How Group Identities Fuel Inequality

professional headshot of Dr. William Darity

By Lucas Hubbard July 5, 2022


How we relate to social groups, members of our own and others, influences how inequality arises and persists. That’s according to a Duke professor and pioneer in stratification economics, which combines sociology, social psychology, history, and economics to deepen understanding of persistent racial and ethnic disparities.

“For the stratification economist, the world consists of self-seeking ‘tribes’ engaged in a persistent dance of negotiation and conflict, which can lead to dehumanization and repression of subordinated communities,” said William A. “Sandy” Darity Jr., a professor of public policy, African and African American studies, and economics at Duke, who launched the subfield in 2005.

“Stratification economics integrates the emphasis on the importance of group position and status from sociology and psychology with the drive for action motivated primarily out of material self-interest from economics,” Darity said. “The field of history provides the explanation for the origin and evolution of social groups and group identity.”

Darity’s latest paper outlining the theory is available online in the Journal of Economic Literature and in the journal’s summer print issue. A related video summarizing the principles and framework of stratification economics is also available here.

“There is a collective rationality to race prejudice,” Darity wrote in the paper, “given a dominant social group’s desire to maintain and harden their position of dominance.”

Stratification economics expands upon and diverges from traditional economic theory in a few important ways. Most notably, incorporating research into human happiness and the social tendency to avoid last place, it finds individuals are concerned not just with their absolute position in society but also with the relative position of their group, as well as their status within their group.

This understanding presents a coherent explanation for why hierarchical systems endure, along with the prejudices that help maintain them. The higher status group wants to maintain its position of power, and it will fight to “render the [lower] group non-rivalrous,” Darity wrote.

Stratification economics research already has offered explanations for a range of social problems, including the “disproportionately fatal responses of authorities” to needs of black communities following natural disasters like Hurricane Katrina; the colorism experienced by darker-complexioned individuals in both labor and social markets; and the failure of school desegregation to generate, uniformly, more positive outcomes for black students.

The paper also highlights six phenomena ripe for analysis via the stratification economics framework. These range from decisions that may have personal or local effects — including the act of “passing” as a member of another group — to decisions on a grander scale, such as politicians and leaders enacting policies to narrow or widen disparities between groups.

The common thread is a recognition of the complex interplay between the individual, the group with which the individual identifies, and that group’s position relative to others.

“Stratification economics opens the door to a fresh approach to understanding why the social groups in the world in which we live occupy such different worlds themselves,” Darity wrote in the paper’s conclusion.

“I confess that I have been surprised in discovering how many scholars have gone into the research space behind the door,” he wrote. “I only can encourage more to follow.”

Click here to download a PDF of the full research report.