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on Social Norms and Social Capital |
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Issue of 2006‒04‒08
sixteen papers chosen by Fabio Sabatini Universita degli Studi di Roma, La Sapienza |
| By: | Assar Lindbeck; Mats Persson |
| 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 (“mimicking”). 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 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1675&r=soc |
| By: | Topi Miettinen; Panu Poutvaara |
| Abstract: | We argue that anticorruption laws may provide an efficiency rationale for why political parties should meddle in the distribution of political nominations and government contracts. Anticorruption laws forbid trade in spoils that politicians distribute. However, citizens may pay for gaining access to politicians and, thereby, to become potential candidates for nominations. Such rent-seeking results in excessive network formation. Political parties may reduce wasteful network formation, thanks to their ability to enter into exclusive membership contracts. This holds even though anticorruption laws also bind political parties. |
| Keywords: | political parties, two-sided platforms, rent-seeking, network formation |
| JEL: | D72 D85 L14 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1663&r=soc |
| By: | Ernesto Reuben; Frans van Winden |
| Abstract: | This experimental study investigates how behavior changes after punishment for an unkind action. It also studies how fairness perceptions affect the reaction to punishment and whether this effect is consistent across repeated play and role experiences. A repeated version of the power-to-take game is used. In this game, the proposer can make a claim on the resources of a responder. Then, the responder can destroy any part of her own resources. The focus is on how proposers adjust their behavior depending on their fairness perceptions, their experienced emotions, and their interaction with responders. We find that fairness plays an important role in the behavior of proposers. Specifically, deviations from a perceived fairness norm trigger feelings of shame and guilt, which induce proposers to lower their claims. However, we also find that the perceived fairness norm varies considerably between individuals. Therefore, it is not the case that proposers who considered they were acting fairly were particularly nice to responders. Our results also show that the different types of individuals predicted by models of social preferences, can be traced among the subjects that played the same role in both periods, but fail to describe the behavior of subjects who switched from one role to the other. |
| JEL: | C90 Z13 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1685&r=soc |
| By: | Ernesto Reuben; Frans van Winden |
| Abstract: | This is an experimental study of a three-player power-to-take game where a take authority is matched with two responders. The game consists of two stages. In the first stage, the take authority decides how much of the endowment of each responder that is left after the second stage will be transferred to the take authority (the so-called take rate). In the second stage, each responder can react by destroying any part of his or her own endowment. Two treatments are considered: one in which all players are ‘strangers’ to each other (random matching), and one in which the responders know each other from outside the lab and are more or less close ‘friends’ (whereas the take-authority is again randomly selected). We focus on how the intensity of ties between responders impacts the decisions, beliefs, and emotions of both the responders and the take-authority. Some of our findings are: (1) although take rates are about the same, friends destroy more than strangers when faced with high take rates; (2) coordination on the same destruction level is stronger among friends; (3) the high level of coordination among friends can be explained by their emotional reaction towards one another; (4) the difference between the actual and expected take rate is a much better predictor of experienced emotions and destruction than the difference between the actual and (what is considered as) the fair take rate. |
| Keywords: | reciprocity, social ties, emotions, expectations, experiment, friends, principal-agent relationship, appropriation, fairness |
| JEL: | A10 C72 C91 C92 H20 Z13 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1674&r=soc |
| By: | Alois Stutzer; Lorenz Goette; Michael Zehnder |
| Abstract: | In this paper, we propose a decision framework where people are individually asked to either actively consent or dissent to some pro-social behavior. We hypothesize that confronting individuals with the choice of engaging in a specific pro-social behavior contributes to the formation of issue-specific altruistic preferences while simultaneously involving a commitment. The hypothesis is tested in a large-scale field experiment on blood donation. We find that this "active-decision" intervention substantially increases the stated willingness to donate blood, as well as the actual donation behavior of people who have not fully formed preferences beforehand. |
| Keywords: | active decision, pro-social behavior, field experiment, blood donation |
| JEL: | C93 D64 I18 |
| Date: | 2006–04 |
| URL: | http://d.repec.org/n?u=RePEc:zur:iewwpx:279&r=soc |
| By: | Alessandro Cigno; Annalisa Luporini |
| Abstract: | We examine the effects of differences in social capital on first and second best transfers to families with children, in an asymmetric information context where the number of births, and the future earning capacity of each child that is born, are random variables. The probability that a couple has children is conditional on the level of reproductive activity undertaken. The probability that a child will have high earning ability is positively conditioned not only by the level of educational investment undertaken by the child’s parents, but also by the social capital of the latter. The optimal policy includes two transfers, one conditional on number of births, the other on the children’s earning ability. |
