Stratification economics is an emergent subfield of economics that uses the concept of social stratification as a point of departure for examining structural and intentional processes that generate hierarchy and economic inequality among groups whose members are defined by one or more characteristic or attribute. Social stratification typically refers to the hierarchical arrangement of social classes, castes, and strata within a society. Stratification economicsanalyzes the social processes influencing the nature and reproduction of stratification not only within, but also across, different societies. Within stratification economics, special attention is directed to the role of racial and caste distinctions and similar group affiliations in producing and perpetuating income and wealth inequality.
Stratification economics treats group identities as produced forms of individual and collective property with both income and wealth-generating characteristics. In addition, these groups’ supply and demand are responsive to changes in production costs and budget constraints. Cooperative economic and noneconomic behaviors are treated as normal outcomes of individuals’ propensity to engage in own-group altruism and other-group antagonism. Theoretical stratification-economics models predict that a person’s reward for cooperative behavior increases with the mean wealth of the person’s group, so that income and wealth inequality strengthen incentives to engage in cooperative behavior.
Within stratification economics, an individual has constrained choices among various identities, such as racial classification and nationality, which establish the foundations for intergroup conflict. For example, powerful groups often attempt to create property rights that facilitate the exclusion and exploitation of nonmembers and provide privileged access to private and public goods for members of the dominant group. Such rights are maintained by social custom, history, law, and other means. Ascriptive markers such as skin color serve as signals to dominant interests to vary the intensity of discrimination targeted at particular subordinate individuals and groups. For example, during the era of slavery in the United States, lighter-skinned blacks were often afforded more privileges than their darker-skinned counterparts, while still encountering discrimination.
Theoretical stratification economics challenge conventional wisdom about the dynamics of intergroup inequality. Stratification economists argue, for example, that intergroup conflict in both economic and noneconomic settings is an endogenous characteristic of the social space, rather than an exogenous contaminant of market allocation processes and individual decision-making. Reductions in intergroup equality and income will not automatically lead to the erosion of traditional patterns of collective identification if the expected returns to additional investments in group identity are unequal across groups. Movement toward more egalitarian intergroup distributions of wealth must therefore be a major element in any earnest attempt to reduce intergroup conflict, because inequities are institutionalized through processes that enable the transfer of material resources across generations.
Stratification economics is supported by studies of mechanisms perpetuating domination in various countries including white privilege in the United States and throughout the Americas, high-caste Hindu privilege in India, and Protestant privilege in Northern Ireland. Studies of economic discrimination targeting particular subgroups in various market societies, including African Americans in the United States, the Buraku in Japan, East and West Indians in Britain, and blacks in Canada, also provide useful insights for stratification economists.
As stratification economics evolves, it is likely to pose increasingly robust challenges to schools of thought that emphasize group-based deficits in personal responsibility and cultural practices as the primary sources of persisting intergroup economic inequality.
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James B. Stewart