Akerlof and Kranton (2000) believed that "choice of identity may be the most important 'economic' decision people make". This challenges traditional theories such as utility maximization and the rational choice theory, where individuals as rational agents are expected to seek maximal utility or satisfaction from their economic decisions. Essentially, one's concept of identity can influence the rationality of an individual's decisions to the extent that they don't always seek maximal satisfaction.
How does this relate to the political compass and their groups? In identity economics, it states that the group a person identifies with could influence them to make decisions that don't attain maximal satisfaction, so they could fit in with the group's identity (Akerlof & Kranton, 2000). Â Therefore, the case of the political compass and each quadrant's communities are special: As each political quadrant is more specialized in their views, so too are the economic behaviour of its followers. Individuals that strongly identify with the distinctive ideals of their political communities can make the most specialized yet "irrational" decisions not based on maximal utility.
For example, one who strongly identifies as a "Libertarian Right", in their attempt to be consistent with the quadrant's ideals, could abstain from using state-run services, despite how beneficial and cost-effective the services are. An individual who's "Libertarian or Authoritarian Left" might only buy services from small businesses or marginalized communities, despite having higher costs and substandard service. One who is 'Authoritarian Right', from their strong sense of patriotism might join the military despite its poor work conditions. These cases don't display mere preferences of individuals, but are economic behaviours based on their political identity.
All in all, these political identities are a case of identity economics, where the concept undermines the theory of humans as 'rational actors' as we often sacrifice maximal utility in exchange for our devotion to our identities.
To Identify Or Not To Identify
The political compass test might be regarded as a trivial online pastime, but the impact that this internet test gives is undeniable. Its social and economic double axis clarifies one's nuanced political opinions and gives a path of political identity and community to impressionable young people. But perhaps the most striking effect is how it can specialize and irrationalize one's economic behaviour to be based on a certain political identity, no matter how absurd it is.
If you still remember what quadrant that you got from the political compass test, it might be best to take caution from identifying too much from it. If you want to, who knows? Maybe your economic behaviour could change once and for all.
By Gopas Teofilus Silalahi | Ilmu Ekonomi 2021 | Trainee Staff Divisi Kajian Kanopi 2021
References:
Akerlof, G. A., & Kranton, R. E. (2000). Economics and Identity. The Quarterly Journal of Economics, 115(3), 715--753. http://www.jstor.org/stable/2586894
Citarella, J. (2020, September 12). Marxist memes for TikTok teens: can the internet radicalize teenagers for the left? The Guardian. Retrieved November 8, 2021, from https://www.theguardian.com/commentisfree/2020/sep/12/marxist-memes-tiktok-teens-radical-left.
