Identity Economics

A New Model

Traditional economic studies describe people’s actions with academic theories and number-crunching garnishments based on salaries and consumption patterns. In contrast, identity-based models add new elements to the financial mix by examining race, gender and other social factors that shape personal and professional decisions. That interplay among economics, identity and social behavior sets the scene for “identity economics.” How does this concept work?

Consider the career of Ann Hopkins. As an employee in an accounting firm’s Washington, DC, government services unit during the late 1970s, Hopkins had a solid reputation. She gained clout by locking down a $25 million contract from the US State Department. That deal broke the firm’s record for consulting contracts, and the federal client was pleased with her work. Hopkins earned a spot on the partner track, but the firm did not promote her. During the partner review process, her co-workers labeled her abrasive and manly. Critics griped about her management style. Some even urged her to take lessons in feminine charm, with special attention to beauty and styling.

Turning to the Civil Rights Act’s Title...