Identity Economics: How Our Identities Shape Our Work, Wages, and Well-Being by George Akerlof, Rachel E. E. Kranton

Identity Economics: How Our Identities Shape Our Work, Wages, and Well-Being by George Akerlof is an exploration of how identity and psychology shape economics. Akerlof takes a unique approach to economics and examines the influence of psychology and identity on markets, wages, and well-being. He argues that economics cannot be understood properly without understanding the various individual identities and interactions within a society.

The central theme of Identity Economics is that understanding economics requires one to understand the social and psychological forces driving why people do what they do. People do not always act rationally as economists often assume. In the book, Akerlof provides evidence that identity plays an important role in economic decisions and actions. He examines how one's identity can influence wages, employment, educational achievement, and well-being.

The book begins by introducing the concept of identity economics. Akerlof argues that identities are formed through interactions with society and by comparing oneself to social norms. He also discusses how identity is shaped by status symbols and possessions. He presents evidence for how these identities shape economic choices and outcomes.

Next, Akerlof focuses on how our work is shaped by our identities. He examines the influence of gender roles and identity formation on the labor market. He argues that gender roles influence hiring decisions, wages, and promotions, and that these identity dynamics can lead to wage inequality. He also examines how the racial identity of workers affects wages and employment.

The next section of the book examines how identity affects educational achievement. Akerlof discusses the importance of social norms in influencing choices about education. He argues that identity shapes people's understanding of what an education can provide and can lead to different levels of educational attainment.

In the final chapter of Identity Economics, Akerlof examines the effect of identity on well-being. He discusses the link between identity and mental health, showing how identity can lead to feelings of inadequacy or low self-esteem. He also suggests that identity can be used to increase psychological and emotional resilience.

Akerlof's Identity Economics is an insightful examination of how identity and psychology shape economics. By showing how identity affects economic decisions and outcomes, the book helps to explain why people behave the way they do in the labor market and educational settings. It also helps readers to understand the link between identity and well-being. The book is an essential read for anyone interested in understanding the influence of identity on economics.