on a Sierra Mist Cuusoo hey everybody community more good afternoon I apologize for being late I come from Rome I'm Tobias builder and I work for the Frankfurt Ally my name's item German newspapers it's my pleasure to introduce professor Rachel Grantham who's going to talk about a fundamental top their craft for this conference whose title is identity and global crisis and professor Quentin works on this topic how can we reconcile economics with people's identities and different settings while in the traditional theory we tend to focus on labor on money on machinery what Professor Cranston is also studying what we need beyond these raw factors and elements so it is my pleasure to give her the floor and then we'll have a Q&A session thank you ok thanks very much very very pleased to be here this is all this is working well now so I'm going to be speaking today the title is beyond money and markets social identity and the economy and the first thing I'd like to say is that this is a report on joint work with George Akerlof who is there in the front row this is work that George and I have been doing together for quite some time now and it's work that we're very excited about and we're hoping that we are changing and helping to change the way economists think about the patterns about economic patterns so you might say to yourselves identity and economics what could that possibly be about so what are all the economists talking about if you look at the titles of the conference they might seem a bit unusual so we have things about personality and European identity so why are we talking about identity and not only Price's wages investments interest rates regulation infamy the set of typical variables that economists usually discuss well that's because we are working on a new economics George and I and collectively a group of economists are trying to work on a new economics with a new way of understanding patterns in the economy so we're going beyond money and beyond markets to see different motivations for people's decisions so we're looking at how people think about themselves and their goals in life so we want to understand people as social beings as they have motivations for themselves and for their families and we're particularly interested in how social norms and social divisions shape not only individual decisions but growth in inequality so we're going to see that people may make decisions based on who they are and who they think they are but there's also structures within society which in some sense tell people who they are or restrict who people can be and that has implications for economic growth and particularly for inequality so again what we're trying to do is to bring basic insights about people as social beings into economics so what we have is not identity and economics with a question mark but identity and economics with an exclamation mark so we're trying to we're reporting on what we think is an exciting work where people are social beings and also people who make economic decisions so let's take a first look about at what we're trying to do so take a look at this phrase this is a common phrase and English I don't know if there's an equivalent in Italian it says every man has his price so what does this mean what could this possibly mean this phrase well it indicates that there's some sort of integrity and norms so a person has some notion of an integrity about how he should behave but there could be a trade-off there's a trade-off between who this person is and their ideals and potentially a monetary reward for giving up on those ideals so here we're beginning to see that there's notions of norms for appropriate behavior but potentially a trade-off between those kind of norms or motivations for feeling of your pride in yourself and monetary typical economic kinds of incentives so it's these sorts of trade-offs and interactions that we explore this is a very basic one that's why I began with it but we're going to expand on this theme because the prices that we observe and here I don't you'd only think about prices of apples and oranges but wages interest rates and generally the types of exchanges that people the types of deals that people make can depend on social norms and identity and what is considered to be acceptable and not for different people and different types of people okay so let's get a little bit deeper into what we mean by identity so what do we mean by identity this word has many meanings in many many different contexts and part of the research that we've been engaged in is to find a notion of identity that's precise enough to be brought into economic analysis so we've been thinking for quite a long time about a simple meaning that can help us bring identity into not into economics so we think of identity as a social designation like man woman black white child adult and what's important about these designations is there not just simply a description but they go along with certain norms for behavior so let's go back to that phrase I had before every man has his price so if you think about it a bit it says every man has his price if it said every woman has her price that would immediately conjure up in your mind a different notion of norms for appropriate and inappropriate behavior and what might be exchanged so immediately seeing that there is something about being a man which leads to certain kind which indicates a certain set of appropriate behavior and a woman who teaches certain other kinds of appropriate behavior and we can then again gender or man women differences are the most obvious ones but we're going to expand on that quite a bit so I mean just again allowed right here so I think we can all think of a long list of things that men if we think of men should and should not do and I would bet that the list I have for American men might be different than the list you might have for Italian men some of the things on the list might be the same some of the things on the list might be different which indicates that this list might be different in different times and in different places and about the different times the list that all of us now have in our minds is different that list today is different than the list it was 40 years ago so these notions of norms and appropriate and inappropriate behavior is something that can differ across time and across place so these identity and norms derived from and are produced by people in society and that is itself part of the economic process both influences and is influenced by economic exchange okay so to get a better sense of this notion of social designations norms and society what I'd like to do is invite you to take a trip to a place that's very far away from here it's to the United States Terry Academy at West Point which is on the banks of the Hudson River in New York State and this is where 17 and 18 year old men and women are trained to become officers in the United States Army so this is a military academy it's a university they go in there 17 and 18 that come out when they're 21 or 22 as officers in the US Army so let's take a look at their very first day so their parents dropped them off so the parents bring them up to West Point and they've gotta drop them off and let them go so let's look at our day our day is the name of this very first day so what is the first day at West Point like the new cadets so there's a name for these people they're called cadets they arrive their hair is cut they put on uniforms and when the very first things they have to do is report to senior cadets and they have to