Explaining Parochialism: A Causal Account for Political Polarization in Changing Economic Environments

Political and social polarization are a significant cause of conflict and poor governance in many societies, thus understanding their causes is of considerable importance. Here we demonstrate that shifts in socialization strategy similar to political polarization and/or identity politics could be a constructive response to periods of apparent economic decline. We start from the observation that economies, like ecologies are seldom at equilibrium. Rather, they often suffer both negative and positive shocks. We show that even where in an expanding economy, interacting with diverse out-groups can afford benefits through innovation and exploration, if that economy contracts, a strategy of seeking homogeneous groups can be important to maintaining individual solvency. This is true even where the expected value of out group interaction exceeds that of in group interactions. Our account unifies what were previously seen as conflicting explanations: identity threat versus economic anxiety. Our model indicates that in periods of extreme deprivation, cooperation with diversity again becomes the best (in fact, only viable) strategy. However, our model also shows that while polarization may increase gradually in response to shifts in the economy, gradual decrease of polarization may not be an available strategy; thus returning to previous levels of cooperation may require structural change.