Why We Need An Identity

New Jersey recently decided I could need a “real ID” by May 7.

In Medieval England, identity initially related to a surname.

Wealthy landowners (who typically were named John, Edward, William, Henry, Charles, James, Richard, or Robert) started adopting last names to be sure they could prove the land was theirs. What they chose said something about themselves. The names could have designated where they lived. One gentleman that lived southeast of Bath in Keevil became William Keevil. Or someone might be a Richardson to show who they were related to. Meanwhile, years later, less affluent surnames included Baker, Brewer, Butcher or Smith.

So they could tax us, draft us, help us, the state wanted to know who we were. Privately, to open bank accounts and sign contracts, we needed a provable identity.

Now, like Medieval England and my real ID, India wants to be sure people can identify themselves.

The Unique Identification Program

Visiting Gagenahalli during 2010, you could have met Shivanna, a 55-year-old Indian farmer. In Gagenahalli, three-quarters of the population lived on less than $1 a day, the homes were made of dried mud, and most people were landless peasants.

However, all would soon change after a stranger walked through the village. Banging a drum to get everyone’s attention, he asked people to gather at the local schoolhouse to hear about the Unique Identification program (UID). By getting their fingerprints taken, their irises scanned, and some data recorded, villagers could receive a 12-digit Aadhaar number. And then, never having had birth certificates or driver’s licenses, or voters cards, for the first time, they could prove who they were.

The Benefits

By proving their identity, villagers could create bank accounts and save the small amounts that became massive injections of new cash in India’s economy. Even when a bank had no nearby office, cell phones and local storekeepers facilitated their deposits and withdrawals. Also, to receive a government subsidy, they could prove who they were, minimize fraud, and use an electronic transfer instead of making a 40-mile trip to a government office.

It became so much easier to get a rice subsidy:

In an October 2024 document, Aadhaar summarized what it has accomplished:

Our Bottom Line: Markets

Defined as the process through which we determine the price and quantity of a transaction, a market prefers that participants have an identity. When we cannot prove who we are, the cost (defined as sacrifice or even as hassle) of the transaction escalates. We need to avoid information asymmetry where i know who I am, for example, but my banker does not.

That takes us to how. Suggested in one World Bank blog, we have to decide what our identifiers should be. As they explain, “…name, height, weight, ethnicity, religion, fingerprints, DNA or all of the above? The answer varies according to the purpose…”

Enabling us to participate in markets, identification fuels the consumption, investment, and government components of the GDP.

Much more personally, I just got my “real license/real ID” to confirm who I am. By May 7, I will need it to fly.

My sources and more: Looking back at the history of surnames and then ahead to its impact in contemporary India, we can see why identity has always been crucial. Then, for more detail, I recommend this paper and this World Bank blog for some economic analysis.

Please note that several of today’s sentences were in a past econlife post.