Stratification economics represents an important new approach devoted to explaining economic inequality in terms of how social groups are separated or stratified along economic lines. This paper combines stratification economics with identity economics to address complications that the phenomenon of intersectionality – people having multiple social group identities – creates for stratification economics. It distinguishes two types of social identities recognized by social psychologists, categorical and relational social identities, and uses this distinction to explain how individuals’ personal identities, understood as ordered sets of social identities, can be seen to be both socially and self-constructed. Individuals order and rank their categorical social identities according to weights they assign to them in interactive social settings in which their role-based relational social identities combine different categorical social identities. Recent research in social psychology in the stigma identity threat literature is then reviewed to distinguish two different ways in which individuals respond to others’ stigmatization of their social groups in interactive settings. The paper argues that individuals respond to stigma by assigning weights to their categorical social group identities in ways that reflect both functional power relationships and stigmatization in a way that on balance tend to reinforce social stratification
