nep-soc New Economics Papers
on Social Norms and Social Capital
Issue of 2005‒08‒13
nineteen papers chosen by
Fabio Sabatini
Universitá degli Studi di Roma, La Sapienza

  1. Do Social Preferences Increase Productivity? Field Experimental Evidence from Fishermen in Toyama Bay By Jeffrey Carpenter; Erika Seki
  2. Competitive Work Environments and Social Preferences: Field Experimental Evidence from a Japanese Fishing Community By Jeffrey Carpenter; Erika Seki
  3. Culture and Institutions: Economic Development in the Regions of Europe By Guido Tabellini
  4. Incentives and Prosocial Behavior By Roland Bénabou; Jean Tirole
  5. How Do Friendships Form? By Bruce Sacerdote; David Marmaros
  6. Fairness and the Optimal Allocation of Ownership Rights By Ernst Fehr; Susanne Kremhelmer; Klaus Schmidt
  7. Democracy, Property Rights, Redistribution and Economic Growth By Gradstein, Mark
  8. The impact of payoff interdependence on trust and trustworthiness By M. Vittoria Levati; Matteo Ploner; Werner Güth
  9. Dynamics of irrigation institutions: Case study of village panchayat in Kerala By Vineetha Menon; Antonyto Paul; K.N. Nair
  10. Testing for Team Spirit - An Experimental Study By Rupert Sausgruber
  11. Making A Difference By Francois, Patrick
  12. Modernity with democracy?: Gender and governance in the people's planning campaign, Keralam By J. Devika
  13. Giving in Dictator Games: Regard for Others or Regard by Others? By Alexander K. Koch; Hans-Theo Normann
  14. Social Interactions and Industry Choices of Entrepreneurs: Identification by Residential Addresses By Rocco Huang
  15. Did the Devil Make Them Do It? The Effects of Religion and Religiosity in Public Goods and Trust Games By Lisa R. Anderson; Jennifer M. Mellor; Jeffrey Milyo
  16. Attitude-Dependent Altruism, Turnout and Voting By Rotemberg, Julio
  17. Value Through Diversity: Microfinance and Islamic Finance and Global Banking By Nicoletta Ferro
  18. The Impact of Social Institutions on the Economic Role of Women in Developing Countries By Johannes Jütting; Christian Morrisson
  19. Morality and Conflicts By Dorothee Schmidt

  1. By: Jeffrey Carpenter (Middlebury College and IZA Bonn); Erika Seki (University of Aberdeen)
    Abstract: We provide a reason for the wider economics profession to take social preferences, a concern for the outcomes achieved by other reference agents, seriously. Although we show that student measures of social preference elicited in an experiment have little external validity when compared to measures obtained from a field experiment with a population of participants who face a social dilemma in their daily lives (i.e., team production), we do find strong links between the social preferences of our field participants and their productivity at work. We also find that the stock of social preferences evolves endogeously with respect to how widely team production is utilized.
    Keywords: field experiment, social preference, income pooling, productivity
    JEL: C93 D21 D24 H41 J24 M52 M54 Z13
    Date: 2005–07
  2. By: Jeffrey Carpenter (Middlebury College and IZA Bonn); Erika Seki (University of Aberdeen)
    Abstract: Models of job tournaments and competitive workplaces more generally predict that while individual effort may increase as competition intensifies between workers, the incentive for workers to cooperate with each other diminishes. We report on a field experiment conducted with workers from a fishing community in Toyama Bay, Japan. Our participants are employed in three different aspects of fishing. The first group are fishermen, the second group are fish wholesalers (or traders), and the third group are staff at the local fishing coop. Although our participants have much in common (e.g., their common relationship to the local fishery and the fact that they all live in the same community), we argue that they are exposed to different amounts of competition on-the-job and that these differences explain differences in cooperation in our experiment. Specifically, fishermen and traders, who interact in more competitive environments are significantly less cooperative than the coop staff who face little competition on the job. Further, after accounting for the possibility of personality-based selection, perceptions of competition faced on-the-job and the treatment effect of job incentives explain these differences in cooperation to a large extent.