| Keywords: | education, stochastic fertility, child benefits, pensions, scholarships, social capital, asymmetric information, multi-agency |
| JEL: | D13 D78 D82 H31 J13 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1664&r=soc |
| By: | Horst Entorf (Institut für Volkswirtschaftslehre (Department of Economics), Technische Universität Darmstadt (Darmstadt University of Technology)); Martina Lauk (Institut für Volkswirtschaftslehre (Department of Economics), Technische Universität Darmstadt (Darmstadt University of Technology)) |
| Abstract: | This article analyses the school performance of migrants dependent on peer groups in different international schooling environments. Using data from the international OECD PISA test, we consider social interaction within and between groups of natives and migrants. Results based on social multipliers (Glaeser et al. 2000, 2003) suggest that both native-to-native and migrant-to-migrant peer effects are higher in ability-differencing school systems than in comprehensive schools. Thus, non-comprehensive school systems seem to magnify the prevailing educational inequality between students with a low parental socioeconomic migration background and children from more privileged families. |
| Keywords: | Peer effects, migration, education, social multipliers, school systems, parental socioeconomic background |
| Date: | 2006–03 |
| URL: | http://d.repec.org/n?u=RePEc:tud:ddpiec:164&r=soc |
| By: | Ettore Damiano; Hao Li; Wing Suen |
| Abstract: | Though individuals prefer to join groups with high quality peers, there are also advantages from being high up in the pecking order within the group. We show that sorting of agents in this environment results in an overlapping interval structure in the type space. Segregation and mixing coexist in a stable equilibrium. A greater degree of egalitarianism within organizations leads to greater segregation across organizations. Policies that are effective for lower-quality organizations to attract talent may be counterproductive for higher-quality organizations to retain talent. The degree and the pattern of segregation are shown to depend also on whether higher types are less concerned with relative ranking within the organization, on relative size of organizations, and on the extent of idiosyncratic preferences for other organizational attributes. |
| URL: | http://d.repec.org/n?u=RePEc:tor:tecipa:tecipa-221&r=soc |
| By: | Stefan Brandauer; Florian Englmaier |
| Abstract: | We analyze a contest between two groups where group members have differing valuations for the contested rent. Generically the pivotal group member with the median valuation of the rent will not act himself but will want to send a group member that has preferences different to her own into the contest. The delegation can be either to more or less 'radical' group members. The direction of delegation depends on the order of moves and the relative 'aggressiveness' of the group medians. We show that almost certainly very asymmetric equilibria arise, even if the median group members value the rent (almost) equally. Delegation can lead to a social improvement in terms of resources spent in the contest. |
| Keywords: | strategic delegation, contests, rent seeking, political economy, arms races, distributional conflict |
| JEL: | D40 D72 D73 P16 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1654&r=soc |
| By: | Martin Kahanec (IZA Bonn) |
| Abstract: | Social interaction is an important vehicle of human capital acquisition and its efficiency decreases in social distance. In this paper I establish that these two premises, given the socio-cultural differences between ethnic groups, explain the puzzling evidence that (i) minorities typically earn less than majorities and (ii) this earnings gap is increasing in the relative size of a minority in a given region. In particular, I argue that inter-ethnic social distance disadvantages smaller ethnic groups in human capital acquisition and that these efficiency differentials systematically expose minority and majority individuals to different incentives as concerns their choice of skills. As a result, minority and majority individuals tend to acquire different (combinations of) skills and the textbook substitution effect drives an efficiency unit of minority labor to sell at a relatively lower wage in a region with higher percentage of minority people. The conditions under which the efficiency disadvantage of the minority in social interaction and the substitution effect explain the abovementioned empirical findings are established. In addition, this study offers an answer why some minorities earn more than majorities, why minority individuals tend to spend more time socializing in families than in schools, and why integration may harm minorities. |
| Keywords: | human capital, earnings inequality, labor market, minority, network externalities, social interaction, ethnic specialization |
| JEL: | J15 J24 J70 O15 |
| Date: | 2006–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2050&r=soc |
| By: | Fougère, Denis; Kramarz, Francis; Pouget, Julien |
| Abstract: | In this paper we examine the influence of unemployment on property crimes and on violent crimes in France for the period 1990 to 2000. This analysis is the first extensive study for this country. We construct a regional-level data set (for the 95 départements of metropolitan France) with measures of crimes as reported to the Ministry of Interior. To assess social conditions prevailing in the département in that year, we construct measures of the unemployment rate as well as other social, economic and demographic variables using multiple waves of the French Labor Survey. We estimate a classic Becker type model in which unemployment is a measure of how potential criminals fare in the legitimate job market. First, our estimates show that in the cross-section dimension, crime and unemployment are positively associated. Second, we find that increases in youth unemployment induce increases in crime. Using the predicted industrial structure to instrument unemployment, we show that this effect is causal for burglaries, thefts, and drug offences. To combat crime, it appears thus that all strategies designed to combat youth unemployment should be examined. |
