I review evidence that individuals associate themselves—or identify—with groups in two
fundamental ways: ingroup bias and conformity to group norms. The evidence spans many
spheres of economic activity, including consumption, production, hiring, promotion,
education, cooperation, financial investments, and law enforcement. Group identities are not
fixed, even when it comes to ethnic and religious identities. I argue that the choice of identity
can be captured by a simple trade-off between gains from group status and costs to distance …