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

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

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

Identity Economics: How Our Identities Shape Our Work, Wages, and 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.

Excerpt

Ann hopkins was hired in Price Waterhouse's Office of Government Services in 1978. By all accounts, she was hardworking and diligent. She retrieved from the discard pile a State Department request for proposals and masterminded it into a contract worth approximately $25 million. It was the largest consulting contract Price Waterhouse had ever secured, and her clients at the State Department raved about her work. in 1982 she was put up for partner, the lone woman among eighty-eight candidates. But the promotion did not go through.

What was deemed wrong with her performance? Colleagues complained about her deportment and the way she treated her staff. in their written comments on her promotion, the senior partners observed: “Needs a course in charm school,” “macho,” and “overcompensated for being a woman.” Her boss, who supported her, told her that if she wanted to make partner she should “walk more femininely, talk more femininely, dress more femininely, wear makeup and jewelry, and have her hair styled.”

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