| Keywords: | crime; youth unemployment |
| JEL: | J19 J64 J65 K42 |
| Date: | 2006–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5600&r=soc |
| By: | Daniel Haile; Abdolkarim Sadrieh; Harrie A. A Verbon |
| Abstract: | Trust games are employed to investigate the effect of heterogeneity in income and race on cooperation in South Africa. The amount of socio-economic information available to the subjects about their counterparts is varied. No significant behavioural differences are observed, when no such information is provided. However, when the information is available, it significantly affects individual trust behaviour. The low income subjects from both racial groups invest significantly less in partnerships with the high income subjects of the other racial group than in any other partnership. We attribute this behaviour to cross-racial envy, which on aggregate may lead to substantial underinvestment in the economy. |
| Keywords: | trust game, ethnic diversity, income inequality, cooperation |
| JEL: | C91 J15 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1657&r=soc |
| By: | Brandts, Jordi; Riedl, Arno; van Winden, Frans A.A.M. |
| Abstract: | This paper experimentally studies the effects of competition in an environment where people's actions can not be contractually fixed. We find that, in comparison with no competition, the presence of competition does neither increase efficiency nor does it yield any gains in earnings for the short side of the exchange relation. Moreover, competition has a clearly negative impact on the disposition towards others and on the experienced well-being of those on the long side. Since subjective well-being improves only for those on the short side competition contributes to larger inequalities in experienced well-being. All in all competition does not show up as a positive force in our environment. |
| Keywords: | competition; emotions; happiness; laboratory experiment; market interaction; well-being |
| JEL: | A13 C92 D30 J50 M50 |
| Date: | 2006–03 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5532&r=soc |
| By: | Francesco Caselli; Wilbur John Coleman II |
| Abstract: | We present a theory of ethnic conflict in which coalitions formed along ethnic lines compete for the economy’s resources. The role of ethnicity is to enforce coalition membership: in ethnically homogeneous societies members of the losing coalition can defect to the winners at low cost, and this rules out conflict as an equilibrium outcome. We derive a number of implications of the model relating social, political, and economic indicators such as the incidence of conflict, the distance among ethnic groups, group sizes, income inequality, and expropriable resources. |
| JEL: | Z13 |
| Date: | 2006–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12125&r=soc |
| By: | Botticini, Maristella; Eckstein, Zvi |
| Abstract: | From the end of the second century C.E., Judaism enforced a religious norm requiring any Jewish father to educate his children. We present evidence supporting our thesis that this exogenous change in the religious and social norm had a major influence on Jewish economic and demographic history. First, the high individual and community cost of educating children in subsistence farming economies (2nd to 7th centuries) prompted voluntary conversions, which account for a large share of the reduction in the size of the Jewish population from about 4.5 million to 1.2 million. Second, the Jewish farmers who invested in education, gained the comparative advantage and incentive to enter skilled occupations during the vast urbanization in the newly developed Muslim Empire (7th and 8th centuries) and they actually did select themselves into these occupations. Third, as merchants the Jews invested even more in education - a pre-condition for the extensive mailing network and common court system that endowed them with trading skills demanded all over the world. Fourth, the Jews generated a voluntary diaspora by migrating within the Muslim Empire, and later to western Europe where they were invited to settle as high skill intermediaries by local rulers. By 1200, the Jews were living in hundreds of towns from England and Spain in the West to China and India in the East. Fifth, the majority of world Jewry (about one million) lived in the Near East when the Mongol invasions in the 1250s brought this region back to a subsistence farming economy in which many Jews found it difficult to enforce the religious norm regarding education, and hence, voluntarily converted, exactly as it had happened centuries earlier. |
| Keywords: | human capital; Jewish economic and demographic history; migration; occupational choice; religion; social norms |
| JEL: | J1 J2 O1 Z12 Z13 |
| Date: | 2006–03 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5571&r=soc |
| By: | Torsten Persson; Guido Tabellini |
| Abstract: | Does democracy promote economic development? This paper reviews recent attempts to address this question that exploited within-country variation. It shows that the answer is largely positive, but also depends on the details of democratic reforms. First, the sequence of economic vs political reforms matters: countries liberalizing their economy before extending political rights do better. Second, different forms of democratic government lead to different economic policies, and this might explain why presidential democracy leads to faster growth than parliamentary democracy. Third, it is important to distinguish between expected and actual political reforms. Taking expectations of regime change into account helps identify a stronger growth effect of democracy. |
| Keywords: | democracy, reform, growth, institutions, difference in difference |
| JEL: | E00 O10 P00 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1672&r=soc |