stand salute and repeat new sir new cadet dough so dough is just the marker for their name you knew cadet Granton reports to the cadet in the red sash for the first time as ordered and they have to do this until they get it exactly right exact words exact salute so here are some pictures excuse me here are some pictures of this salute this is from the our day website so you see here the new cadets they're the ones who are doing the saluting and you see the officers in the red sashes it's around their waists and here this is just three of many examples but I did pick out the one in the middle for a particular reason okay take a look at the one in the middle do you see something interesting up in that picture okay so okay y'all got it there's a very tall white man probably about a half a meter taller than the Asian woman but he is saluting her she's the cadet in the red sash so I'm to return to that in a second so what's going on here and we really want besides these are nervous these are 17 year olds 18 have just arrived they're nervous and if they don't get it exactly right they're reprimanded and they're only allowed responses are yes sir no sir no excuse sir sir I don't understand they're only allowed to say those words so what is the army trying to do what is our day all about why the dramatic haircut the new moniker is the scripted speech the red sash the ritual the army itself this is not what you know I'm saying it's what the army says about our day it's aiming to change recruits view of themselves to transform themselves from civilians to military cadets so what they're supposed to do is leave the civilian world behind them and the social understandings of the civilian world behind and they're entering a new social world with its rules and norms and in that world a very tall white man must obey the orders of a short asian woman and they're all dedicated to the same mission and that mission is to think of themselves as officers in the United States Army and are dedicated to the values of duty honor and country so again this is alright from the US military Academy's website so our day is as you've probably recognized an initiation rite it's the beginning of four year change in identity and norms and initiation rites and rites of passage are common all over the world it's not just a military experience and there are the markers in society of a new person people go through these rites they come out as a new person with new responsibilities and expectations so I've gone to the extreme of the military academy but we see these kinds of social designations everywhere not only the distinction between the civilian and the military or the obvious distinctions of gender or in the American context race we also see these differentiations among students workers and management CEOs and so on and I'll return to some of these examples later and indeed some of these social designations and differences are so much a part of human society that we don't even notice them but if we just go around in our daily lives and that's our world until they're pointed out to us as perhaps I've been doing because once we point them out it becomes really obvious so it's evident in the clothes we wear the way we cut our hair the style of the speech the accents the slang and the stereotypes we hold so now you might be wondering well but where's all the economics so the economics is in bringing together prices and decision making with this view of human behavior and to do so we take a typical economic analysis and add three ingredients one is the social designations and the categories and people's assignment to these categories - it would be the norms for behavior which correspond to these designations and three would be the losses or gains in pride sense of self not only to myself but to others if the norms are not followed and I should emphasize that these ingredients that we that we use in our in our studies come not from our imagination but they come from researchers who are very skilled at observing social settings for example the person who spent four years at West Point and follow these recruits through their academic program so these are anthropologists historians sociologists political scientists and so on so once we add these ingredients we can see that identity immediately affects economic decisions so for example if I think of myself as a woman I may act in ways appropriate to being a woman even when those actions reduce my income so here again is one of these trade-offs furthermore I may be offended by others actions so other women or other men who violate norms for behavior and may get very upset if somebody's not acting the way they should and in that case I may not want to be with that person I might distance myself from that person or otherwise act against them even when those actions are also reducing my income so these are just again an outline of the waves we see these trade-offs between the social norms and the sense of self or pride and an income and typical economic decisions okay so again what are the three ingredients social designations norms for behavior corresponding to designations and the losses in Pride to self and others if the norms are not followed now we can think about these this type of analysis in two ways we can think about it first what we call the short run in the short run none of these three ingredients change so I'm just interacting in my world my designation is given to me so I am Who I am the norms are fixed okay so the appropriate and inappropriate behavior for people within society are fixed and the social designations and the categories are also fixed so we have certain notions of who people are in society however in the long run okay that's the phrase we use for thinking about as time passes it is also true that people can change the social designation and norms people may choose who they want to be so what is an example of that I may decide to emigrate okay I may decide to pursue a different kind of education okay I may choose and here choosing for somebody else I may choose a school for my children a particular way of bringing up my children so there are choices that can be made about who people are it is also possible that the norms themselves change so they may change there there are people out there and again I'm sure you're gonna start thinking about examples of this who might want to change norms for profit if you can induce people to think that it's appropriate to do certain things then including buying your product then there will be people who will have an incentive to change the norms and also certainly for political advantage again and in in a study of politics and we've also seen that there are changes in social designations in the categories themselves so we have evolving notions of for example citizenship in Europe so we just have we're going to have we've had talks about is there a European identity that's a whole new designation in a whole new category these can come about by people who are acting in a very conscious way it can also be part of social revolutions to change the way people think so if you think about the great revolutions in society so to speak of the French Revolution right people became citizens so these can there can be great social transformations that change the social designations in the categories themselves so I went to argue that since identity is fundamental behavior in the long run the choice of identity may in the end be the most important economic decision people make since who you are is going to affect every decision you