Arnold Kling  

George Akerlof and Rachel Kranton

Murphy's Catch-Up Contradictio... Wage Freeze for Government Wor...

Their new book is called Identity Economics, and they think it's a pretty big deal.On p. 114:

we can explain a large number of phenomena, including the nature of African-American poverty, the reasons why students drop out of school, the role of the Women's Movement, and why organizations work.

If only.

Identity economics means that people do things because they believe they are supposed to, based on group affiliation. I believe that this is true.

But if African-American poverty comes from being trapped in an identity as outsiders, then we also have an explanation for the intractable poverty of the descendants of Yiddish-speaking Jewish Americans. And I'm not sure what empirical phenomenon is meant by "the role of the Women's Movement." At one point, the authors cite increased smoking among women in the 1970's. But as with other gender-related phenomena, such as labor force participation, I suspect a graph from, say, 1910 through 1990 would look more like a smooth trend and less like a regime change around 1970.

One more excerpt, from p. 125:

Politics, too, is often a battle over identity...Some of the most dramatic examples of regime change involve changes in norms regarding who is an insider and who is an outsider...The French Revolution changed subjects into citizens. The Russian Revolution turned them into comrades.

The first sentence in that paragraph could have been written by a Masonomist. The last sentence could not.

Identity does matter. Robin Hanson would tell you that group identity matters because of the way it affects our sense of status. When our team wins, we perceive that as a gain in our status.

[My prediction would be that if Scott Brown wins in Massachusetts, Democrats are not going to react by recalculating the political situation. Instead, they will take offense at the loss of status. The election may have little or no effect on health care legislation, but it could affect the Democrats' mood on other issues (will they be feeling less generous toward Haiti? More eager to punish bank shareholders and CEO's?)]

Since Adam Smith, economists have noted "self-regard" as a motive for people. Nowadays, Hanson and others use "status" in place of "self-regard." I think that if you focus on status, and if you take into account the fact that people derive feelings of status from group affiliation, you will get whatever insights Akerlof and Kranton can provide by talking about identity.

I think that Akerlof is one of the most valuable, creative economists around. For me, his ideas have a high mean and a high variance. Unfortunately, Identity Economics mostly served to increase my estimate of the latter.

COMMENTS (6 to date)
E. Barandiaran writes:

I'll leave my comment on Akerloff and the book for another time. Just to point out that the ongoing looting in Massachusetts provides another signal that your country is consolidating its position as the great leader of the Banana Republic Club. Too many deads are voting today.

Ramon writes:

Did the author mentioned the BIG elephant in the room?

We all know what it is.

agnostic writes:

You mean IQ? Of course not -- as Arnold hints, it destroys the silly explanation of black poverty because of Ashkenazi Jews and Northeast Asians living destitute and marginalized lives in America. And they were vilified too -- the Japanese were even sent to internment camps -- but strangely they failed to reflexively conform to society's expectations of them.

ed writes:

I haven't read the book. But isn't it possible that feelings of "group identity" are an important part of the story of both black under-achievement AND Jewish over-achievement? (And even perhaps black over-achievement in some realms like music and sports?)

Steve Miller writes:

"The French Revolution changed subjects into citizens. The Russian Revolution turned them into comrades."

Someone please help me in my effort to read these lines charitably. Right now it seems that the authors (and I also respect George Akerlof) are saying, "Whatever may have been wrong with the Bolshevik Revolution, it was a force of positive social change because it offered an inclusive group identity."

Maybe I was a Kulak in a past life, because that sentiment makes me want to throw up.

Loof writes:

Identity, group and status counts –and suppose love of identity, group and status can count absolutely with identity economics: the economics of sheep, who don’t understand goats. For sure, since Smith, economists have noted "self-regard" as a motive for people –but it appears mostly nowadays in regard to sheepish, selfish and narcisstic behavior: love of one's reflection, status, in a group. Indeed, the identity and reflection that egotistically and selfishly aligns personalism, corporatism or collectivism and nationism in an absolute social ideal –and Hegelian, Left (socialist) and Right (statist) – but not with Masonomians, who centrally appear to identify with corporatism, sans statism. Nontheless mainstream economics is sheep economics adding up losses of personal identiy in self-regard.

Identity group economics, left or right or centre, is categorically different than “self-regard” identification of the person in themselves: the esteem of self-love relative to one’s own interest that, ilo, includes others interest minimally to the point of fairness in free markets, though not “the benevolence [a generous gift] of the butcher the brewer, or the baker that we expect our dinner.”

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