Economics and Identity*

TLDR

This paper examines how a person's sense of identity influences economic outcomes. The authors embed identity into a utility function linked to social categories and use a simple game‑theoretic framework to analyze its effects on gender discrimination, poverty, and household labor. Including identity in these models substantially alters prior economic conclusions.

Abstract

This paper considers how identity, a person's sense of self, affects economic outcomes. We incorporate the psychology and sociology of identity into an economic model of behavior. In the utility function we propose, identity is associated with different social categories and how people in these categories should behave. We then construct a simple game-theoretic model showing how identity can affect individual interactions. The paper adapts these models to gender discrimination in the workplace, the economics of poverty and social exclusion, and the household division of labor. In each case, the inclusion of identity substantively changes conclusions of previous economic analysis.