make then that primary decision or that primary choice that's been made for you might be the most important decision to make but it is incredibly important to remember that this choice can be severely limited there are structures in society which will limit people's choice so these designations in these categories that I'm describing are associated with particular characteristics so say particular skin color particular family background particularly hair color so for example in the United States at least when you think if I were to ask you and probably here in Italy as well if I were to ask you to imagine the boss of a firm what are you gonna start to picture you know picture somebody from a particular social background okay so somebody who might look like that okay so some okay so you get you get the point it's it's an older person a man white okay so you get the image you're going to come up with these two of course these things are changing is might be this image and so if you were trying to achieve to be a manager and you don't look like this this might not be something that you could ultimately achieve so in the military traditionally officers so the people who went to West Point were literally gentlemen okay in that classic sense which of course relates to ethnicity and so it's quite interesting that there's an artifact of this this was until the 1950s where the u.s. Uniform Code of Military Justice article 133 was concerning concerning somebody an officer who was not acting as he should and the literal phrasing was conduct unbecoming an officer and gentleman so there's an historical artifact of the social structures which were or the social classes which were leading to officers of course the United States military is very different today but again that's part of what this of the story here is that these things can change and why do they change now this might be tough to see but I thought this was a great this is a book about the British imperial Empire and where they recruited where they recruited their officers you can see they're the Scots and there's particular groups in India as well so again just to say that there's there's these notions that particular people you know particular designations will look like somebody that come from a particular background so birthplace accent skin color low wealth can all limit choice so therefore the constraints or an identity choice can be one of the most important determinant of a person's economic well-being and similarly societal changes in these designation and norms can fundamentally alter the distribution of income and wealth okay so the basic message here is if you take regular economics and you add identity to it you're going to get some new insights so what I'd like to do here is go three examples the first example in his example of smoking the second example is an example of wage as unemployment and the third example is education and schooling and I should emphasize these are micro economic examples so I'm literally going to talk about an individual making a decision and we're going to see the interplay interplay of prices and identity and how identity matters and we're going to see how changes in social designations and norms make a difference in economic outcomes well-being inequality now the examples are going to present are from the United States of course I'm an American that's the context I know best but the analysis I should emphasize is applicable anywhere the identity ingredients those three ingredients I mentioned they're from observation of a particular setting so in any particular social setting we're going to say look for those three ingredients and you'll be able to construct an analysis of identity and economics in that setting so let's turn to smoking obviously to say smoking is a major medical and economic issue the Center for Disease Control in the United States so this is statistics from the United States list smoking is the number one preventable cause of death in the United States in cure numbers in terms of work productivity let alone medical cost this is just work productivity there's a loss of productivity of about eighty two billion dollars a year and not surprisingly it's been the subject of much study within economics and there's been a lot of policy to reduce smoking so let's take a look at smoking through the lens of economics and identity so we would begin with a typical economic study where we start out with well you know there's just some people out there who like to smoke you know they like the taste of tobacco and we can add to that that nicotine is an addictive product and then a person would decide how much to smoke given the price of cigarettes their own income and perhaps weighing health costs the future health costs as you come out with an answer of smoking rates so this kind of analysis would tell us that smoking rates would depend on individual tastes prices income and understanding of health costs there should be no particular difference between smoking rates of men and women who are the same with respect to all of these things or between blacks and rights and so on should be no difference at all but of course historically we know this is not the case this is not what's happened historically so historically in the United States men smoked much more than women so I mean historically going back to the beginning of to the 1900s gradually over the 1900s the rates got closer until in the 1970s when the smoking rates of men and women largely equalized and there's very little evidence to support an explanation based on the convergence of income and the understanding of health issues so the typical economic model would tell you well women and men now have about the same of money amount of money or they both have the same understanding of health issues there's very little evidence of that so let's do some observation let's take a look out there and see what were people saying about smoking what was the image of smoking let's look at the social norms smoking was historically only acceptable for men until the 1960s and 70s so this is an ad campaign a very famous ad campaign so you've come a long way baby and what we see of course in the background is a frumpy woman you know scrubbing the clothes and she's stuck in her house and that's all she does she's a housewife and the foreground is the modern hip liberated woman and what this ad of course is telling you is that the women's rights movement has not only freed you from laundry it's giving you the right to smoke and you should enjoy smoking so I should say this is just an example you know there's many people who study the change in the norms at this time so now let's do something very simple from our observation let's add our three ingredients to our analysis let's have the social designations of men and women the norms pre and post 1970s a and the losses from violating the norms is pre-1970 and easily with no fuss at all we get the prediction that smoking rates converge and again I'm not going to say there's anything fancy in any mathematical derivation here it's just we said let's let's go look let's go take a look about what people said we're saying and what people's attitudes were and quite frankly it's such a remarkable difference we can't ignore it and so here we see quite very clearly the implications for the changes in the norms and we also see very clearly the implications of manipulation of the norms for advantage so someone was trying to sell cigarettes and if you take a look at the internal documents this is all available online