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A widely read book by Erik H. Erikson launched a set of ideas that stimulated the formulation of the concept of identity status. Writing from a psychoanalytic perspective, Erikson construed that individuals at each stage of life (e.g., infancy, childhood, adolescence, adulthood) have a crisis to resolve, with all positive resolutions enhancing the foundation of ego identity that is created during adolescence. Each society is thought to provide early enhancements of a child's imitation and identification with parents. This process stimulates, in the early years of childhood, an identity that is based on parental ideals, values, or beliefs. But during adolescence, society offers a psychosocial moratorium for the youth to experiment with ideas about roles, values, goals, and possible commitments that could expand identity beyond parental ideals to a more self-constructed identity. During the psychosocial moratorium (i.e., a time to be free to explore personal and career goals and options), adolescents struggle with an identity crisis and formulate an identity or experience an unsettling state of role confusion and self-consciousness. By resolving the identity crisis, an extreme occupation with self-consciousness is diminished, and a youth identifies a set of goals, values, and commitments that become the foundation for an adult identity. Identity resolution brings with it several strengths in personality, particularly, when the identity is well received by adult society and is encouraged and recognized by adults as a useful direction to life. This recognition can occur through ceremonies, rituals, or rites of passage (e.g., graduation, scout badges, or communion).

James Marcia used Erikson's theory to devise a concept and research tool to assess identity. The identity-status paradigm utilizes Erikson's concepts of crisis and identity commitments. Crisis means a turning point, a time for action, a period of exploration and discovery. Identity commitments refer to the establishment of goals, accepted values, and faith of the use and importance of ideologies (such as capitalism, denominational faith, or political party affiliation). When crisis or exploration is crossed with commitments, four identity statuses are defined. These identity statuses are labeled diffusion, foreclosure, moratorium, and achievement. Diffusion status represents a person who has little or no sense of crisis or exploration and no firm set of commitments. Foreclosure represents an individual who has accepted commitments but not based on exploration or searching. The foreclosed person has commitments based on parental or adult values without the experience of exploration. This form of identity is mostly based in imitation, identification with parental ideals, and conformity without critical inspection. The moratorium status involves a person who is in a deep state of exploration and discovery but is not ready to make lifelong commitments. Identity achievement is the pinnacle of identity development. Individuals who report a state of exploration and firm commitments are identity achieved.

Identity statuses are categories of four different states in identity formation. Therefore, identity statuses are a set of typologies. Four identity statuses are readily found in any population of adolescents or emerging adults. Furthermore, over time and with increasing maturity, a youth can evolve into another typology. Most longitudinal evidence suggests that diffused youth can become foreclosed or move into a moratorium status. And most moratorium-status youth become identity achieved. However, youth can also reverse their growth from moratorium back to diffusion or maybe foreclosure. Also, identity-achieved individuals can return to moratorium but usually mature back into a new form of identity-achievement status. There is always a possibility of progression to more exploration, commitment, or both, but regression is possible where a youth reverses direction to a simpler or less complex form of identity.

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