Towards Better Economic Models of Social Behaviour? Identity Economics

Abstract

In recent years, a growing literature emerged studying the role of identity in economics. Yet, mainstream economists and other social scientists still eye identity economics with suspicion. This article illustrates the underlying assumptions of identity economics, gaps in the literature, as well as existing tools and research in other domains of economic theory that help to close these gaps, while demonstrating that identity economics is able to provide sophisticated approaches and additional findings that support transdisciplinary research on the topic. In order to demonstrate how these tools can be used to study the complex social systems in which identity, preferences, and institutions co‐evolve, I develop a number of simple analytical models and elaborate on their implications, while keeping technicalities to a minimum. In addition, I show how findings in behavioural economics apply to identity economics and prove insightful for our understanding of the complex interdependencies between identity and group formation.

Mass Atrocities and Their Prevention

“…In words, identity is the outcome of one's own and others' actions, of course, but also-and importantly-of "assigned social categories c j " (Akerlof and Kranton, 2000, p. 719). Since social status inheres in social 23 Identity groups can also be formed by forcible inclusion, in which attempted internalization of collective benefits into individual's preferences may go awry and, in time, pose a threat to the cohesion of the identity group (Ille, 2017a). categories, "a person assigned a category with higher social status may enjoy an enhanced selfimage" (p. 719) and consequently a higher level of utility.…”

On Revolutionary Waves and the Dynamics of Landslides

“…Consequently, ABM simulates the strategic interaction of members within a large population to study the aggregate dynamics at the system level. ABM has frequently been used by social scientists to understand questions related to coordination, organization, and cooperation better (for examples, see Axelrod 1997;Bonabeau 2002;Ille 2017;Tesfatsion and Judd 2006).…”