it's quite remarkable to read them if you look at some internal documents from the marketing the marketing divisions of Philip Morris and so on you see that the companies wanted to create an image to go with women's new sense of self in this new age so this is all it's not any accident this was a purposeful selling of this image to correspond with the new image that women were creating for themselves so now let's move to the second example organizations work incentives and identity so economists have studied and are very concerned with how to best give correct incentive to workers to compensate workers for how well and I hard they work now like I said we studied this question at length but there's a big problem in most modern enterprises it's very hard to see work effort so we're not in a factory now where you can see somebody doing something piece by piece by piece it may be somebody who's doing something creative or somebody who's selling so it's actually difficult to see how hard somebody is actually working so economists have said well yes it's very hard to see work effort perhaps we can devise wages and our set incentives that are based on what we can see like for example a stock price rather than how hard people work because we can't see how people are people work but perhaps there's a relationship between how hard people work and the stock price so we might see bonuses being paid according to this figure which is observed and this is particularly important in jobs where effort is hard to observe but now let's go back to West Point I'm not sure I could imagine a place where it's harder to observe effort than on the battlefield now the West Point does not pay bonuses sorry the army US Army does not pay bonuses the whole West Point program is chen the whole army program challenges the theories of work and incentives based on wages and bonuses instead we might think that how people feel about themselves and their part in an organization may be what's critical to work incentives and we may be particularly attentive to this because we actually know that there are lots of problems that arise when workers are working for bonuses workers may do things to increase their bonuses and not necessarily do what is good for the company or good for the clients because these are all much harder to see so which is to say that the schemes which we come up with because work effort is harder to observe could actually really create quite bad incentives for workers to do things which actually harm clients for example but if workers can be induced to identify with their firm we could have a very different outcome and again this might be especially important when effort is hard to observe like in the military in battle so again based on observation we study work incentives with identity as a possibility so let's think of a very simple way of of social designations of workers as insiders or outsiders to the firm we have norms where insiders should work in the first firms best interests and we want to posit that there are gains that insiders are proud when they work for the good of the firm and if we were to include this in a model this very simple theory gives a different view of incentive pay and human resource policies okay so let's take a simple question should a firm hire a supervisor to better observe workers okay so do you want to have somebody who watches watches the workers more attentively to see if they can observe better this work effort well in a strict supervision a regime a supervisor would report on workers management could then fine-tune incentives you might be able to pay the workers for their effort but I'm sure you can imagine that closely monitored workers feel less a part of the organization they start to feel like they're just you know they're being watched all of the time and nobody trusts them and so they start to feel like they're Outsiders and as Outsiders you better pay them a lot if they're going to work hard taken the opposite kind of supervisory policy which we say loses supervision where the supervisor every now and again let some things go so again this is an American context I'm talking about the management may be able to less fine-tune incentive pay so you know sometimes workers don't work so hard but the workers in the supervisor could develop what we might think of as an insider work group identity with norms more aligned with the organization's interest and what's actually interesting is that when you look at military units you actually see some of this so the sergeant's aren't always reporting on them they're men or women to the higher authorities right and so the good sergeants the people that the men are really willing to fight for right are the ones who under the circumstances where I'll just let that one go okay so you have actually look inside military units you see these things so the model predicts for example that organizations were workers feel more like insiders will have less bonus pay they're just going to earn a straightforward wage and the organization's these also these organizations will have a greater incentive to invest in worker identification when effort is harder to observe and again we can go to the extreme example of a military versus civilian comparison to see this play out military pay is relatively flat meaning it meaning that the the the higher ranks don't earn much much much more than the people in the lower ranks and it's also overall lower than for comparable positions in civilian firms and as we saw the military makes this huge investment in worker identification now again this is an extreme version we pick the military of course to show the contrast but that's not to say these same things may be playing out within regular old enterprises and this this notion of identity has implications for fiduciary responsibilities on the parts of workers and management and I would say that this is particularly important today for the reform of financial institutions when people should be thinking about themselves as part of their part of the firm that they're working for and not just trying to what we would say gained the firm to their own advantage okay let me move to my third example the third example is education and we're going to look at schools and children's identity or adolescence identity so education is a primary driver of individual income and economic growth and there's so much work on this I don't have to give you all the statistics I can just tell you the special name that we have for education it's called human capital there's a notion that we as human beings educated human beings are as important to an economy as roads bridges and factories so we have human capital so development of human capital is critical for the growth of an economy and it's also critical for an individual's own well-being our economic well-being so if we were to just think about a young person and with their decisions whether or not to get an education so just take a look at the wages and we were just to do a kind of standard economic study of this we would say that students that say teenagers should stay in school as long as the future gains are higher than the current costs so future gains are you know how much more money would I earn if I were to stay and go to college versus then the current costs meaning it's hard to work in school or perhaps getting a job today but in the United States at least it's quite clear that a lot of decisions are not based on this kind of calculus we actually see extraordinarily high dropout rates in the United States particularly