nep-soc New Economics Papers
on Social Norms and Social Capital
Issue of 2005‒12‒14
seventeen papers chosen by
Fabio Sabatini
Universitá degli Studi di Roma, La Sapienza

  1. Social Capital and Incentive Compatibility: Modelling the Accumulation and Use of Social Collateral By Tewodaj Mogues; Michael R. Carter
  2. Empowerment and Local Level Conflict Mediation in Indonesia : A Comparative Analysis of Concepts, Measures, and Project Efficacy By Christopher Gibson; Michael Woolcock
  3. Symbolic Public Goods and the Coordination of Collective Action : A Comparison of Local Development in India and Indonesia By Vijayendra Rao
  4. Governance in the Gullies : Democratic Responsiveness and Leadership in Delhi's Slums By Saumitra Jha; Vijayendra Rao; Michael Woolcock
  5. Democratization and clientelism: Why are Young Democracies Badly Governed? By Philip Keefer
  6. Shocks, Livestock Asset Dynamics, and Social Capital in Ethiopia By Tewodaj Mogues
  7. Cinema Is Good For You: the effects of cinema attendance on self reported anxiety or depression and “happiness” By S.C. Noah Uhrig
  8. Institution Building and Growth in Transition Economies By Thorsten Beck; Luc Laeven
  9. The Impossibility of Corporate Ethics – For a Levinasian Approach to Managerial Ethics By Corvellec, Hervé; Bevan, David
  10. Building Global Knowledge Pipelines: The Role of Temporary Clusters By Peter Maskell; Harald Bathelt; Anders Malmberg
  11. Network Potentials By Subhadip Chakrabarti; Robert P. Gilles
  12. International R&D Collaboration Networks By Huasheng, SONG; Vincent, VANNETELBOSCH
  13. Institutions and Development:A View from Below By Rohini Pande; Christopher Udry
  14. On Delegation under Relational Contracts By Oliver Gürtler
  15. Childhood Family Structure and Schooling Outcomes: evidence for Germany By Marco Francesconi; Stephen P. Jenkins; Thomas Siedler
  16. Household Savings and Residential Mobility in Informal Settlements By Somik V. Lall; Ajay Suri; Uwe Deichmann
  17. Networks of Manufacturers and Retailers By Ana, MAULEON; José, SEMPERE-MONERRIS; Vincent, VANNETELBOSCH

  1. By: Tewodaj Mogues (International Food Policy Research Institute); Michael R. Carter (University of Wisconsin - Madison)
    Abstract: In economics, where the long resistance to reflecting on the effects of social interaction on economic behaviour is slowly waning, the concept of social capital may turn out to be a useful analytical tool. However, initial interest in social capital has produced a large variety of definitions, theoretical frameworks, empirical analyses, and even policy prescriptions. This paper provides a selective review and critique of some of the more recent literature on social capital. It then suggests that many of the problems in the existing literature can be addressed by lowering aspirations about what social capital is and reformulating it in terms of its impact on incentive problems in economic transactions in the presence of imperfect markets and costly or non-enforceable contracts. The paper finally advances a model of one of the ways that social capital resolves incentive compatibility problems, namely its role as a collateral asset
    Keywords: Social Capital; Incentive Compatibility; Social Collateral; Credit
    JEL: O
    Date: 2005–12–08
  2. By: Christopher Gibson (Brown University); Michael Woolcock (The World Bank and Harvard University)
    Abstract: The notion of empowerment has been more often deductively claimed than carefully defined or inductively assessed by development scholars and practitioners alike. The authors define and assess empowerment through an in-depth examination of the extent to which a large community development project in rural Indonesia empowers participants (especially members of marginalized groups) through building their capacity to manage local conflict. Although the project induces conflict through its deployment of a competitive bidding process, the authors argue that, when well implemented, it can also enable otherwise unequal groups to more peacefully, equitably, and effectively engage one another. Using a mixed methods approach, they compare cases from otherwise similar treatment and control villages to shed light on the chief components of villagers' capacity to manage local conflict. They discuss the interdependencies of two major analytical realms-routines of inter-group collaboration, and sources of countervailing power-and their relation to local conflict processes and outcomes.
