Weekend Reading

My RMIT colleagues Chris Berg, Jason Potts and I have a new working paper out on the economics of identity.

Identification forms a key part of all but the least sophisticated economic and political transactions. More complex or significant transactions demand more formal identification of the parties involved. In this paper we develop an institutional economics of identity. We distinguish between a Demsetzian evolutionary view of identity institutions and a ‘legal-centric’ view of identity institutions. In the former view, identity is a contextual, fluid and subjective, and evolved for market, social and political exchange. In the latter, identity is uniform and permanent, and created (imposed) by governments. Governments have an interest in identity insofar as identity is used in the process of tax collection, entitlements, and conscription. Private organisations free ride off state-provided identification services. The paper concludes with a discussion about technological change and identity management. We characterise two possible futures: one in which new technologies enable states to create more comprehensive uniform identities, and one in which new technologies enable identities to be ‘federated’ and transferred to citizens.

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10 Responses to Weekend Reading

  1. Louis Hissink

    Some more weekend reading and navel gazing:

    Thanks to a string of screw-ups and bugs, an unsuspecting developer recently took possession of an estimated $US390 million worth of the Ethereum cryptocurrency by accident. In an attempt to give back the money, however, the guy ended up locking up the funds permanently. Essentially, the money has just evaporated.

    Rest here

  2. cui bono

    Mr Harbourside Mansion is too busy celebrating to read this contribution to our political debate.

  3. Dr Faustus

    Public, secured blockchains remove the need for individual service providers (firms or governments) to store information about their clients centrally.

    How so?

    I see that a blockchain is a suitable technology to uniquely identify an individual, allowing that person the ability to overlay attributes of choice as and when they wish.

    However governments and firms still have a legitimate need to store and access information about individuals to manage their function and relate back to the person. The blockchain identity will be a unique key in this data set, but the data still needs to be collected, maintained and is still there to be shared (and probably abused) at government’s discretion.

  4. RobK

    Interesting paper. Some random comments:
    In my view, an intrinsic part of identification is an address which maybe a registered address or a physical property address, at least for higher level transactions. This didn’t seem to surface much in the paper.

    Seperately, the centralised state/institution identification has issues of accuracy. The more integrated, the higher the risk of poor ledger management. The issue of identity management by the individual of a institional register is a known area of problems.

  5. john malpas

    identity can grow out the barrel of a gun. At all levels. That is , inter alia, the guardians have guns

  6. RobK

    “We know where you live” is a useful device both for redress and repeat business.

  7. .


    Check out

    “Image generating AI (“generative adversarial networking”) technology” NVIDIA has been refining…

    Private organisations free ride off state-provided identification services.

    What about crowding out? Remember the government demands you have a legal identity.

    The pizza shop down the road isn’t free-riding off the local council etc if I am forced to pay for a road attached to my land.

  8. With respect the narrative feeds the opinion. Crabs in the pot.

  9. Aristogeiton

    Blockchain is our saviour. Libertarians were right again. Gay marriages for all, and register the lot using blockchain. Blockchain.

  10. .

    …and deliver us from non-crypto transactions,


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