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Identity Economics

Book Review Identity Economics Every person who engages in economic choices is in some way or another emulating the theories from Identity Economics. George Karaoke and Rachel Grantor, the authors of the book, delve deep into how people think they and others should behave, how society teaches them how to behave, how people are motivated by these views, and how to provide a rationale for certain economic choices that previously could not be explained.

The authors’ research provides a framework of decision making where social context matters and where a person’s identity is tantamount to pecuniary odds and non-pecuniary goods. By researching “real people and real situations,” Karaoke and Grantor create a new utility function for Modern day economics (Karaoke & Grantor, 8). The book Identity Economics, begins by establishing the criteria for their framework. The criterion it uses includes social status, societal norms, and a person’s identity, which gets coupled into the broader term of identity.

Karaoke and Grantor posit that this identity is molded by the social categories an individual finds himself or herself placed into, the ideal actions that a society dictates for an individual’s social categories, and the observations an individual sees and absorbs. Following the theory logically,

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that identity lays the foundation for how one behaves, decides, and thinks. Essentially, the social categories that an individual chooses or is born into and consequently the norms an individual follows, provides the foundation for his or her identity.

After the book discusses what constitutes an identity, it provides applications to the term. Karaoke and Grantor start off by specifying the standard component of someone’s utility: tastes for goods, services, or other economic outcomes, and then they incorporate the identity elements: social categories, the norms and ideals for each category, and the identity utility, which is the gain when actions conform to those norms and ideals. So, what the latter describes is a utility function based off what a person’s tastes and preferences are, and what identity that person has.

One real life example, Karaoke and Grantor utilize involves how women in the sass’s allowed societal norms to dissuade them from smoking cigarettes, even though the taste and utility derived from cigarettes would e equivalent for male and female. So in that particular example, through this societal norm, women smoked less than males. As time progressed and society became more accepting towards the idea of women smoking, consumption of cigarettes increased until women smoked as much as men.

The reason why this new utility function confirms the latter application is easily followed: dependent on how society thinks of one and how one thinks of herself or himself, one can find the actual consumption level, as opposed to Just ones tastes and preferences. The book then entities on to discuss why norms play such a heavy role in our behaviors. Karaoke and Grantor state it accurately when they indicated, “People have Individualistic tastes in their utility function, but norms also enter into it.

Individuals acquire some By Kevin-Langford These norms may be internalized through mechanisms of community approval and disapproval (Karaoke & Grantor, 22). ” This quote signifies why humans do not always behave according to the standard utility function. This is due to our desire to fit in with our communities, which pushes people toward certain behavior that would not respond to traditional economic thought. After the theory and functionality of Identity Economics is explained, the reader is shown the practical usage.

The first area that the authors seek to yield new conclusions in, based off this new utility function, involves the work setting. They illustrate how money is not the only factor that promotes better work ethic, by creating the “Boilerplate model” of work incentives. This model dictates that if a worker’s identity meshes with the organization, “an insider”, putting forth more effort at work will increase the workers identity utility function, and if the worker’s identity does not mesh with the organization, “an outsider”, the more effort they put forth at work will decrease the workers identity utility function.

This finding, which is confirmed through their research of organizational productivity, has broad implications on how to best increase productivity at work. The authors posit that instead of focusing on giving an individual a raise to get higher production, the company should focus on how to work with the individual’s goals and how to inculcate a worker into organizational culture. The second area they apply their research to is school.

Karaoke and Grantor use that exact same “Boilerplate model” to predict that based off the social category the student finds himself or herself in, they see different costs and benefits to their identity utility function for exerting effort in school. Accordingly, what this means is that when a student does not identify with the school and accept its authority, learning does not occur, which is confirmed by their detailed analysis. The third area they seek to apply this is gender.

Identity Economics, attributes much of the blame or female occupational segregation on Identity Utility, because females lose Identity utility when they work in a man’s Job and men lose utility when working with a female. Only after government intervention, title VI’, and a social movement did these discriminatory identity formations begin to change. The fourth and final area that the book examines is race. The curious aspect of race is that even after legal measures were taken, there still have been seemingly disastrous choices made by blacks.

The way identity economics fits is that blacks are considered the outsider, and when they align with the insider, whites, they lose their identity. So, when blacks choose a traditional white person’s life, they lose some of their identity utility, and since white people are the ones usually hiring, they will discriminate against blacks, because they don’t want outsiders in their organization. This unfortunately often mires blacks into a life of crime and poverty or a life as a proverbial uncle tom.

