Commitment through our identities

One of my favourite Christchurch restaurants is Welcome Cafe. Why? Because it’s a vegetarian restaurant, so I have my pick of anything on the menu. I had dumplings last time I was there — I have no idea why more restaurants don’t make veggie dumplings.

Here are two ways of looking at my dietary practice:

• I do not eat meat
• I am a vegetarian.

In practice — in the market — these two statements lead to the same revealed preferences: I do not demand products made from meat. But, there is an important difference. One statement focuses on behaviour while the other says something about identity. And I wonder, are we vegetarians because we don’t eat meat, or do we avoid meat because we are vegetarians?

One problem in economics is time inconsistency of preferences (here is Akerlof’s ‘Procrastination and Obedience’). We know we should do something — give up cigarettes, take up exercise, save for retirement — but it is easy to put the change off until tomorrow. After all, one more cigarette isn’t that bad, and exercise tomorrow is just as good as exercise today. It’s not that we don’t want to do these things. Our preference is to have done them. The problem is matching our preference for today with our preference for the longer term.

If we are concerned with some aspect of meat — gout or animal cruelty — then one burger more or less doesn’t make a difference. And then one more burger doesn’t make a difference. Nor the next one. The preference for avoiding gout or animal cruelty gets caught in the marginal impact that is zero in the limit.

I wonder if selecting identities is a way that people overcome the problem of time-inconsistent preferences. This thought is in the same vein as Peter Earl and Jason Potts’s work on the market for preferences. They were explaining the use of interior designers: people aren’t sure what their preferences ‘should be’. That is, they have a preference to be a certain kind of person but aren’t sure how to reflect that in their colour scheme.

By deciding ‘I am a vegetarian’ (or ‘I am a non-smoker’ or ‘I am a saver’), you construct the immediate consumption problem differently. The impact of the burger or cigarette isn’t on your heart or lungs but on your identity. The marginal impact on your physical health may be nearly zero, but the impact on your identity is binary. You are no longer that which you have decided to be.

Selecting an identity — like selecting an interior decorator — allows you to make a portfolio of decisions all at once. You commit to the identity. Then, to preserve the identity you  have to do the behaviour in the future and in the now. Identity becomes a strategy for pre-commitment.

Which is another reason why I like Welcome Cafe. They don’t just have non-meat dishes. They are a vegetarian restaurant. They even have store copies of Vegetarian Living New Zealand, from the New Zealand Vegetarian Society. Note the magazine title — ‘Vegetarian Living’. It’s not about the everyday consumption decisions; it’s about the identity.