nep-soc New Economics Papers
on Social Norms and Social Capital
Issue of 2006‒02‒19
fifteen papers chosen by
Fabio Sabatini
Universita degli Studi di Roma, La Sapienza

  1. Social Capital, Public Spending and the Quality of Economic Development: The Case of Italy By Fabio Sabatini
  2. Does Culture Affect Economic Outcomes? By Guiso, Luigi; Sapienza, Paola; Zingales, Luigi
  3. The Empirics of Social Capital and Economic Development: A Critical Perspective By Fabio Sabatini
  4. A Model of Income Insurance and Social Norms By Lindbeck, Assar; Persson, Mats
  5. Deliver us from Evil: Religion as insurance By Andrew Clark; Orsolya Lelkes
  6. Cultural transmission of religious attitudes among Spanish Catholics By Pablo Brañas-Garza
  7. The Role of Community in Migration Dynamics By Sergio Vergalli
  8. Democracy and Development: The Devil in the Details By Torsten Persson; Guido Tabellini
  9. Institution Building and Change in China By Krug, B.; Hendrischke, H.
  10. Social Networks in the Boardroom By Kramarz, Francis; Thesmar, David
  11. Communication Networks, Hegemony, and Communicative Action By James Tully
  12. Public Implementation Eliminates Detrimental Effects of Punishment on Human Cooperation By Erte Xiao; Daniel Houser
  13. Choosing the Stick or the Carrot? Endogenous Institutional Choice in Social Dilemma Situations By Haigner, Stefan; Kocher, Martin; Sutter, Matthias

  1. By: Fabio Sabatini (University of Rome La Sapienza)
    Abstract: This paper carries out an empirical assessment of the relationship between social capital and the quality of economic development in Italy. The analysis draws on a dataset collected by the author including about two hundred variables representing different aspects of economic development and four “structural” dimensions of social capital. The quality of development is measured through human development and indicators of the state of health of urban ecosystems, public services, gender equality, and labour markets, while social capital is measured through synthetic indicators representing strong family ties, weak informal ties, voluntary organizations, and political participation. The quality of development exhibits a strong positive correlation with bridging weak ties and a negative correlation with strong family ties. Particularly, the analysis shows a strong correlation between informal ties and an indicator of “social well-being” (synthesizing gender equality, public services and labour markets) and between voluntary organizations and the state of health of urban ecosystems. Active political participation proves to be irrelevant in terms of development and well-being. Finally, the role of public spending for education, health care, welfare work, and the environment protection is analysed, revealing a scarce correlation both with social capital and development indicators.
    Keywords: Social capital, Social networks, Public spending, Economic development, Human development, Principal component analysis
    JEL: O15 O18 R11 Z13
    Date: 2006–01
  2. By: Guiso, Luigi; Sapienza, Paola; Zingales, Luigi
    Abstract: Economists have been reluctant to rely on culture as a possible determinant of economic phenomena. The notion of culture is so broad and the channels through which it can enter the economic discourse so vague that it is difficult to design testable hypotheses. In this paper we show this does need to be the case. We introduce a narrower definition of culture that allows for a simple methodology to develop and test cultural-based explanations. We also present several applications of this methodology: from the choice to become entrepreneur to that of how much to save, to end with the political decision on income redistribution.
    Keywords: cultural; culture; culture economics; culture-based; economic outcomes
    JEL: A10 J10 Z10
    Date: 2006–02
  3. By: Fabio Sabatini (University of Rome La Sapienza)
    Abstract: This paper provides an introduction to the concept of social capital, and carries out a critical review of the empirical literature on social capital and economic development. The survey points out six main weaknesses affecting the empirics of social capital. Identified weaknesses are then used to analyze, in a critical perspective, some prominent empirical studies and new interesting researches published in the last two years. The need emerges to acknowledge, also within the empirical research, the multidimensional, context-dependent and dynamic nature of social capital. The survey also underlines that, although it has gained a certain popularity in the empirical research, the use of “indirect” indicators may be misleading. Such measures do not represent social capital’s key components identified by the theoretical literature, and their use causes a considerable confusion about what social capital is, as distinct from its outcomes, and what the relationship between social capital and its outcomes may be. Research reliant upon an outcome of social capital as an indicator of it will necessarily find social capital to be related to that outcome. This paper suggests to focus the empirical research firstly on the “structural” aspects of the concept, therefore excluding by the measurement toolbox all indicators referring to social capital’s supposed outcomes.
