Nobel Prize-Winning Economist George Akerlof and Rachel Kranton Offer An Engaging Look At How Identity Matters in Economic Decisions in Their New Book IDENTITY ECONOMICS

PRINCETON, N.J., March 10 /PRNewswire-USNewswire/ -- 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.

People often make the choices that will define their lives—where to live, how many children to have, etc.—based on financial drawbacks and incentives. IDENTITY ECONOMICS: How Our Identities Shape Our Work, Wages, and Well-Being explores how our identities are shaped by our economic decisions and behavior. With this book, Akerlof & Kranton hope to take a giant step further on the path of behavioral economics. 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.

Fresh off his bestselling 2009 book Animal Spirits (new paperback edition out in March 2010), with Yale's Robert Shiller, Akerlof and co-author Kranton, push the limits of behavioral economics.  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.

"In the regular economic discourse of markets and taxes, we often forget about the forces that truly make a large difference in our lives. In IDENTITY ECONOMICS we sit on an economic porch with Rachel Kranton and George Akerlof, observing what we care about most—our identity."

— Dan Ariely, author of Predictably Irrational: The Hidden Forces That Shape Our Decisions

"This intriguing book shows how much can be learned when you add the tools of economics to the other intellectual resources now available for thinking about the power of identity. George Akerlof and Rachel Kranton report the results of technical modeling without immersing the reader in the technicalities. The result is an accessible work of commendable clarity."

— Kwame Anthony Appiah, author of The Ethics of Identity

"In IDENTITY ECONOMICS, George Akerlof and Rachel Kranton team up to bring people and their passions into economic analysis. Moving away from conventional accounts, they propose a bold paradigm to explain why and how identity and social norms shape economic decision making. With verve and insight, the book transforms standard economic understandings of organizations, schools, gender segregation, and racial discrimination. This new enlightened economics opens up a bright future for serious collaboration between economists and sociologists."

— Viviana A. Zelizer, author of The Purchase of Intimacy

About the Authors:

George A. Akerlof is the Koshland Professor of Economics at the University of California, Berkeley, and 2001 Nobel Laureate in Economics. He is the coauthor, with Robert Shiller, of Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism. Rachel E. Kranton is Professor of Economics at Duke University.

IDENTITY ECONOMICS

How Our Identities Shape Our Work, Wages, and Well-Being

George A. Akerlof and Rachel E. Kranton

Cloth $24.95 • Pounds Sterling 16.95 | ISBN: 978-0-691-14648-5

200 pp. | 6 x 9 | 2 halftones

Publication Date:   March 3, 2010

In North America:

Contact: Andrew DeSio

Phone: (609) 258-5165

Fax: (609) 258-1335

[email protected]

SOURCE Princeton University Press