Changing Identity: The Emergence of Social Groups

The original Homo Economicus has progressed from an atomistic and self-interested individual to a socially embedded agent in modern economics. In particular, social interaction models suggest that the individual’s own utility of undertaking an action may be influenced by the number of peers taking this same action. Hence, people gain by conforming to, or differentiating their behaviour from that of others. A number of papers have also suggested why people want to conform. In particular, Akerlof and Kranton (2000, 2002, 2005) suggest that people belong to certain groups and wish to adopt the corresponding social identity by behaving according to the behavioural prescriptions of these groups. In this paper, we present a social interaction model that is based on a different account of identity. The concept of identity used here is on a more personal level and suggests that people have desired self-images of themselves that they wish to attain at some time in the future. Hence, individuals aim to transform their current individual characteristics into those of their self-image. They try to achieve this by joining social groups and adopting the typical characteristics of these groups. However, groups will be modified over time by the people joining them. This may induce individuals to revise their previous choices and eventually to move on and to choose different groups. The model thus presents an endogeneous interaction structure and offers an account of endogenous group formation as well as an endogenous evolution of personal identity. We further study in what sense and under what conditions the dynamics at the individual and at the social level will reach an “equilibrium” and what the nature of such an equilibrium is.Economic agent, social interaction, conformity, personal identity, self-image, change

Is There Personal Identity in Economics?

John B. Davis explores the question of what the economic individual is. He bases his considerations of orthodox economics on the assumption that these theories implicitly rely on a conception of the individual that has its origin in Locke’s idea of the self as subjective inwardness. Economic history then is the attempt to deal with Locke’s inherent problems that this view involved. If neoclassical economics still has aspects of human psychology, mainstream economics dropped the subjective concept of the individual out of their considerations. However, Davis demonstrates that even the neoclassical concept of the individual fails to pass the existence test of individual identity. The latter is an idea developed in analogy to philosophers’ concern about personal identity and examines if the individual can be distinguished among different individuals and if he or she can be reidentified as the selfsame individual through time. The failure of the theory of the individual in orthodox economics led Davis to develop a concept of a socially embedded individual in accordance with heterodox accounts of economics. He submits this conception to the same test of individual identity. It appears that the socially embedded individual can be said to hold an identity in specific circumstances.John B. Davis traite, dans son livre, la question suivante: qu’est-ce que c'est l'agent économique. Il base l'ensemble de ses considérations sur une vision de l'économie orthodoxe qui fonde implicitement ses théories sur une conception de l'individu ayant ses origines dans le concept de Locke du "soi" vu comme une intimité subjective. Les développements de l'économie orthodoxe consistent ensuite en une tentative de traiter des problèmes inhérents à cette conception de l'individu. Si l'économie néo-classique a toujours espéré intégrer la psychologie humaine, l'économie contemporaine a écarté la subjectivité de ses considérations. Davis démontre cependant que même la conception néoclassique de l'individu échoue au test d'existence d'identité de l'individu. Ce test d'existence est développé en analogie avec les investigations des philosophes sur l'identité personnelle et s'interroge simultanément sur la possibilité de distinguer un individu parmi d'autres individus et de le ré-identifier comme un seul et même individu dans le temps. L'échec de la théorie de l'individu utilisée par l'économie orthodoxe à réussir un tel test d'existence conduit Davis à considérer l'individu comme inclu dans le social et ce, en accord avec les propositions de l'économie hétérodoxe. Il soumet ensuite cette conceptualisation au même test d'existence. Il apparaît que l'individu inclu dans le social peut être considéré comme doté d'une identité dans certaines circonstances

Conflicts in Decision Making

OSInternational audienceFollowing Nick Baigent’s argument that one must go “behind the veil of preference” (Baigent, Jpn Econ Rev 46(1):88–101, 1995) to be able to develop a satisfactory theory of rational behaviour, we propose to analyse potential intrapersonal conflicts caused by different reasons, goals or motivations to choose one option over another, which may make the development of a coherent preference impossible. We do this by presenting an extensive, but certainly not exhaustive overview of psychological research on intrapersonal conflict, its influence on preference reversal (and hence on incoherent behaviour), on psychological well-being and on motivational and behavioural changes over time. We then briefly describe our own theory of choice under conflicting motivations (Arlegi and Teschl, Working Papers of the Department of Economics DT 1208, Public University of Navarre, 2012), which is a first attempt at putting psychological insights into intrapersonal conflict into an axiomatic economic context

Effort and Redistribution: Is More than Value Judgement Involved?

OSInternational audienceThe log-normal distribution is convenient for modelling the income distribution, and it offers an analytical expression for most inequality indices that depends only on the shape parameter of the associated Lorenz curve. A decomposable inequality index can be implemented in the framework of a finite mixture of log-normal distributions so that overall inequality can be composed into within-subgroup components. Using a Bayesian approach and a Gibbs sampler, a Rao-Blackwellization can improve inference results on decomposable income inequality indices. The very nature of the economic question can provide prior information so as to distinguish between the income groups and construct an asymmetric prior density which can reduce label switching. Data from the UK Family Expenditure Survey (FES) (1979 to 1996) are used in an extended empirical application

Pareto rationalizability by two single-peaked preferences

Business & Economics - Mathematics - Mathematical Methods In Social SciencesInternational audienceWe study, in a finite setting, the problem of Pareto rationalizability of choice functions by means of a preference profile that is single-peaked with respect to an exogenously given linear order over the alternatives. This problem requires a new condition to be added to those that characterize Pareto rationalizability in the general domain of orders (Moulin (1985)). This new condition appeals to the existence of a central range of options such that the choice function excludes alternatives which are distant from that range

Adaptive Preferences and Capabilities: Some Preliminary Conceptual Explorations

The Capability Approach (CA) as developed by Amartya Sen and Martha Nussbaum, has in part been a response to the problem of adaptive preferences. Their argument says that people might adapt to certain unfavorable circumstances and any self-evaluation in terms of satisfaction or happiness will in this case necessarily be distorted. To evaluate people's well-being in terms of functionings and capabilities guarantees a more objective picture of people's life. Next to this strong criticism on subjective measurements of well-being, we observe an increasing interest in Subjective Well-Being (SWB) or Happiness studies that are included in the broader field of Hedonic Psychology. In this paper, we thus revise the original critique of adaptive preferences and compare it with a more detailed analysis of adaptation as it is presented in hedonic psychology. It becomes clear that adaptation can be a positive as well as a negative phenomenon and that the adaptive preference critique had a particular narrow view on adaptation. However, this does not mean SWB-research is not any longer susceptible to this critique. An alternative way to assess people's subjective well-being, but which could be considered to be more in line with the CA, is proposed by Daniel Kahneman's Objective Happiness. These are all relatively new considerations, especially in economics. Therefore much more research needs to be done on the positive and negative aspects of adaptation to understand its consequences on well-being - especially when evaluated within the capability-space.functionings, capabilities, adaptation, subjective well-being, objective happiness,