    Keywords: Social capital, Social networks, Trust, Economic development, Relation of economics to other disciplines, Relation of economics to social values
    JEL: A12 A13 O10 Z13
    Date: 2006–01
  4. By: Lindbeck, Assar (Institute for International Economic Studies, Stockholm University); Persson, Mats (Institute for International Economic Studies, Stockholm University)
    Abstract: A large literature on ex ante moral hazard in income insurance emphasizes that the individual can affect the probability of an income loss by choice of lifestyle and hence, the degree of risk-taking. The much smaller literature on moral hazard ex post mainly analyzes how a “moral hazard constraint†can make the individual abstain from fraud (“mimickingâ€). The present paper instead presents a model of moral hazard ex post without a moral hazard constraint; the individual's ability and willingness to work is represented by a continuous stochastic variable in the utility function, and the extent of moral hazard depends on the generosity of the insurance system. Our model is also well suited for analyzing social norms concerning work and benefit dependency.
    Keywords: Moral hazard; sick pay insurance; labor supply; asymmetric information
    JEL: G22 H53 I38 J21
    Date: 2006–02–14
  5. By: Andrew Clark (CNRS, PSE, and IZA); Orsolya Lelkes (European Centre for Social Welfare Policy and Research)
    Abstract: This paper focusses on the insurance role of religion in buffering the well-being impact of stressful life events, and the ensuing economic and social implications. Using two large-scale European data sets, we show that the religious enjoy higher levels of life satisfaction, and that religion does insure against some adverse life events. All denominations suffer less psychological harm from unemployment than do the non-religious; equally both Catholics and Protestants are less hurt by marital separation. However, while Protestants are protected against divorce, Catholics are punished for it. These results do not seem to come about from the endogeneity of religion. These patterns in subjective well-being correspond to data on both attitudes (the religious are both anti-divorce and anti-job creation for the unemployed) and behaviour (the religious unemployed are less likely to be actively looking for work). In panel data, as implied by insurance, the religious have less variation in life satisfaction. Last, we suggest that religion’s insurance role might be reflected in support for different economic and social systems: consistent with this, unemployment replacement rates across Europe are lower in more religious countries.
    Keywords: Life Satisfaction, Religion, Unemployment, Marriage, Divorce, Insurance.
    JEL: I31 J12 J65 Z12
    Date: 2006–02–15
  6. By: Pablo Brañas-Garza (Department of Economic Theory and Economic History, University of Granada)
    Abstract: This paper examines how church attendance by mothersand fathers may influence their children´s religious practice. On the assumption that both maternal and paternal attendance are production factors for the religious capital of their offspring,we analyse whether the father can substitute for the mother´s attendance and vice versa. The analysis shows that: (i) the rol of the mother within Spanish households is more active than fathers; (ii) both parents attendance are positive factor of offspring current attendance; (iii) substitution among parents is possible; (iv)thus, the standard production function works.
    Keywords: church-attendance, offspring education, production function
    JEL: C90 C91 D63 D64
    Date: 2006–02–07
  7. By: Sergio Vergalli (University of Brescia)
    Abstract: In this paper, we present a theoretical model that, implementing the pioneering work of Burda (1995), based on the Real Option Theory, investigates the roots of the migration dynamics. In the model the decision to migrate of each individual depends not only on the wage differential, but also on a U-shaped benefit function of a community of homogeneous ethnic individuals, modelled according to the "theory of clubs". The theoretical results are able to give an explanation to the observable "jumps" in the migration flows and to describe how the trigger for entry can change depending on the dimension of the district. The analysis of the results also sheds light on the dynamics of the districts’ development: some possible rigidities in the adjustment of the district dimension, as regards the optimal levels, could magnify the hysteresis process.
    Keywords: Migration, Real option, Theory of clubs, Network effect
    JEL: F22 H49 O15 R23
    Date: 2006–01
  8. By: Torsten Persson; Guido Tabellini
    Date: 2006–02–08
  9. By: Krug, B.; Hendrischke, H. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: We advance a conceptual frame for explaining economic transformation in China that combines a dynamic and a comparative perspective by taking the analysis of Fiscal Federalism one step further. Using insights from the comparative business systems literature we show that devolution of power at the beginning of the reform process introduced local autonomy, which stimulated a diversity of local regulatory regimes. As the central political leadership is no longer the sole supplier of institutional change, local governments become equal contributors to the formation of local business systems. Yet, local governments only partially define emerging local business systems. Local governance at the enterprise level is defined by the interaction between political and economic entrepreneurship, or, phrased in institutional terms, local business systems emerge from the interplay between the formal architecture of local autonomy and the informal institution of networking. In a comparative perspective this interaction, and its underlying driving forces for co-operation, namely: procedural uncertainty, relational risk and institutional change, will lead to diversity in outcomes. In a dynamic perspective both market competition and networking will ensure further competition between business systems, while political unification, imitation or scale economies will ask for convergence of local business systems beyond the local nexus.