Hmong in particular early groups in particular groups within the society so African Americans and Hispanics now this could be due to the schools that these teenagers are attending or a pretty lousy because there's insufficient school budgets so there's actually maybe not a return to staying in school you could also be that there's incorrect beliefs about future wages so people may not understand that if they stayed in school for longer that they would earn more and I certainly want to say this can be part of the puzzle but I think we should also do a bit of observation let's go inside those high schools let's go inside the schools and see what is actually happening in those schools how are these kids making their decisions so it could also be very much due to how students think about themselves and particularly how the schools treat the students so it goes both ways are the schools fostering us where students identify with learning where they start to think of themselves as being part of the school and wanting to learn so again let's now look at education or the acquisition of human capital through the lens of economics and identity what actually is going on inside schools so I'm going to describe for you what's a pretty typical American high school students form social groups and these groups are associated with people who are more or less engaged in school and learning so here are some of the names that you'll hear so there are the jocks so jocks are people who are into athletics I'll get to that in a second they're the ones who are kind of the popular kids in school and they do pretty well in their classes but not excessively well then there are the Nerds I don't know if that word is yeah okay so then they're the Nerds who are you know they study all the time and geeks might be a similar kind of word burnouts are those who really don't have anything to do with the school they hang around they cut class we would say cut class they're they're not involved in school activities and to give you to the ax sense to which this is ubiquitous I'm going to show you some pictures okay so the one on the right it might be hard to see this but I find these pictures to be so telling this is these are these are titles of books that kids read so the one all the way over there on the left is it's the title is the beauty queen and the school nerd okay can you guess which one's the beauty queen is and which one the school nerd is okay so nerds always are wearing glasses they're usually not blond if she's got the book and this is of an unlikely friendship okay so that's a point about this both unlikely friendship between the beauty queen and the school nerd the middle one is I think I'm not sure I have to go more than just say The Revenge of the Nerds right the idea is that nerds eventually grow up and you know they're the ones who make the money of course this poor sad kid is also wearing glasses and has lots of books the dumb jock is an interesting book so jocks people involved in athletics are usually considered to be not so smart but they want to play their sports right so they sometimes need help so this is about a relationship between a dumb jock and a smart kid who then helps the dumb jock get through school and there's an interesting twist is that the jock and the nerd actually turn out to have a bit of a relationship which of course shatters all sorts of norms okay so that's what this book is about now I mean I'm showing you these things to indicate to you that we can just look at this and figure it out and see that these things are salient in the lives of teenagers to the extent to which that these pictures we can just look at them and immediately know the messages they're telling us okay so so if we were to put these kinds of cats we need our three ingredients again see where I am okay we need these three ingredients the three ingredients would be the social designation so jocks nerds burnouts we need the norms for behavior then we need the gains and losses and utility or in in in in pride that would go along with violating the norms for behavior and oops here we go sorry I forgot to advance my slides okay what's doing so well there we go all right so here are our ingredients the social designations the norms for insiders who identify with school and schooling and then the gains and losses so the ends are ciders they feel proud when they fulfill the school goals so they you know they might be on the chess team that would be the nerdy kind of insiders or they might be on the football team those are the kind of jock kind of insiders and then there are the outsiders who just you know fool around in class and try and disrupt the school together and we're going to see from such an analysis that the insiders may actually over achieve and the outsiders under achieve and what's interesting if you look at this schools the schools some schools administrators in some sense get this and also we increasingly see parents and groups of parents trying to address this so let's take a look at school policies there's this actually a remor if you think about it again this is one of these things that's so common in the United States that you might not think about it but once you think about it you start to say what are all these athletic programs doing in high schools why do high schools have football teams why you know why do they have soccer teams increasingly and lacrosse teams and so on and I'm not sure this is the reason why but it certainly has an implication for children's attachment to schools if you are a an outsider but you want to play football then you you become an insider by participating in two sports so there's some very interesting studies for example in Texas of Hispanic kids who join the football team right so they're that they're they're the poor kids in town they're very much the outsiders very much discriminated against but the now the football team is open to them and then start to become more integrated into the school system the other thing that you see is that we start to see groups of parents and even schools themselves adjusting the curriculum to the student population so you see huge debates within the United States about curricula what kind of history should we be teaching what kind of literature should we be teaching because teaching Moby Dick which is quite a different book than teaching an African American classic and we also see increasingly new types of schools emerging so let me just give you again some visuals to bring this home you know again I just took this off of the websites so the I think that again the one on the left is really what is this a picture of this is a picture of the high school football champions in new jersey this is the state championship football team and it's a team from Newark New Jersey so Newark New Jersey is a quite poor city obviously overwhelming the african-american now man now they're there they're these a bunch of proud young men and you know to be a part of this football team and this winning football team they had to stay in school ok so this is a way you can see how this letting might be able to bring people into the educational system that might not otherwise be the picture down on the right is from the south it might be hard to see but it's a pretty integrated team ok and here's the phenomenon I wanted to tell you about this was back on this bullet point there's new types of schools which are emerging because increasingly I think parents are in different groups within the society recognize that or at least believe that if the school is