Identity Economics

George Akerlof and Rachel Kranton have a new book that proposes to add identity and norms to the economic representation of tastes.  Current economic thinking views tastes as a characteristic of the individual, but they suggest that identity derives from the social setting.  “The incorporation of identity and norms then yields a theory of decision making where social context matters.”  Most significantly for the context of my current work, Akerlof and Kranton note that we can observe these “categories, norms and ideals” in narrative – in how individuals talk about their lives.