Identity was introduced in economics by the work of George Akerlof and Rachel Kranton between 2000 & 2010
It is the answer of the question "Who am I?" (and yes, multiple answers are valid)
Psychologists distinguish between self-identity and social-identity
Social Identity: when people answer the identity question with reference to their attachment or belongingness to a social group whose values they share
People operate with a strong sense of "us" and "them" (preclusion due to inclusion into any of the groups)
Closely related to Maslow's view that people have a need for social belonging
May also relate to need for esteem. Esteem of others affect our self-worth
So, much of economic behavior in the end is for identity management.
Shrum et al (2013): Materialism: construction and maintenance of the self through acquisition of products, services, experiences, relationships that have a perceived desirable symbolic value.
"How do I look?" / "How do I want society to perceive me?"
If my hair is thinning, I will spend more on products that will save my hair...
Economic behavior
Identity is closely bound with the ways: "Are my clothes outdated?"
we feel motivated to behave in relation to changing fashions
we set out to acquire things that will enhance social-status
Fashion and Economic Behavior
Core of conventional thinking: We want to be in equilibrium
Notion is challenged by Caroline Foley, who questioned this static utility theory. Argued that fashion swings are driven by
Love of distinction (look different from others)
Imitation (followers will imitate their leaders, good thing: they rise up while doing so... bad thing: they imitate the immaterial things)
Desire after equalization - desire for conformity (catch up with other people, avoid folo)
Expression of social conciousness
Social Norms and fashion
Conspicuous consumption (act of buying costly stuff to demo wealth)
The rich have never been content. History reveals that they engage in vigorous competition to live more lavishly than others.
This pursuit of the rich has spillover effects:
The production to meet the desires of the rich will lead to generating employment for the poor
The rich wish to stay updated and thus they will replace current things with new and novel things. Those current things will be given away sometimes at lower prices or for free in charity, and the poorer sections of the society will be able to afford even luxury items. Lavish lifestyles trickle down...
Status and Conspicuous Competition
Vicarious consumption & leisure
The household head gets pleasure, not merely by a leisurely lifestyle for ourselves but by seeing our family members being able to consume similar high quality goods.
1930 The Economic Possibilities for our Grandchildren - J M Keynes... technological improvement will make us on average eight times better off and we would require to work only 15 hours a week to satisfy our economic needs.
We hear prescription of 70 hour working weeks...
Middle class is characterized by dual-income (both husband and wife earning) to remain upwardly mobile, non-decreasing in the social ladder
Ha-Joon Chang (2010) argues that washing machine (that helped both of them to go to work) was a more significant invention than the internet
Importance of Fashion Cycles & Status-drive Consumption
Fashion not just for novelty
If everyone in the society knew their place and didn't try to compare and differentiate themselves, then there would be very few inceptives to innovate (other than external threats or population pressures - "I must survive")
Initially new knowledge to generate profit from fashion may only benefit the rich/high-status individuals. But the effects would trickle down to the lowest levels of the society, through obsolesce & secondhand usage.
Fashion Cycles & Consumer Behavior
5-state cycle:
Introduction
Rise
Peak
Decline
Obsolescence (becoming obsolete)
Fast fashion accelerate Fashion cycles (Shien drops 6000 new daily items and exploit consumers' FOMO)
Case Study: Shien's 2-week production cycle vs Zara's 3-week cycle
Zara: 25 days
Shien: 11 (design) + 12-21 (garment production)... 29 days delivered to consumers
Acquire a new possession lead to a spiral of consumtion
Received a new dressing gown... kept it in his wardrobe... the old garments looked very dull in comparison to the this new gown.. So replace them with new one (a spiral)
Escalation in the expenses. "Regrets on Parting with My Old Dressing Gown"
iPhone -> Airpods -> Macbook ecosystem.
Shirt -> New jacket, trousers, shoes to match...
Trip -> Purchase new clothes, handbags and trolleybags
Mechanism: Cognitive dissonance from mismatched possessions / human motivation to achieve consistent standards
e.g. Amazon's "Frequently bought together" - Algorithms Diderot's enablers - They sell cascading effects
e.g. Apple's ecosystem
Several discarded pocessions cannot be reused - Environmental effect
Means-End
MECs (Means-end chains) is a cognitive model
connect tangible attributes ("means")
to abstract, intangible personal and emotional values ("ends")
Consumers translate product into personal meaning and motivations. Attribute -> consequence -> value
e.g. eco-friendly packaging -> environmental protection -> social responsibility (we can uncover hidden motivations). We would perceive them as socially responsible and like to associate ourselves with those companies.
Techniques for Uncovering Means-End Chains
George Kelly's ==Repertory Grid Technique (RGT)==
Coax people to reveal their personal repertoires of constructs (dimension they use when characterizing phenomena)
these may change with time
may trigger with recent incidents
e.g. If I had a bad experience with a dysfunctional brake then I will mention good brakes as a necessary requirement for a car
Dennis Hinkle's several extensions to RGT. One of them construct laddering
Specify area of interest (mobile phones)
List around 10 alternatives (called elements) in this area
including previous available
those you wish to be available
Consider 3 elements and talk about similarities and differences between them (attribute called constructs)
e.g. Give them combinations of 3 elements at a time and ask them questions till they don't have anything else to say. Demo:
Element 1, 2, 3
1, 2, 4
1, 2, 5... so on till all combinations are exhausted
This forms the repertoire of constructs
Then we construct the repertory grid (axes: elements, constructs)
Then, focus on one construct and tell which pole of the construct is preferred
These poles will be used to generate further constructs... Like no camera => Lesser time spent with phone
This is the construct laddering technique
Though, this actually should look like an inverted tree.
Though, this actually should look like an inverted tree.