more attentive to the child's social social designation in our terms of the students identity then the child may learn better so the top picture is from these are these are what are called chart the top picture is from what's called a charter school a charter school is a school schools that receive funding from the government but they have an independent curriculum so the top picture is from the Booker T Washington public charter school for technical arts this is a high school in Washington DC and who is Booker T Washington Booker T Washington is a famous black scientist from the early 1900's so of course you see what they're doing here is they're creating a school that's saying this is a school where we as african-americans can achieve the middle pictures there are from the websites for home schoolers so home schooling might be a phenomenon you're not so familiar with but it's growing in the United States is where parents each their children at home okay now there's a couple of reasons one is that parents may believe that their children will learn more at home okay they also literally that the schools may be bad and their children are learning more at home where their child may have a learning disability but as you can very much see from these titles here that a large part of homeschooling has to do with making the school meet the child's identity and also the parents here again choice of identity for their children so it's a very big movement among strong Christian communities we might say fundamentalist Christian communities in the United States and the bottom one is again a charter school and this is a charter school from Washington DC but here we see a kind of incredible mix of things we can see how specialized this can get this is the Latin American a Montessori by the Engel public charter school so I know you all know what Montessori is and then the Latin American bilingual I'm sure you can figure out as well so this is for Hispanic kids they want them to grow up speaking Spanish and English but these are a group of parents who believe in the Montessori system of education so we're increasingly seeing this diversity of Education of educational options and to a large extent we can see that this may be a response to schools which aren't necessarily creating the atmosphere that at least parents feel their children should have to enhance their learning and that's both the literal skills of reading and writing and arithmetic but also feeling a part of the school community so now I'll conclude so this research brings identity and norms into economic analysis and again we need our three ingredients the social divisions the social designations the norms associated with those designations and the gains and losses that people may feel when they obey the follow those norms or not and critically these ian's come from observation they come from observation of the social context so every single example I've given you is from a real world it's a real place in real time and of course these were United States examples but this method is applicable anywhere and people will make decisions rationally they're facing trade-offs but their payoffs what they're trading off here depends on their identity their network social network and their social relations and so this combination of economics and entity can lead us to new and different conclusions so we've seen for example a new view of supervisory policy in school and the importance of institutional identity isn't in places in the in the schooling example so economics as more than money and more than market can lead us to see how changes in norms social and divisions impact individuals it can give us guidance for improving institutional performance and it can also advance our understanding of inequality and equality thanks very much Nazi professor Crandall Thank You professor Cranston Thank You professor Granton we've seen that in economics there's much more than output formulas or the interpretation of companies turnovers I'm oversimplifying of course but his is looking at me as if I am trying to make a suicidal attempt however you're not being paid for every piece you produce you have mentioned bonuses or incentives but as a German I can tell you a long story in eastern Germany it was important to reach the plan objectives and then you know what happened in that economy and you know what has happened to the financial sector professor Granton has clearly explained to us that there are many other things beyond beyond bonuses and incentives there are more important issues such as identity the feeling of belonging within a company and this model has some has to do with the people's identity and it is modular I'm sure is valid in Italy too and professor Cramton has made some examples American examples of course in different settings in your curriculum I read that you have been teaching for some years but before you worked for the World Bank and in Egypt for development projects and I think it would be interesting to have a brainstorming altogether to understand how we can implement this model to the Italian seed setting a situation and I could mention some ideas you know in Italy there's a major discussion on civil servants who don't work enough they're called loafers or there are other people who want to work the ambitious but they are not not supported by their colleagues and we could discuss this and then as the companies that are family-run companies where there's a strong identification with a company very often there are less than 15 employees or so there's a close contact with the owner and the boss then there are larger companies when there are many workers and trade unions as well so the situation is different I'm really interested in the concept of Italian entrepreneur I wanted to compare Germany with 80 million inhabitants to Italy and in Germany there are about 3 million people with the with a v80 number in Italy 60 million inhabitants and 5.6 v80 holders the 80 number holders is a whole population a subgroup in the sub population of the population so you need the independent workers self intrapreneurs are increasing in number and this is a way to climb the social ladder I think and then there's another example in Italy industrial clusters and I don't know where the professor Cranston's model can be implemented in the context of industrial clusters well that this was a sort of very long a question but it's a kind of stimulus to the older audience so that we can have a brainstorming together how this model can be applied in Italy in different fields maybe I could give the floor back to Professor Granton I mean I have been a bit aggressive in this longer question but maybe you can react now and after the questions asked by the audience sure well first of all I think that the job here would be for those who have done some deep observation of the Italian context so one of the one of the most important things of this kind of study is to understand the social context and understand the social setting well so the first place I would turn would be to people who have studied the social context within Italy and to pick out just one of your points would be for example what does it mean what is the meaning of work right so I'm going to your factory workers versus your I'm sorry your small family companies versus your large trained unionize companies here it seems the notion of people how people understand what work is and is how is work part of themselves or is it something that you do for you is it something that you do for your family is it something