Monday, May 17, 2010

Is Identity Economics in Economics the Equivalent of Liberalism or Constructivism in Political Science?

After reading Akerlof and Kranton's new article about identity economics, why do I seem to get the impression that the state of political science is more advanced than economics?
... But in most economic analysis, the decision makers’ point of view is quite narrow. It starts with what people like and don’t like. People may have a taste for oranges or bananas, or a preference for enjoying life today instead of saving for the future. They then decide what to buy or how much to save, given prevailing prices, interest rates, and their own income. Economists have included in such analysis that people interact with others, but they have largely treated such social interactions in a mechanical fashion, as if they were commodities.

...When we examine people’s decisions from the perspective of their identities and social norms, we get new answers to many different economic questions. Who people are and how they think of themselves is key to the decisions that they make. Their identities and norms are basic motivations. We call this approach identity economics.
They are basically saying that the majority of the economic discipline have treated preference as exogenous. This reminds me of two big debates in the field of international relation in the 90s. First, liberalism's challenge to realism. For example, Andrew Moravcsik's argument that realists tend to treat state preferences as exogenous and that we should instead look at national characteristics and how state preferences vary. Second, constructivism's challenge to rationalism. For example, Alexander Wendt's argument of how norms and identity shape the interests and behavior of actors. Or Peter Katzenstein's argument of how culture and identity affects national security.

To me, political science seems to be quicker to admit and face the weakness of rationalism and its assumptions.

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