    Keywords: Poverty, Social development
    Date: 2005–09–01
  3. By: Vijayendra Rao (The World Bank)
    Abstract: Most economists think of common property as physical-a body of water, a forest-and as bounded within geographic space. In this paper, building on work in social theory, the author argues that common property can also be social-defined within symbolic space. People can be bound by well-defined symbolic agglomerations that have characteristics similar to common property. He calls these "symbolic public goods" (SPGs) and make the case that such constructs are central to understanding collective action. He illustrates the point by contrasting how conceptions of nationalism in Indonesia and India created SPGs that resulted in very different strategies of local development. Indonesia emphasized collective action by the poor that resulted in a form of regressive taxation, enforced by the ideology of svadaya gotong royong (community self-help) that was both internalized and coercively enforced. India emphasized democratic decentralization through the panchayat system driven by the Gandhian ideology of gram swaraj (self-reliant villages). This has resulted in an unusual equity-efficiency tradeoff. Indonesia has delivered public services much more efficiently than India did, but at the cost of democratic freedoms and voice. The author argues that the challenge for these countries is not to undermine their existing SPGs but to build on them. Indonesia should retain the spirit of svadaya gotong royong but channel it in an equitable and democratic direction, while India should build the capacity of the panchayat system by giving it fiscal teeth, while promoting underutilized institutions such as Gram Sabhas (village meetings) that encourage accountability and transparency.
    Keywords: Governance, Urban development, Poverty, Rural development, Social Development
    Date: 2005–08–01
  4. By: Saumitra Jha (Stanford University); Vijayendra Rao (The World Bank); Michael Woolcock (The World Bank)
    Abstract: The authors use detailed ethnographic evidence to design and interpret a broad representative survey of 800 households in Delhi's slums, examining the processes by which residents gain access to formal government and develop their own informal modes of leadership. While ethnically homogeneous slums transplant rural institutions to the city, newer and ethnically diverse slums depend on informal leaders who gain their authority through political connections, education, and network entrepreneurship. Education and political affiliation are more important than seniority in determining a leader's influence. Informal leaders are accessible to all slum dwellers, but formal government figures are most accessed by the wealthy and the well-connected.
    Keywords: Governance, Urban development, Poverty, Social Development
    Date: 2005–09–01
  5. By: Philip Keefer (The World Bank)
    Abstract: This paper identifies systematic performance differences between younger and older democracies: younger democracies are more corrupt; exhibit less rule of law, lower levels of bureaucratic quality, and lower secondary school enrollments; and spend more on public investment and government workers. Only one theory explains the effects of democratic age on the wide range of policy outcomes examined here-the inability of political competitors in younger democracies to make credible promises to citizens. This explanation, first advanced in Keefer and Vlaicu (2004), offers a concrete interpretation of what political institutionalization might mean, and why it is that young democracies frequently fail to become older and well-performing democracies. A variety of tests support this explanation against alternatives. The effect of democratic age remains large even after controlling for the possibilities that voters are less well-informed in young democracies, that young democracies have systematically different political and electoral institutions, or that young democracies exhibit more polarized societies.
    Keywords: Infrastructure, Governance, Social Development, Education, Public sector management
    Date: 2005–05–01
  6. By: Tewodaj Mogues (International Food Policy Research Institute)
    Abstract: This paper uses household survey panel data of 416 rural households to study livestock asset dynamics in the north-east of Ethiopia. The period under examination (1996-2003) was marked by severe environmental shocks, including a series of droughts. Using as point of departure the literature on the evolution of productive assets in the presence of risk, which relates asset paths to initial endowments, we test the hypothesis of wealth divergence and the existence of asset poverty traps. Results indicate rather that livestock asset dynamics are marked by convergence over time. Examining the role of social capital in recovery and growth of households’ endowments, both local social relationships as well as ‘bridging’ social capital seem to have a positive effect on asset holdings directly, as well as indirectly by mitigating the impact of income shocks on livestock capital.
    Keywords: Ethiopia; Social capital; Shocks; Livestock assets; Dynamic analysis
    JEL: O P
    Date: 2005–12–09
  7. By: S.C. Noah Uhrig (Institute for Social and Economic Research)
    Abstract: I analyse the effects of cinema attendance on psychological well-being and happiness. The type of visual stimulation unique to film provokes an emotive response holding therapeutic properties. The collective and controlled experience of this emotive response promotes well-being generally. This analysis differs from most research into the effect of leisure on happiness, anxiety or depression, and well-being because it focuses on the effects of sensory stimulation and its resulting emotion inducing properties as opposed to leisure pursuits involving physical conditioning. This work differs further by systematically comparing 10 different leisure activities against cinema attendance in their relative affects on happiness and self-reported anxiety and depression. Using data from wave 12 of the British Household Panel Study, I find that cinema attendance has strong positive effects on happiness and stable negative effects on self-reporting of anxiety or depression, even when controlling for various socio-demographic and economic factors. This research confirms, therefore, that cinema is a unique leisure activity with beneficial properties for well-being.
