The concept of identity and its importance for many aspects of life as well as in the political, social and psychological realm have been studied by fellow social scientists for a longtime. Sociologists, social psychologists, political scientists, anthropologists and human geographers have developed theories about the identity of individuals and created surveys to test them empirically. Indeed, they have found that identity is a significant characteristic and a distinguishing attribute that affects many facets and phases of the individual’s, the group’s and the society’s sphere. Following the neoclassical economic theory, economists have been reluctant to delve into ‘exotic’ questions such as how does the identity of an individual affect his or her utility function, demand and supply of goods and services, and demand and supply of labor or even tackle the fundamental economic question of how limited resources are distributed among the different ethnicities or minorities in the host country. With the exception of Amartya Sen, Gary Becker and a few others, economists started seriously looking into the identity ‘variable’ only in the 1990s.
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