Thursday, June 24, 2010

Identity Economics and Cartooning Around

Ho Internet,

To kick off this quaint little forum, I thought a post that blends three of my favorite subjects; economics, cartoons, and contrarianism, would be fitting. My friend/fellow blog cohort, Louis, stumbled across this article by Frances Woolley at Worthwhile Canadian Initiative comparing Spongebob and Canadian education/immigration policies to Akerlof and Kranton’s “Identity Economics,“ which I would say is a must read for anyone interested in sociology or economics.

Woolley boils down Akerlof and Kranton’s thesis to the notion that if a person’s place of work affirms their self-defined identity then they will be more productive. In the case of the show Spongebob, the character Squidward is the unproductive employee because he deems himself an intellectual and therefore over-qualified to be working as a cashier at the local burger shack, whereas Spongebob believes being a fry cook is his calling, so his job reaffirms his identity, causing him to work harder.

Woolley ties this over-qualification, under-performance problem to Canadian immigration policy:

“In Canada, the problem of over-qualification is exacerbated by our immigration system. Canada admits immigrants on a point system that gives preference to highly educated candidates. However research by Phil Oreopoulos suggests that Canadian employers place little to no weight on foreign credentials and experience, while Steven Wald and Tony Fang and others have found that immigrants are more likely to be over educated for the jobs they hold.”

The study by Oreopoulous concludes that outright discrimination, not the points system, is at the heart of immigrant’s inability to get the jobs that they are qualified for:

Regardless of what behavior underlies these results, deciding whether to interview an applicant based solely on his or her name is illegal under the Ontario Human Rights Act. …Previous research on why immigrants do not assimilate in the labor market has largely ignored this potential explanation, perhaps because of lack of data ... Discrimination causes immigrants to miss out on hiring opportunities in situations where they are most qualified for a job.”

This harkens back to a point of Akerlof and Kranton’s Identity-based method that Woolley misses. It is not that individual utility can only be increased by realizing some self-made ideal, but utility-maximization can occur by fitting into a group that the individual feels a part of, “The utility then derives from group processes (p. 24).“

In the case of Spongebob, there is an episode where another employer buys Spongebob’s contract and tries to force Spongebob to make food for his burger joint. This competitor, named Plankton, even goes so far as to make an exact replica of the kitchen that Spongebob worked in previously, but that doesn’t make Spongebob work anywhere near as hard as he did at his old job. Spongebob does not feel that the competitor’s culture maximizes his pleasure, even though he is doing his same ideal job. Group-created culture and atmosphere, not just individual ideals, create utility.

If one looks at the question of over-qualification and immigration from this standpoint, then company-based discrimination becomes important. The issue of responsibility is no longer on the numbers game of immigration policy, is the country letting in too many over-qualified immigrants, but instead becomes centered around policies used to incorporate immigrants into the economy, is the economy structured fairly to allow immigrants to feel like they are part of the in-group of the economy?

The productive benefits to inclusion of people into these in-group’s are numerous, as outlined in Akerlof and Kranton. They pull from Muzafer Sherif’s famous experiments on inter-group bias, which show how people are bias towards the groups they have been assigned to/pick themselves, and likely to work harder for them. Spongebob only can identify himself with the Krabby Shack, and not Plankton’s Chum Bucket, therefore working for the former, but not the latter. One example Akerlof and Kranton use is how the best schools garner consistent results. These "model" schools are constantly attempting to break down divisions within student groups, creating a more holistic group encompassing the entirety of the school. This sort of what’s good for the group is good for you, reminds me of a now famous New York Magazine article which focuses on Goldman Sachs. Goldman benefited from this sort of inclusive atmosphere compared to its competitors:

“The cult of the individual, which I think has been a disadvantage to so many of the firm’s competitors, really doesn’t exist here,” says Lucas van Praag, the British-born communications director. “The more you have acceptance, the easier it is to be effective.”

So what does all of this say about where to take immigration policies from here. One idea is to provide more social networking for incoming immigrants. Providing tax-breaks to employers at medium to small sized firms for hiring recently admitted immigrants. A stricter enforcement of anti-discrimination policies may also be an idea. Oreopoulous and his coauthors were able to deduce this discrimination from merely mailing in applications. I wonder if this could not be replicated by the appropriate governmental agencies?

Nevertheless, this focus on the notion that over-qualification is an inevitability allows easy scapegoating, when concrete solutions seem like a better point for discussion.

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