you do for your company there can be different social understandings of work and participation in different institutions and so I I would I would say that again you know we're going to look for our three ingredients and the three ingredients would need to come from a good study of the Italian context and I can imagine that we're going to come up with quite different answers to these questions so the question of is you know what is work and what does it mean to a person to work in say the Italian context or the German context or the American context so that would be my short my short answer to a long question I wasn't thinking about it until you brought it up but a study of that would be banfield the moral basis of a backward society so that would be exactly a study and it would would talk about the differences between how people look at work in one society in an Italian society relative probably between the north and the south just a bolster why are you speaking Italian I'll put these on your your presentation extremely interesting and you know I think saying the way I understand the identity is essentially as the borders within which a number of for loans are collectively shared identities needed in order to ensure that these norms became a culture and so the identity grants enforcement to the to the norm because defines a collectivity so essentially you need at least two people that identify with something otherwise there is no no scope my question is how does identity arises and why it is so advantages for instance in organizations you see that sometimes you know people tend to identify the organization in other organization the same face completely you know from the point of view of the organization let's say in number of corporations there are strong incentives where workers that are identified with the firm precisely because you know there is a cheap way but I think that is also something that workers understand you know they can be exploited and so the definition of identity I think is is tricky because it's a mechanist ensures that once we are identified you are not exploited you know well I think that indeed these these these types of mechanism that we're talking about where you might where people may be induced to think about themselves in particular ways and then are exploited it actually happens so there's nothing to say that identity these identity processes that we're describing are good or they're helpful for people indeed people do internalize norms that put them in a subservient or exploited position okay so I don't mean to say that creating worker identification is always going to you know lead to some nirvana where people are working for the good of the firm and they're getting paid well and in fact I just only touched on it here but this is one of the points that I was again I touched on it but it deserves much more attention especially giving you a question that these they're their structures within the society so it could be you know people who are interested in having a docile workforce that may indeed profit from particular kinds of social norms and social arrangements so I don't think there is such a guarantee but what I think if we want to think about this in a larger sort of setting I think there should be people if we are interested in social justice then there are people who should go to these exploited workers and say hey you know you should start thinking about this differently and of course in fact we do you know that is a process we have seen occur that's exactly what happened in the early part of the the 20th century so there is a bit you know that these things turn around and there are people who have particular visions and and not only for profit and not only for advantage but who are concerned with social justice who would like to change these situations as well see if anybody good afternoon I come from Bari and have a question on the workers identification with their company in the 90s in Italy there was a new wave the wave of the Japanese cooperator philosophy there was the first acquisitions by Japanese companies and Kaizen was mentioned you know the myth of Japanese workers loving or working for the company and their children already knew at the age of seven that they would have the place in the same company and so on and so forth and I'm I'm sure you you are much more aware than me about this process what happened to the Japanese fighter philosophy of workers identification with their company because now nobody's talking about it anymore and then in the internet there's a video on mr. Silvana a ghostie and the title of this video is the typical enslaved persons discourse illustrating the thinking of this person on on work in general but my question is about the Japanese fighter philosophy about workers in an identification with a company thank you so so I cannot claim to be an expert on the rise and fall of the of the Japanese method but it were specially in Italy I can say that there has been a similar kind of talk in the United States and there certain especially automobile companies that have tried to introduce these kind of systems and there has been some wonderful anthropological work on workers in these factories and indeed you see that it's not so easy to transplant plant just this firm context from Japan to the United States say and expect it to work and I'm sure that would happen in Italy as well because it's supported by an entire structure right with notions of what it means to be as part of a family and loyalty and so on and so what I do see though that's happened is that oh sorry one other point so it's in some of these studies of these car factories in the United States you actually do see that workers kind of get it they get it that they're supposed to act a certain way but they don't really believe in it and so they'll try and overact and tour to achieve their goals so you're certainly this is not like in a perfect indoctrination system people will figure this out I do think that some of these so the sort of stereotypical extreme version of this has not lasted as least as I can see in the United States but you do see vestiges of this so you do see vestiges of these these kind of worker motivation techniques so Walmart for example I don't know if you guys know Walmart is it is it here not yet but anyway so you know what Walmart of these strike ok no it's ok no yeah so so Walmart you ever go to a Walmart and you know 7:00 in the morning as I did every now and then to get my kids diapers but anyway you'll see the workers doing these cheers w.a oh and and this this you know this is part of this you know what you sort of think of the typical Japanese calisthenics in the morning but associated with his big Walmart cheer so some of this kind of ideas that you might associate it with more Japanese of course this is an American thing to to do the spelling out business you know that's like you do with football teams but I don't think it's completely disappeared I mean some of these ideas have remained within at least the American context not in the full force that we've that they were introduced but they're they're they're yeah I would like to bring a parameter we should dimension in your presentation you know lecture a sort of Italian touch I would say with his family because I think family shapes identity very much and it gives an initial capital I would say initial asset to to give a future to the kids of course so it can be a place where identity and economics at least individual economics meet so have you thought about it and