I finally got around to reading “Identity Economics” by Akerlof and Kranton, a long-awaited addition to my reading list.

The central theme of the book is that our identities significantly shape our decisions.

Traditional economics often overlooks our personal identities, focusing instead on minimizing costs or maximizing profits.

While this is a simplification, it is quite close to reality.

Each of us is unique, as many acknowledge.

For instance, an unmarried vegan male might prefer working at certain firms and consuming specific products. Conversely, a married, highly educated mother may make choices reflecting her identity in her children’s education and her professional wardrobe.

This concept isn’t groundbreaking.

So, the big question is: how much are we aware of our identities, to the point where we understand how they influence us?

I bet, not much.

Of course, we can think it through and get answers: consider our subscriptions, the sports we practice (or do not), the work we do, and the things we like, and we can get a fairly accurate idea.

But how can we leverage this knowledge?

Knowing without acting is fine, but it does not help leave a footprint in our world.

Let’s see some examples.

We can better select the firms we want to work for. Even if company X seems super cool because they do what we like, if our values are not aligned, we will either have to cope (aiming to reduce our cognitive dissonance) or live with it until we quit or get fired. Personally, I believe that people are often terminated not just for their performance but because they do not conform to the ongoing rules.

Consumer marketing. Here, I have nothing to teach skilled marketers. Exploiting customer profiles, including their identity-driven biases, is well-known. However, sometimes I think the actions are right, but the premises are wrong. Are we sure the identity profiles we assume to be true are accurate? How much of those identities can we gauge? And how? There is a lot more to explore in terms of discrimination and privacy protection too.

Branding. This can also be interesting. Identity-based branding is known (see Pepsi People or Virgin Flights, and the list goes on). What about branding sustainable products made by the same holding company that sells unsustainable ones? Is this going to create cognitive dissonance in both the workforce and consumers? And if so, how can we get this right?

I am not sure there is one single solution to all, but this can be a very interesting tool to be skilled in.

I believe identity economics is another way to look at economics, and it is an untapped resource to push sustainable, re-done products. The next step is: how to do so?