554
Prizes: Runner-up for Association of American Publishers/Professional and Scholarly Publishing Awards: Economics 2010.

Media Reviews

George A. Akerlof, Co-Winner of the 2001 Nobel Prize in Economics One of Bloomberg News's (bloomberg.com/news) Top Thirty Business Books of the Year for 2010 Honorable Mention for the 2010 PROSE Award in Economics, Association of American Publishers Akerlof ... and Kranton ... explore the links between our identities and the everyday decisions we make about earning and spending money. Their goal is to add a more personal touch to economics. --New York Times There is no question monetary incentives are important--indeed critical--but it is important also to consider other meaningful ways to motivate and engage work forces. In a recent book by George Akerlof and Rachel Kranton, Identity Economics, the authors document how people in exceptional organizations work well because they identify with the values and the culture, not simply the financial rewards. --Al Gore and David Blood, Wall Street Journal [A]n important new book... Professor Akerlof and Rachel Kranton have invented Identity Economics. --Daniel Finkelstein, The Times Identity Economics is a popular account of work that will already be familiar to economists who have read the authors' journal articles. It is admirably short, written in a clear, nontechnical style but without the condescending breeziness of many books aimed at the airport market. Nonspecialist readers will find a lot of insightful and well-informed analysis of how issues of identity have an impact on real economic problems. --Robert Sugden, Science The authors make a compelling case that the group with which individuals identify shapes their decisions about schooling, work, savings, investment, and retirement. This paradigm offers better ways of understanding the consequences of public policies and business practices... Identity Economics provides a new language and a useful apparatus to take measure of 'real people in real situations.' --Barron's Business managers, economists, policy makers, and school administrators will all gain fresh insights into similar enigmas that confront them if they bear the book's message in mind: identity matters. --ForeWord [A] lucid look at how social considerations carry economic consequences... The authors use the word 'identity' as shorthand for the way people divide themselves into social groups, each of which--like high-school Jocks and Burnouts--has a sense of how to behave. --James Pressley, Bloomberg News The essence of the book is to place social contexts at the heart of an individual's decision-making. Tastes vary with social context, and concepts such as identity and norms influence the outcome. --Mint This is a completely new idea, which, in essence, says that one effect of being in an increasingly liberal and affluent society is that aspects of identity that previously didn't seem to matter much to economists are consciously influencing our behaviour. --Trevor Phillips, Prospect [Akerlof and Kranton] present the material in a very readable and entertaining way. Their findings are that economic behavior is governed by one's social category, by the norms of that social assignment, and by how one views one's identity in that social context. --Choice [B]y the end of the book, my overwhelming feeling was that the authors had made a pretty robust case for why our profession should pay greater attention to the social structures that underpin our economic decisions. For this, they should be highly commended. --Samuel Tombs, Business Economist Identity Economics provides the broader, better vision that we need. --New Economy The book provides a solid basis for a plethora of future research, especially in the field of behavioural economics... Identity economics is a step forward, progressing economic theory and understanding a little further along the path from Homo economicus to Homo sapiens. --David A. Savage, The Economic Record Akerlof is one of the most imaginative thinkers in neoclassical economics, and his earlier work on information economics essentially sparked off a revolution which dramatically changed the nature of the subject. Any work by him is worth pursuing. --Priyodorshi Banerjee, Economic & Political Weekly Identity Economics marks a very significant contribution to the ever-growing economic literature incorporating nonmonetary motives to explain behavior and as such it is highly recommended reading for social scientists. --Andreas P. Kyriacou, Public Choice This book is a must read for any social scientist whose interests lie in the intersection of economic analysis and real-world context and situations. While decidedly a trade book, the substantial list of references and strong foundations in the economics literature provide further reading for those who may be more mathematically inclined. Overall, the book was an interesting and informative read providing a framework for analysis not usually offered elsewhere. --Gabriel R. Serna, Journal of Economic Issues By demonstrating the ways identity and social norms guide economic behavior, Akerlof and Kranton present a powerful challenge to conventional economics--and our everyday assumptions about human behavior. --World Book Industry

Author Bio

George A. Akerlof, winner of the 2001 Nobel Prize in Economics, is the Koshland Professor of Economics at the University of California, Berkeley. He is the coauthor, with Robert Shiller, of Animal Spirits: How Human Psychology Drives the Economy , and Why It Matters for Global Capitalism (Princeton). Rachel E. Kranton is professor of economics at Duke University.