Social identity theory is a theory designed to explain how it is that people develop a sense of membership and belonging in particular groups, and how the mechanics of intergroup discrimination work. This theory plays an important role in the study of social psychology. Everyone from sports fans to students of elite colleges is influenced to some degree by social identity, and this theory explains how intergroup competition and discrimination can get so vicious that people will be driven to acts as extreme as murder or the promotion of legislation that is designed to marginalize members of other groups, such as Jim Crow laws in the American South.
Several interconnected mechanisms are at work with social identity theory. The core idea is that people tend to seek out group membership as an affirmation of self esteem, but that membership in a group alone is not enough to build an affirm self esteem. To feel better, though, people have to believe that they are in the right group, which creates the need for a positive distinction from other groups.
One of the concepts behind this theory is categorization, the idea that humans all categorize each other, sometimes subconsciously, creating a set of natural groups. Describing someone as a woman, a business person, a wheel chair user, and so forth is creating a series of categorizations. These categories play into personal identity and the perception of the identities of others. Personal identification with a specific group and the development of an ingroup mentality is also involved.
One interesting thing to note is that people can be part of multiple groups, and that the part of their identity that is most dominant can change, depending on which group they are associating with. For example, a gay man who belongs to a professional organization of surgeons may feel that the gay part of his identity is dominant when he is among other gay men, confirming his ingroup identity, and that the surgeon aspect of his identity is dominant when he is among other surgeons or in the hospital.
Comparison is also a key part of social identity theory. Once people have categorized themselves and others, they can start to compare themselves. People generally want to create favorable comparisons that make their own groups appear superior. This plays into psychological distinctiveness, the desire to be unique within a group identity, and to be viewed positively when compared to others. The gay surgeon, for example, may derive self esteem from the knowledge when when he is compared with a surgical nurse, he may be viewed as superior because of his more advanced job title.