    Keywords: cinema, depression, leisure, well-being
    Date: 2005–08
  8. By: Thorsten Beck (The World Bank); Luc Laeven (The World Bank and CEPR)
    Abstract: Drawing on the recent literature on economic institutions and the origins of economic development, the authors offer a political economy explanation of why institution building has varied so much across transition economies. They identify dependence on natural resources and the historical experience of these countries during socialism as major determinants of institution building during transition by influencing the political structure and process during the initial years. Their empirical analysis shows that countries that are more reliant on natural resources and spent a longer time under socialist governments are more likely to see former communists remain in power and to start the transition process with less open political systems, with negative repercussions for the development of market-compatible institutions. Using natural resource reliance and the years under socialism to extract the exogenous component of institution building, the authors also show the importance of institutions in explaining the variation in economic development and growth across transition economies during the first decade of transition.
    Keywords: Governance, Transition, Macroeconomics and growth
    Date: 2005–07–01
  9. By: Corvellec, Hervé (Gothenburg Research Institute); Bevan, David (King's College London)
    Abstract: The moral philosophy of Emmanuel Levinas offers a prospectus of stark impossibility for any programme of business or corporate ethics. It differs from most traditional ethical theories in that for Levinas the ethical develops in a personal meeting of one with the other, rather than residing in some internal deliberation of the moral subject. Levinasian ethics emphasises an infinite personal responsibility arising for each of us in the face of the radical otherness of the Other. It stresses the imperious demand we experience in our humanity to be open to, prepared for and impassioned with that which we may not know, or recognise, about ourselves or about the other. Such a demand transcends our intellectual and/or rational potential, involving us in a carnal and somatic bodily experience of otherness. Consequently, it is questionable whether corporations can even be moral subjects in a Levinasian sense. We assert not only that corporations cannot deal with such a demand, but further that this helps to understand the failure of the business ethics project to date. If we are to speak of Levinasian ethics in any organisational setting, it cannot be a matter of corporate ethics but only a matter of individual managerial ethics. What such an ethics would be like is yet to be outlined and, as a contribution, we propose here a series of questions and injunctions. These questions and injunctions will explicate for individual managers some key terms of a Levinasian practice for which we will propose a vocabulary of otherness, responsibility, proximity, diachrony and justice. This vocabulary will provide managers with insights to an experience of alterity and may encourage them to experience the challenge of radical otherness and the irresistible call to a pre-ontological, timeless and infinite individual ethic.
    Keywords: Levinas; Managerial Ethics; Responsibility; Justice; Otherness/alterity
    Date: 2005–12–12
  10. By: Peter Maskell; Harald Bathelt; Anders Malmberg
    Abstract: Business people and professionals come together regularly at trade fairs, exhibitions, conventions, congresses, and conferences. Here, their latest and most advanced findings, inventions and products are on display to be evaluated by customers and suppliers, as well as by peers and competitors. Participation in events like these helps firms to identify the current market frontier, take stock of relative competitive positions and form future plans. Such events exhibit many of the characteristics ascribed to permanent spatial clusters, albeit in a temporary and intensified form. These short-lived hotspots of intense knowledge exchange, network building and idea generation can thus be seen as temporary clusters. The present paper compares temporary clusters with permanent clusters and other types of inter-firm interactions. If regular participation in temporary clusters can satisfy a firm’s need to learn through interaction with suppliers, customers, peers and rivals, why is the phenomenon of permanent spatial clustering of similar and related economic activity so pervasive? The answer, it is claimed, lies in the restrictions imposed upon economic activity when knowledge and ideas are transformed into valuable products and services. The paper sheds new light on how interaction among firms in current clusters coincides with knowledge-intensive pipelines between firms in different regions or clusters. In doing so, it offers a novel way of understanding how inter-firm knowledge relationships are organized spatially and temporally.
    Keywords: Economic geography; knowledge; clusters; temporary clusters; trade fairs; conventions; pipelines
    JEL: D83 L22 O17 O18 R12
    Date: 2005
  11. By: Subhadip Chakrabarti; Robert P. Gilles
    Abstract: A network payoff function assigns a utility to all participants in a (social) network. In this paper we discuss properties of such network payoff functions that guarantee the existence of certain types of pairwise stable networks and the convergence of certain network formation processes. In particular we investigate network payoff functions that admit an exact network potential or an ordinal network potential. We relate these network potentials to exact and ordinal potentials of a non-cooperative network formation game based on consent in link formation. Our main results extend and strengthen the current insights in the literature on game theoretic approaches to social network formation.
    Keywords: Network formation; pairwise stability; potential functions
    JEL: C72 C79 D85
    Date: 2005–10
  12. By: Huasheng, SONG; Vincent, VANNETELBOSCH
    Abstract: We reconsider Goyal and Moraga-Gonzalez (Rand J. of Econ. 32 (2001), 686-707) model of strategic networks in order to analyze how government policies (e.g. subsidies) will affect the stability and efficiency of networks of R&D collaboration among three firms located in different countries. A conflict between stability and efficiency is likely to occur. When governments cannot subsidize R&D, this conflict will occur if public spillovers are not very small. However, when governments can subsidize R&D, the likelihood of a conflict is considerably reduced. Indeed, a conflict will arise only if public spillovers are very small or quite large.