    Keywords: Institution Building;Institutional Change;Transition Economy;China;
    Date: 2006–02–06
  10. By: Kramarz, Francis; Thesmar, David
    Abstract: This paper provides empirical evidence consistent with the facts that (1) social networks may strongly affect board composition and (2) social networks may be detrimental to corporate governance. Our empirical investigation relies on a unique dataset on executives and outside directors of corporations listed on the Paris stock exchange over the 1992-2003 period. This data source is a matched employer employee dataset providing both detailed information on directors/CEOs and information on the firm employing them. We first find a very strong and robust correlation between the CEO's network and that of his directors. Networks of former high ranking civil servants are the most active in shaping board composition. Our identification strategy takes into account (1) differences in unobserved directors 'abilities' and (2) the unobserved propensity of firms to hire directors from particular networks, irrespective of the CEO's identity. We then show that the governance of firms run by former civil servants is relatively worse on many dimensions. Former civil servants are less likely to leave their CEO job when their firm performs badly. Secondly, CEOs who are former bureaucrats are more likely to accumulate directorships, and the more they do, the less profitable is the firm they run. Thirdly, the value created by acquisitions made by former bureaucrats is lower. All in all, these firms are less profitable on average.
    Keywords: board of directors; corporate governance; social networks
    JEL: G34 J44
    Date: 2006–02
  11. By: James Tully
    Abstract: Communicative action now commonly takes place in electronically mediated global networks and the networks are a powerful form of social ordering. This article analyzes the different forms of power that operate in communicative networks and how these alter communicative action. It suggests that the more optimistic literature on global and network governance, arguing and bargaining, and soft norm generation has not taken these new modes of hegemony fully into account. An analysis of the possible forms of communicative freedom in networks rounds off the article.
    Keywords: sovereignty; identity; multilevel governance; Europeanization
    Date: 2005–06–02
  12. By: Erte Xiao (George Mason University and IZA Bonn); Daniel Houser (George Mason University)
    Abstract: Development of human societies requires cooperation among unrelated individuals and obedience to social norms. Although punishment is widely agreed to be potentially useful in fostering cooperation, many recent results in psychology and economics highlight punishments' failures in this regard. These studies ignore punishments' social effects, and particularly its role in promoting social norms. We show here, using experiments with human subjects, that public implementation of punishment can eliminate its detrimental effects on cooperation. In a public goods game designed to create tension between group and individual interests, we find that privately implemented punishment reduces cooperation relative to a baseline treatment without punishment. However, when that same incentive is implemented publicly, but anonymously, cooperation is sustained at significantly higher rates than in both baseline and private punishment treatments. These data support our hypothesis that public implementation of punishment enhances the salience of the violated social norm to both the punished and those who observed the punishment, and that this increased salience positively affects group members' norm obedience. Our findings point to the importance of accounting for social consequences of punishment when designing procedures to deter misconduct in social environments including schools, companies, markets and courts.
    Keywords: punishment, cooperation, public goods game, social norms, experiments, behavioral economics
    JEL: C92 D71 H41
    Date: 2006–02
  13. By: Haigner, Stefan; Kocher, Martin; Sutter, Matthias
    Abstract: We analyse an experimental public goods game in which group members can endogenously determine whether they want to supplement a standard voluntary contribution mechanism with the possibility of rewarding or punishing other group members. We find a large and positive effect of endogenous institutional choice on the level of cooperation in comparison to exogenously implemented institutions. This suggests that democratic participation rights enhance cooperation in groups. With endogenous choice, groups typically vote for the reward option, even though punishment is actually more effective in sustaining high levels of cooperation. Our results are evaluated against the predictions of social preference models.
    Keywords: endogenous institutional choice; experiment; public goods; punishment; reward; voting
    JEL: C72 C91 C92
    Date: 2006–02
  14. By: José A. García Martínez (Universidad de Alicante)
    Abstract: In this paper we have introduced and parameterized the concept of ?group cohesion? in a model of local interaction with a population divided into groups. This allows us to control the level of ?isolation? of these groups: We thus analyze if the degree of group cohesion is relevant to achieve an efficient behaviour and which level would be the best one for this purpose. We are interested in situations where there is a trade off between efficiency and individual incentives. This trade off is stronger when the efficient strategy or norm is strictly dominated, as in the Prisoner?s Dilemma or in some cases of Altruism. In our model we have considered that agents could choose to be Altruist of Egoist, in fact, they behave as in Eshel, Samuelson and Shaked (1998) model.
    Keywords: Group Cohesion, Cooperation, Local Interaction, Altruism, Group selection.
    JEL: C70 C78
    Date: 2004–11
  15. By: Dunia López-Pintado (Universidad de Alicante)
    Abstract: This paper studies the problem of spreading a product (an idea or a technology) among agents in a social network. An agent obtains the product with a probability that depends on the spreading rate (or degree of contagion) of the product as well as on the behaviour of the agent?s neighbours. This paper shows, using a mean field approach, that there exists a threshold for the spreading rate that shapes the pattern of the product?s diffusion. This threshold, that depends on the network structure and the mechanism of contagion, determines whether the product spreads and becomes persistent or it does not spread and vanishes.
    Keywords: social networks, diffusion, contagion.
    JEL: C73
    Date: 2004–09

This nep-soc issue is ©2006 by Fabio Sabatini. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.