    Keywords: field experiment, cooperation, social disapproval, social preference, competition, Japan, fishing
    JEL: C90 C93 H41 M54 Z13
    Date: 2005–07
  3. By: Guido Tabellini
    Abstract: Does culture have a causal effect on economic development? The data on European regions suggest that it does. Culture is measured by indicators of individual values and beliefs, such as trust and respect for others, and confidence in individual self-determination. To isolate the exogenous variation in culture, I rely on two historical variables used as instruments: the literacy rate at the end of the XIXth century, and the political institutions in place over the past several centuries. The political and social history of Europe provides a rich source of variation in these two variables at a regional level. The exogenous component of culture due to history is strongly correlated with current regional economic development, after controlling for contemporaneous education, urbanization rates around 1850 and national effects. Moreover, the data do not reject the over-identifying assumption that the two historical variables used as instruments only influence regional development through culture. The indicators of culture used in this paper are also strongly correlated with economic development and with available measures of institutions in a cross-country setting.
    Keywords: culture, economic development, trust, literacy, institutions
    JEL: F10 N13 O10 P10
    Date: 2005
  4. By: Roland Bénabou (Princeton University, CEPR, NBER and IZA Bonn); Jean Tirole (Institut d’Economie Industrielle (IDEI), GREMAQ, CERAS and MIT)
    Abstract: We develop a theory of prosocial behavior that combines heterogeneity in individual altruism and greed with concerns for social reputation or self-respect. Rewards or punishments (whether material or image-related) create doubt about the true motive for which good deeds are performed and this "overjustification effect" can induce a partial or even net crowding out of prosocial behavior by extrinsic incentives. We also identify settings that are conducive to multiple social norms and those where disclosing one’s generosity may backfire. Finally, we analyze the choice by public and private sponsors of incentive levels, their degree of confidentiality and the publicity given to agents’ behavior. Sponsor competition is shown to potentially reduce social welfare.
    Keywords: altruism, rewards, motivation, esteem, crowding out, overjustification effect, identity, social norms, morals, greed, psychology
    JEL: D64 D82 H41 Z13
    Date: 2005–07
  5. By: Bruce Sacerdote; David Marmaros
    Abstract: We examine how people form social networks among their peers. We use a unique dataset that tells us the volume of email between any two people in the sample. The data are from students and recent graduates of Dartmouth College. First year students interact with peers in their immediate proximity and form long term friendships with a subset of these people. This result is consistent with a model in which the expected value of interacting with an unknown person is low (making traveling solely to meet new people unlikely), while the benefits from interacting with the same person repeatedly are high. Geographic proximity and race are greater determinants of social interaction than are common interests, majors, or family background. Two randomly chosen white students interact three times more often than do a black student and a white student. However, placing the black and white student in the same freshman dorm increases their frequency of interaction by a factor of three. A traditional "linear in group means" model of peer ability is only a reasonable approximation to the ability of actual peers chosen when we form the groups around all key factors including distance, race and cohort.
    JEL: J0 J2
    Date: 2005–08
  6. By: Ernst Fehr; Susanne Kremhelmer; Klaus Schmidt
    Abstract: We report on several experiments on the optimal allocation of ownership rights. The experiments confirm the property rights approach by showing that the ownership structure affects relationship-specific investments and that subjects attain the most efficient ownership allocation despite starting from different initial conditions. However, in contrast to the property rights approach, the most efficient ownership structure is joint ownership. These results are neither consistent with the self-interest model nor with models that assume that all people behave fairly, but they can be explained by the theory of inequity aversion that focuses on the interaction between selfish and fair players.
    Keywords: ownership rights, double moral hazard, fairness, reciprocity, incomplete contracts
    JEL: C70 C90 J30
    Date: 2005
  7. By: Gradstein, Mark
    Abstract: Protection of property rights, as well as the burden of fiscal redistribution, have long been viewed as growth related factors. It is argued here that democratization may affect both. As the economy becomes more democratic, it creates high quality institutions such as public protection of property rights, but also becomes more responsive to fiscal demands. The analysis – which, we argue, is consistent with existing evidence - reveals that the net effect is likely to increase growth while at the same time reducing inequality. We also introduce the concept of a political bias and argue that its gradual reduction is the means to indirectly commit to high quality institutions. All this indicates, in particular, a strong link between democracy and institutional quality.
