An Economic Analysis of Identity and Career Choice

Standard economic models tend to be more specific about pecuniary payoffs than non-pecuniary payoffs to education. Based on Akerlof and Kranton (2000), we consider a model of career choice and identity where individuals derive non-pecuniary identity payoffs. Using factor analysis on a range of attitude questions, we find two factors related to identity (career orientation and social orientation), which are important for planned educational choices and for observed gender differences. The implication is that policymakers and institutions of higher education need to focus on identity related issues rather than just improved financial incentives if they aim at attracting the high ability youth to certain careers.