    Keywords: Network; R&D collaboration; Subsidy
    JEL: C70 F13 L13 L20
    Date: 2005–05–15
  13. By: Rohini Pande (Economic Growth Center, Yale University); Christopher Udry (Economic Growth Center, Yale University)
    Abstract: In this paper we argue the case for greater exploitation of synergies between research on specific institutions based on micro-data and the big questions posed by the institutions and growth literature. To date, the macroeconomic literature on institutions and growth has largely relied on cross-country regression evidence. This has provided compelling evidence for a causal link between a cluster of ‘good’ institutions and more rapid long run growth. However, an inability to disentangle the effects of specific institutional channels on growth or to understand the impact of institutional change on growth will limit further progress using a cross-country empirical strategy. We suggest two research programs based on micro-data that have significant potential. The first uses policy-induced variation in specific institutions within countries to understand how these institutions influence economic activity. The second exploits the fact that the incentives provided by a given institutional context often vary with individuals’ economic and political status. This can help us better understand how institutional change arises in response to changing economic and demographic pressures.
    Keywords: Institutions, Growth, Cross-Country Regressions
    JEL: O11 O12 O17 P51
    Date: 2005–11
  14. By: Oliver Gürtler
    Abstract: The benefits and costs of different forms of job design have been analyzed in the literature yet. The focus has thereby mostly been on job designs under formal contracts between the parties. However, in the real world relational contracts - informal agreements sustained by the value of future relationships - play a role as important as formal ones. This paper therefore considers the advantages and disadvantages of two different kinds of job design, partial del- egation and complete delegation with specialization, when the parties make use of both, formal and informal agreements. It is found that many of the results derived in the absence of informal contracts will no longer hold, if these contracts become available.
    Keywords: Job design, relational contracts, formal contracts, delegation
    JEL: D82 J33 L23 M52 M54
    Date: 2005–10
  15. By: Marco Francesconi (Department of Economics, University of Essex); Stephen P. Jenkins (Institute for Social and Economic Research); Thomas Siedler (Institute for Social and Economic Research)
    Abstract: We analyse the impact on schooling outcomes of growing up in a family headed by a single mother. Growing up in a non-intact family in Germany is associated with worse outcomes in models that do not control for possible correlations between common unobserved determinants of family structure and educational performance. But once endogeneity is accounted for, whether by using sibling-difference estimators or two types of instrumental variable estimator, the evidence that family structure affects schooling outcomes is much less conclusive. Although almost all the point estimates indicate that non-intactness has an adverse effect on schooling outcomes, confidence intervals are large and span zero.
    Keywords: childhood family structure, education success, instrumental variables, lone parents, sibling differences, treatment effects
    Date: 2005–11
  16. By: Somik V. Lall (The World Bank); Ajay Suri (Society for Development Studies, Delhi, India); Uwe Deichmann (The World Bank)
    Abstract: Strategies to help the one billion people worldwide who live in informal settlements have mainly focused on slum upgrading, sites and services programs, and tenure security. In contrast, there has been less attention on what enables slum dwellers to transition into the formal housing sector, which has the dual benefits of improving service access and escaping social stigma. In this paper the authors investigate residential mobility among slum dwellers in Bhopal, India. Their analysis shows that one in five households succeeds in getting out of a slum settlement, and a major determinant is the household's ability to save on a regular basis. Due to limited outreach of institutional housing finance, most slum dwellers rely solely on household savings for purchasing a house. These findings underscore the urgent need to improve savings instruments for slum dwellers and to downmarket housing finance to reach the poorest residents of rapidly growing cities in developing countries.
    Keywords: Urban development
    Date: 2005–05–01
    Abstract: We study the endogenous formation of networks between manufacturers of differentiated goods and multi-product retailers who interact in a successive duopoly. Joint consent is needed to establish and/or maintain a costly link between a manufacturer and a retailer. We find that only three distribution networks are stable for particular values of the degree of product differentiation and link costs : (i) the non-exclusive distribtion & non-exclusive dealing network in which both retailers distribute both products is stable for intermediate degree of product differentiation and small link costs; (ii) the exclusive distribution & exclusive dealing network in which each retailer distributes a different product is stable for low degrees of product differentiation; (iii) the mixed distribution network in which one retailer distributes both products while the other retailer sells only one is stable for high degrees of product differentiation and large link costs. We show that the distribution networks that maximize social welfare are not necessarily stable. Thus, a conflict between stability and social welfare is likely to occur, even more if the degree of product differentiation is either low or high.
    Keywords: Networks; Retailers; Manufacturers
    JEL: C70 L13 L20 J50 J52
    Date: 2005–06–15

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