NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Economics of Identity and the Endogeneity of Race

Howard Bodenhorn, Christopher S. Ruebeck

NBER Working Paper No. 9962
Issued in September 2003
NBER Program(s):   DAE

Economic and social theorists have modeled race and ethnicity as a form of personal identity produced in recognition of the costliness of adopting and maintaining a specific identity. These models of racial and ethnic identity recognize that race and ethnicity is potentially endogenous because racial and ethnic identities are fluid. We look at the free African-American population in the mid-nineteenth century to investigate the costs and benefits of adopting alternative racial identities. We model the choice as an extensive-form game, where whites choose to accept or reject a separate mulatto identity and mixed race individuals then choose whether or not to adopt that mulatto identity. Adopting a mulatto identity generates pecuniary gains, but imposes psychic costs. Our empirical results imply that race is contextual and that there was a large pecuniary benefit to adopting a mixed-race identity.

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Document Object Identifier (DOI): 10.3386/w9962

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