Working Paper: CEPR ID: DP11130
Authors: Dennis J. Snower; Steven J. Bosworth
Abstract: This paper seeks to extend the domain of identity economics by exploringmotivational foundations of in-group cooperation and out-groupcompetition. On this basis, we explore the reflexive interaction betweenindividual economic decisions and social identities in response to technologicalchange in market economies. Our analysis explores how technologicalchange falling on marketable goods and services, rather than nonmarketcaring relationships, leads to a restructuring of identities, whichincreases the scope of individualism and promotes positional competitionat the expense of caring activities. Since positional competition generatesnegative externalities while caring activities create positive ones, thesedevelopments have important welfare implications.
Keywords: motivation; reflexivity; cooperation; identity; technological progress
JEL Codes: A13; D03; D62; D71; I31; O10
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Technological change affecting marketable goods (O33) | Restructuring of social identities (Z13) |
| Restructuring of social identities (Z13) | Increase in individualism (F61) |
| Increase in individualism (F61) | Promotion of positional competition (J62) |
| Promotion of positional competition (J62) | Diminishing of caring activities (D13) |
| Positional competition (C73) | Negative externalities (D62) |
| Caring activities (I11) | Positive externalities (D62) |
| Increase in individualism (F61) | Smaller ingroups (C92) |
| Smaller ingroups (C92) | Greater emphasis on positional competition (Z29) |
| Greater emphasis on positional competition (Z29) | Deterioration of caring relationships (J12) |
| Deterioration of caring relationships (J12) | Loss of welfare (I38) |
| Increase in positional competition (J62) | Cascade of social demotions (J62) |
| Cascade of social demotions (J62) | Envy and pride based on relative positions (D63) |