    Keywords: democracy; growth
    JEL: O11 P16
    Date: 2005–07
  8. By: M. Vittoria Levati; Matteo Ploner; Werner Güth
    Abstract: In one-shot investment game experiments where each player's payoff is a convex combination of own and other's profit, trust remains unaffected by the extent of interdependence whereas trustworthiness reacts positively to it.
    Keywords: Investment game; Trust; Trustworthiness; Payoff interdependence
    JEL: C72 C92 D62
    Date: 2005–08
  9. By: Vineetha Menon (Centre for Development Studies); Antonyto Paul (Centre for Development Studies); K.N. Nair (Centre for Development Studies)
    Abstract: Based on field work in a village panchayat in Kerala, analyzing the complex issues concerning the development and working of irrigation institutions, the present study reveals that successful management of irrigation is contingent upon the level of participation of the water users in the management. By comparing irrigation institutions under different property rights, the study identifies the significant factors that contribute to the success and sustainability of irrigation institutions. It is found that albeit the physical characteristics of irrigation systems and the heterogeneities of the members of the user groups do impact the outcome, it is the institutional environment as reflected in the presence of clear as well as flexible systems of rules and regulations, enforcement mechanisms, nesting and networking of such institutions etc. that have become the most crucial determinants. For this, presence of able and fair leadership and the manoeuvring of various sources of power are found to be essential.
    Keywords: irrigation, institutions, water management, irrigation organisations, sustainability
    JEL: D7 H4 Q15 Q25
    Date: 2005–02
  10. By: Rupert Sausgruber (University of Innsbruck)
    Abstract: It is often suggested that team spirit counteracts free-riding. Testing for team spirit with field data is difficult, however, due to an inherent identification problem. In this paper test for team spirit experimentally. In a team work task we vary subjects' information about relative team performance while we leave unchanged the structure of explicit incentives. We find that subjects contribute more to their team's project when teams observe each others' performance. We attribute this result to the enhancement of team spirit caused by asymmetric peer effects between observing teams.
    Keywords: team spirit, peer effects, organization of work, public goods experiments
    JEL: C92 H41 J2
    Date: 2005–08–02
  11. By: Francois, Patrick
    Abstract: Despite the potential for free-riding, workers motivated by ‘making a difference’ to the mission or output of an establishment may donate labour to it. When the establishment uses performance related compensation (PRC), these labour donations closely resemble a standard private provision of public goods problem, and are not rational in large labour pools. Without PRC, however, the problem differs significantly from a standard private provision of public goods situation. Specifically, in equilibrium: there need not be free-riding, decisions are non-monotonic in valuations, and contribution incentives are significant even in large populations. When PRC is not used, the establishment tends to favour setting low wages which help to select a labour force driven by concern for the firm’s output. Expected output can actually fall with the wage in this situation. For sufficiently high levels of risk aversion, performance related pay can yield less expected output than when compensation is output independent.
    Keywords: incentive schemes; privately provided public goods; public sector employment; voluntarism
    JEL: H11 H41 H83 J45
    Date: 2005–07
  12. By: J. Devika (Centre for Development Studies)
    Abstract: This paper takes advantage of the possibility of a critical perspective afforded by the feminist perspective in analyzing the interactions between political and civil societies in the shaping of specific developmental interventions by the state, to examine the People's Planning Campaign (PPC) in Keralam. Implemented in the mid-90s, this was hailed as an important experiment in mainstreaming gender concerns in development. The objectives of this paper go beyond reporting on the degree of success/failure of the effort at mainstreaming gender concerns in the PPC, though it draws upon many such reports. It will raise a few questions essentially historical in nature: given the fact that political society in Keralam has never displayed any acute concern for gender justice, and that this was a marginal issue even within civil society here, under what conditions did it come to be acknowledged as a key element in a political experiment as momentous as the PPC? Gender justice has been addressed in people's planning (at least in some locations, to some extent) in some specific ways, excluding other ways- what determines this selection process?. In the first section of this paper I trace the emergence of civil and political societies in 20th century Keralam, with special attention to the ways in which they have been gendered, and simultaneously worked as gendering spaces. This account may help us to understand how gender justice came to be both `in' and `out', at one and the same time, in the momentous political experiment of the PPC. In the second section, several points of agreement between numerous reports on gender and governance in the PPC are taken up and discussed in the wider historical context. These reports generally point out, for instance, that that the active involvement of social movements like the KSSP in democratic decentralization has not effected a significant change in the general attitude of misogyny prevalent in political society. The conclusion considers the implications of some of two significant developments-the entry of women into local governance, and the wide reach attained by the women SHGs _ for the future of gender politics in Kerala.
