"Dysfunctional Identities" Can Be Rational

Understanding the nature and sources of human identity is an important objective in the study of a variety of social problems. Scholarly and popular writing on the cultural determinants of economic disadvantage underscores this point. Some analysts (e.g., Edward Banfield, 1970; Thomas Sowell, 1994; John McWhorter, 2000; John Ogbu, 2003) have hypothesized that a causal connection exists between the poor social performance of a group of people and their “culture. ” That disadvantaged people harbor “dysfunctional” notions about identity has been offered as an explanation of a group’s welfare dependency, or its low academic proficiency. It has been said, for instance, that people fare poorly because they focus overly much on their own victimization, or because they disassociate themselves from their more successful fellows, and so on. At the root of such cultural criticism lies the presumption that the disadvantaged should “reform” themselves: If those people would only see themselves differently, the critics hint, they could be so much better off. This mode of social explanation easily accommodates racial overtones. With the present paper we intend to raise serious doubts about such normative criticisms of the poor when applied to their conceptions of identity. We show that the identities adopted by a group of people can be perfectly consistent with rational individual choices, even though feasible alternative configurations may exist under which everyone would be better off. Indeed, we argue that identity choice by interactive agents with ongoing economic relations has a “tragedy of the commons” quality about it: the profile of dominant strategies for the agents can yield a Pareto-inferior collective outcome. Preaching “identity reform” to such people is a bit like trying to counter an overfishing problem by lecturing fishermen on the moral need for forbearance! We wish to be explicit and clear at the outset about what we have in mind when using the term “identity. ” Human identity includes both a personal and a social aspect. Social identity deals with how an individual is perceived and categorized by others (e.g., Erving Goffman, 1963). In contrast, personal identity, which is the subject of this paper, and which psychologists sometimes call “ego identity,” deals with a person’s answer to the question: “Who am I? ” Our proposed model of personal identity posits that, to answer this question, an agent must provide a “narrative” about her personal history. That is, she has to summarize her life experiences. Because a full personal history is (necessarily) a very complex object, and since their cognitive capacities are limited, answering the “Who Am I? ” question requires agents to project elaborate personal accounts onto manageable categories of self-description. We think of an agent’s identity as the mechanism she uses to convert complex personal history into a more simplified account of herself. A group’s “collective identity” is any self-representational mode of this sort which has been adopted in common by (most of) the agents in that group. We formalize the problem of selective selfrepresentation and use the resulting framework to study the efficiency implications of the “identity” choices people make. This, we believe, is one way that economic analysis can contribute to the study of identity-related issues.