well I think that's a I think that's exactly right I mean we have thought about it too to the extent that we've thought about the educational process so that you know the the choice of a school for your child is an extraordinarily important choice that these parents in the United States make because parents in the United States actually do have these choices at least even even though it may be a limited choice because if you don't have the money to pay for a private school but that's what this whole charter school movement is about is that you may be able to create a school for your children in a particular way but but more broadly I think actually there's this fantastic complementarity between this perspective this identity perspective and what Jim Heckman was talking about yesterday so one of the things that you can deliver to your children is what he was calling these non-cognitive skills he was talking about them as traits but I don't think we disagree if we could say that some of this has to do with how I think about myself and what I'm supposed to do should I persevere should I finish should I finish something should I be working for a particular goal so you know I don't think there's a doubt that the family is important it's what's teaching you you know sort of your basic you know your basic again I'm going to call them skills but I don't mean in terms of skills of reading and writing but these basic capacities say for our abilities to do it to achieve a particular goal and to think about yourself in a particular way so those kids we're going to all of these different schools that I put up are going to have different notions of what they should be doing with their lives right and that's again coming from the parent school combination yeah I really appreciate your presentation because it makes it very clear what economists have to do if they want to adapt their models to include social norms and I've been working on this with Dan hammer mesh and Philly Vail on a female and male total work in in the average sense in economies when we've observed actually is that over time is kind countries get richer the total amount of time that when men and women work on average is converging so the the steady-state is sort of Scandinavia in the United States and Britain are a little bit behind and then there's central Europe and then then you have Italy and then you have the developing world at the very bottom men work a lot less than women okay so the question is for me I love the idea of putting the social norm into my model but you have to end dodging eyes it and then you get the criticism from our colleagues you have too many degrees of freedom the dynamics are completely undetermined it's just at hakurei so what's your answer to that right well sure we've done we've gotten those criticisms many many times again one is I think it's important to put to have some discipline and in the in the research and that's where I keep emphasizing these three ingredients and observation so again this isn't coming from my imagination right this is coming for the the ingredients that I'm putting into these models are coming from deep observation of a particular social setting so that is one part of the discipline that's placed on this now it is true that once you kind of introduce some of these norms or my three ingredients that the the distance between my assumptions and my results is extremely short I mean nothing right fine I'm okay with that because maybe the assumptions are right and this is the way we should be looking at things a deeper question is where is this all coming from how is this evolving and how is it changing and this is a very deep question and it's it's a it's a question that we've touched on just a bit because we've looked at in particular settings that someone may profit from changing the norms okay so I touched on that in the smoking example in the education example the schools a school administrator who may have a goal for educating students may have an incentive to change the school curriculum or the school culture right in order to have the students achieve okay so in these particular micro settings we're seeing some of these things but of course the larger study is still yet to be done and you know opening this up to you know people in the room and to cross across the Academy to to work on these issues this new this work needs to be done to Nancy yes can you hear me now good sorry if there are no other questions I would like to go back to the Italian local identity you know that in Italy there are many different places which are very proud there's a lot of local pride because of the city of the province of the region do you think this can be an element in the development of a given region in the States for instance if another region in another region higher wages are paid you tended to move there well in Italy you tend to remain where you were born for instance and you tend to try and make a contribution to the local development so what do you think can this be a an advantage or a limitation when people are not ready to move so when mobility is reduced you know initially there are many industrial clusters which have this pride and they also operate as a sort of network as a club and maybe a student in economics in Italy could try and adopt your model to this kind of reality certainly I think again it's it's kind of the the double its double-edged sword here you know so that segregation can lead to inequalities but segregation can also have these or segregation or warping together can also have these advantages so certainly a sense of pride and community can lead to lots of investment within that community so again I'm going to point back to research from the United States this isn't we're in ethnically diverse communities you may see less investment in what's called public goods and schooling and so forth so in more homogeneous society more homogeneous communities you might see more investment in schools and roads and and other things which can advance development and so certainly there can be these I'd say advantages for thinking about yourself as part of a larger entity that's all working together for a particular goal now there are of course downsides to that too because there may be people who are nodding who live within these regions or who may be wanting to emigrate to these regions which could lead to and who are not included in this majority group who are left out so it's kind of a balance between is working for this larger goal but at the same time being inclusive so again so it's just back to this sort of double-edged sword but I want to go into your clusters because you've mentioned this you mentioned this in your first question these industrial clusters are quite remarkable and certainly one of the one of the aspects of identity and feeling part of a group is that you have some notion that you can either trust people who are like you or you're more comfortable with people who are like you which certainly can lead to enhanced exchange so that is one of the the things I think yet we we could use this model to to understand these these industrial clusters thank you maybe we could go on with this brainstorming last question last question otherwise I can give up if there's no time I think that maybe we should close this session but then this discussion can go on because we will be talking about clusters and maybe you can come and ask your question there because you already asked one that's why thank you very much for your patience thank you very much professor Benton