    Keywords: Gender Justice, Framework of Democracy, Framework of Modernity, Civil Society, Political Society
    Date: 2005–02
  13. By: Alexander K. Koch (Royal Holloway, University of London and IZA Bonn); Hans-Theo Normann (Royal Holloway, University of London)
    Abstract: Recent bargaining experiments demonstrated an impact of anonymity and incomplete information on subjects' behavior. This has rekindled the question whether "fair" behavior is inspired by regard for others or is explained by external forces. To test for the importance of external pressure we compare a standard double blind dictator game to a treatment which provides no information about the source of dictator offers, and where recipients do not even know that they participate in an experiment. We find no differences between treatments. This suggests that those dictators who give are purely internally motivated, as asserted by models of other-regarding preferences.
    Keywords: dictator game, altruism, social preferences
    JEL: A13 C91 D64
    Date: 2005–07
  14. By: Rocco Huang (University of Amsterdam)
    Abstract: This paper documents how social interactions shape industry choices of entrepreneurs. We utilize an administrative data set recording residential addresses of London entrepreneurs. In a large cross-section of community-industry pairs, we show that new entrepreneurs are more likely to enter industries historically over-represented by their residential neighbors. This persistence of industry specializations is stronger in communities where social interactions are more intensive, as proxied by higher ethnic homogeneity, housing structures that are more conducive to social interactions, or higher entrepreneurial density. The effect is also stronger in industries that require more informational interactions, as proxied by higher geographic agglomeration of entrepreneurs. The use of residential addresses helps us identify the presence of social interactions because we can safely argue that residential addresses affect social interactions but do not directly affect industry choices. The median home-business distances in our sample is nearly six kilometers, thus the persistence of industry specializations is unlikely to be driven by unobservable common product market conditions. In every regression, we also control for industry specializations at borough level (the higher level of geographic unit than community, each of which contains around 20 communities), to further remove the effects of unobservable factors. Finally, we also use various sub-groups of entrepreneurs to test for a series of alternative hypotheses, and we do not find support for them. We do not find lower failure rate for entrepreneurs who follow their neighbors’ popular choices. Nevertheless, overall, the results suggest that entry of new entrepreneurs tend to reinforce agglomeration, while exits do not reverse it. This is a weak evidence of agglomeration economies.
    JEL: M13 J24 R12
    Date: 2005–07–26
  15. By: Lisa R. Anderson (Department of Economics, College of William and Mary); Jennifer M. Mellor (Department of Economics, College of William and Mary); Jeffrey Milyo (Department of Economics and Truman School of Public Affairs, University of Missouri)
    Abstract: We test whether religious affiliation and participation in religious services are associated with behavior in public goods and trust games. Overall, religious affiliation is unrelated to individual behavior. However, we find some weak evidence that among subjects attending religious services, increased participation is associated with behavior in both public goods and trust games.
    Keywords: public goods experiment, trust, religion
    JEL: C9 H4 Z12
    Date: 2005–08–03
  16. By: Rotemberg, Julio
    Abstract: This paper presents a goal-oriented model of political participation based on two psychological assumptions. The first is that people are more altruistic towards individuals that agree with them and the second is that people’s well being rises when other people share their personal opinions. By conveying credible information on attitudes, votes give pleasure to individuals who agree with them and thereby confer vicarious utility on voters. Substantial equilibrium turnout emerges with nontrivial voting costs and modest altruism. The model can explain higher turnout in close elections as well as higher turnout by more informed and more educated individuals. For certain parameters, the model predicts that third party candidates will lose votes to more popular candidates, a phenomenon often called strategic voting. For other parameters, the model predicts ‘vote-stealing’ where the addition of a third candidate robs a major candidate of electoral support.
