Economic Models of Identity Formation and Cultural Transmission

In this paper we survey recent advances in the economic theory of identity formation. We restrict our analysis to models which conceptualize identity formation as embedded into an inter-generational cultural transmission process, and therefore have implications for the dynamics of social identity. Through the lens of a general framework linking identity formation to cultural evolution, we discuss issues related to the dynamics of oppositional, racial, or minority attitudes, cultural polarization, identity switching, and openness to alternative identities. An application of the set-up to multidimensional identities constructed from combinations of characteristics, provides conditions under which societies converge (or not) toward narrow identities centered on salient markers such as religion, ethnicity, or race. We conclude by outlining promising avenues for future research.