These new areas of research, exemplify the uniqueness of Identity Economics. The authors’ help convey a new train of economic thought that explains a significant amount about consumer behavior, and adds a new wrinkle to the foundation that economics is built on. Although I firmly agree that this research is solid and grounded in logical reason and science, it would be interesting to examine the last issue the book discusses: Race and Identity.

A few days ago, Barack Obama in his acceptance speech alluded to this very idea of Race and Identity: “We believe in a generous America, in a daughter who studies in our schools and pledges to our flag. To the young boy on the south side of Chicago who sees a life beyond the nearest street corner” (Obama, 2012). Identity to many black children on the south side can be defined as life of crime and poverty. In a study from 2010, 72% of African American Children are born to unmarried mothers while the national average is 25. 8% (Newswomen, 2011).

Combine these statistics with statistics that identify 85% of all youths in prison come from fatherless homes, 71% of all high school dropouts come from fatherless homes, and that 90% of all homeless and runaway children are from fatherless homes, and they tellingly reveal how the African American Identity has taken shape (Siva, 2010). So, hen we combine the theorems of Karaoke and Grantor and the above statistics, Identity Economics develops the rationale that there have always been different codes for blacks and whites.

These codes, evident in slavery and Jim Crow Laws, made an oppositional Identity for Blacks. This oppositional identity then is inserted into the “boilerplate model” Identity Economics focuses on. It starts off by identifying that there are Black and White workers, and when one includes social categories, norms and ideals, and losses in utility, their theory takes root. Since, whites are insider the dominant majority in American Society, they become insiders, and that leaves blacks as outsiders, who have to decide whether to integrate and submit to the insiders or remain an outsider.

Although it may not be rational under traditional economic theory for the Outsider to not engage in market labor for wages with the dominant party, Identity economics demonstrates that many Black “outsiders” reject the dominant party in order to maintain their unique, minority identity. So, either a black becomes the Uncle Tom “insider” and loses his or her Black identity or becomes an” Outsider” who does not get paid as much or does not work at all. This theory of Identity utility with blacks as outsiders and whites as insiders fits within actual economic patterns.

To extrapolate the theory with economic data, we observe that blacks do not have the ideals of a nuclear family and that staying in high school, a rational economic concept when one wants to maximize utility, is not considered “making it,” therefore a life of crime and poverty maybe the identity that blacks have taken in modern day society (Karaoke & Grantor, 104). As intuitive as the hero is, it becomes more intuitive, when you look at developmental psychology. It would not surprise many that not having a cohesive family unit can create a myriad of problems in economic pursuits.

Hence, when blacks have an outsider identity and a positive feedback cycle created by the lack of role models and a family unit, blacks really do get mired in the same undesirable path. To alleviate these horrible outcomes, Karaoke and Grantor state that one needs to address the root of the problem: Identity. They suggest 3 potential remedies: eliminate the distinction of lack and white in the insider ideal, change what it means to be black, and limit the feedback effects. The latter two solutions seem the most pragmatic in my mind.

By having a Black president, an outsider succeeding in an insider world, young black Americans can develop a new positive identity that they can make it in an insiders world, and if society invests in educational programs specifically in poor urban areas, society can mitigate the positive feedback cycle that has stifled the black population for so many years. Although the effectiveness of this solution will take years to be SE of the tools identified in Identity economics. All in all, Identity Economics can play an integral role in understanding human behavior moving forward.

It provides the world with tools and theories that are so intuitive and statistically conclusive in the areas it is applied to, that it is hard to deny the merit of Karaoke and Grantor’s work. Even with so little in-depth research, only 4 areas on the theory, the book mentions the possibilities and the current endeavors that are being utilized to substantiate many perplexing economic trends. These theories could be instrumental to understanding the concepts relayed to the class in ACE 476, including sexual divisions in the labor force and discrimination in the work place.

When one uses Identity Economics, one gets a logical explanation of the trends in the labor market for race and gender, as well as, explaining unequal pay between Men and Women. Hence, this revolutionary theory could provide more rationale to the material we are learning, and to the ever-changing family dynamics that are happening around the country. Works Cited Karaoke, George A. , and Rachel E. Grantor. Identity Economics: How Our Identities Shape Our Work, Wages, and Well-being. Princeton: Princeton UP, 2010. Print.

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