I note some of these issues in my Public Choice classes when we cover expressive voting. When we're making decisions as shoppers, our consumption decisions are often bundled with all kinds of expressive considerations and identity issues. But there's no reason to expect these to be at all suboptimal in any overall sense. We weigh up the expressive benefits from certain consumption choices and weigh them against the opportunity costs - the extra amount of real resources we have to forego in making that choice. We can have problems, surely, where because we've bundled some aspects of consumption into our identities we might take too long to switch from a suboptimal path after a relative price change, but because we're individually bearing those costs, the losses can't be spectacularly large. Otherwise we'd switch.
When we flip over to the political realm, identity and expressiveness choices are individually costless. Now that isn't always true - some folks get so wrapped up in it that it surely imposes real costs on themselves and others. But on the whole, you don't really need to weigh up the real external costs imposed by your expressive and identity choices in policy. If it makes you happy to believe that you're a good person who's affiliated with good people and voting for the kinds of things that good people vote for, then it really doesn't matter much if those policies actually do harm in the real world. There's no feedback loop from individual choice to individual consequence at the ballot box. And so we get the political world we live in.
I say politics is the mindkiller. Andrew Coyne puts it a bit more bluntly:
In short, partisans are morons: mindless, mouthbreathing automatons.Enjoy your identity and affiliations when shopping. But, if you can (and only metaphorically), grab an icepick, jam it up into the part of your brain that connects identity and affiliation to politics, and stir it around a bit.
— Andrew Coyne (@acoyne) December 4, 2012