    Keywords: altruism; elections; turnout; voting
    JEL: D64 D72
    Date: 2005–07
  17. By: Nicoletta Ferro (Fondazione Eni Enrico Mattei)
    Abstract: Internet resources, extended media coverage and international organizations’ reports recently witness the increasing interest of western banks in new models of finance, particularly Islamic finance and microfinance. This new trend is not only channeled through the frame of corporate social responsibilities programs and policies or limited to ad hoc financial institutions (like microcredit banks or Islamic banks) as it is entering the financial offer of mainstream banks. The paper primarily outlines that many elements of microfinance could be considered consistent with the broader goals of Islamic banking. Apart from pure economic considerations which are not the aim of this analysis, the paper supports the thesis that by addressing new markets and embracing unconventional financial proposals, the global banking sector can contribute to the quest for diversity-oriented policies posed by an increasingly globalised scenario. The consequences this new trend is likely to have on inner banking structures are still unknown and are likely to interest the issue of wealth distribution. Moreover, from a more general point of view, by showing that even different moral ethos deep rooted in different cultural paradigms can be as profitable and available as western capitalistic ones, the banking sector can play a potential role in disseminating awareness on specific cultural and religious issues, resulting in increased integration of Muslim communities and low income investors in the long run and supporting commercial banks the close relation between economy and culture.
    Keywords: Microfinance, Islamic finance, Diversity, Multiculturalism, Global banking
    JEL: G21 I31 Z12 Z13 G24
    Date: 2005–06
  18. By: Johannes Jütting; Christian Morrisson
    Abstract: <P>Donor agencies and policy makers tend to agree that increased access of women to education, health, credit, formal legal rights and employment opportunities, in conjunction with economic growth, will substantially improve the socio-economic role of women in developing countries. This paper challenges that view. It argues that these measures might not be sufficient if the institutional framework within a country constrains women from participating in economic activities. It finds that social institutions — laws, norms, traditions and codes of conduct — constitute the most important single factor determining women’s freedom of choice in economic activities. They have not only a direct impact on the economic role of women but also an indirect one through women’s access to resources like education and health care. The findings suggest that an institutional framework that disadvantages half of the adult population hinders development. To address gender inequalities effectively, policy ...</P> <P>Les agences d’aide et les responsables politiques s’accordent en général sur l’idée suivante: un accès accru des femmes à l’éducation, à la santé, au crédit, aux droits reconnus par la loi et aux possibilités d’emploi, en conjonction avec la croissance économique, améliorera significativement le rôle des femmes dans la société et l’économie des pays en développement. Ce document conteste cette idée pour la raison suivante : ces mesures risquent de ne pas suffire aussi longtemps que le cadre institutionnel limite dans un pays la participation des femmes aux activités économiques. Il montre que les institutions sociales, c’est-à-dire les lois, les normes, les traditions et les codes de comportement dans une société représentent le facteur le plus important qui détermine la liberté de choix des femmes en matière d’activité économique. Les institutions sociales n’ont pas seulement un impact direct sur le rôle économique des femmes, mais elles ont aussi un impact indirect à cause de ...</P>
    Date: 2004–05
  19. By: Dorothee Schmidt (Department of Economics, Johannes Gutenberg University of Mainz, Germany)
    Abstract: In recent debates, morality or social norms have been proposed as an instrument to reduce conflict behavior. As the argument goes, moral people will not engage in socially not-tolerated behavior or, less so than amoral people. Analyzing this question in the framework of contest theory, we find that if morality can discriminate between appropriation and defense, it is an effective instrument to lower socially unwanted behavior and support the enforcement of property rights. If it cannot discriminate between these different conflict efforts, strategic effects due to a one-sided increase in morality might actually lead to total increased conflict effort in the economy.
    Keywords: Contests, property right enforcement, morality, education
    JEL: D72 D74 I20 K42 Z13
    Date: 2005–07

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