nep-soc New Economics Papers
on Social Norms and Social Capital
Issue of 2006‒06‒03
twenty-six papers chosen by
Fabio Sabatini
Universita degli Studi di Roma, La Sapienza

  1. Social capital, social cohesion, and economic growth By Jesus Clemente; Carmina Marcuello; Antonio Montañes; Fernando Pueyo
  2. Place of Work and Place of Residence: Informal Hiring Networks and Labor Market Outcomes By Giorgio Topa; Stephen Ross; Patrick Bayer
  3. Trust, Honesty, and Corruption: Reflection on the State-Building Process By Susan Rose-Ackerman
  4. Comparative social capital: Networks of entrepreneurs and investors in China and Russia By Bat Batjargal; Bat Batjargal;
  5. Corporate Social Responsibility: International Perspectives By Abagail McWilliams; Donald S. Siegel; Patrick M. Wright
  6. Corporate Social Responsibility and Economic Performance By Catherine J. Morrison-Paul; Donald S. Siegel
  7. The Role of Social Capital in Early Childhood Development: Evidence from Rural India By Wendy Janssens; Jacques van der Gaag; Jan-Willem Gunning
  8. What Has Been Capitalized into Property Values: Human Capital, Social Capital, or Cultural Capital? By Shihe Fu
  9. Cooperative Networks: Theory and Experimental Evidence By Katinka Pantzy; Anthony Ziegelmeyer
  10. Dependence and trust between suppliers and industrial customers By Sanner, Leif
  11. On Delegation under Relational Contracts By Oliver Gürtler
  12. Institutions, Firms and Economic Growth By Jane Frances
  13. Hours of Work and Gender Identity: Does Part-time Work Make the Family Happier? By Alison Booth; Jan van Ours
  14. The Power of Positional Concerns: A Panel Analysis By Benno Torgler; Sascha L. Schmidt; Bruno S. Frey
  15. Cross-Border and Local Cooperation on the island of Ireland - A Behavioural Perspective By Stephen Roper
  16. Conformity and Indifference: The Structure of Frequency-Dependent Social Learning By Charles Efferson; Rafael Lalive; Peter J. Richerson,; Richard McElreath; Mark Lubell
  17. The Impact of Group Diversity on Performance and Knowledge Spillover %u2013 An Experiment in a College Classroom By Zeynep Hansen; Hideo Owan; Jie Pan
  18. The use and value of hierarchical governance and modeling in infrastructure network planning By Ben Immers; Mike Duijn
  19. The Popular Movement Marinade – The dominant civil society framework in Sweden By Hvenmark, Johan; Wijkström, Filip
  20. The motives of organizational justice By Nadisic, Thierry
  21. Socio-Economic Status, Health Shocks, Life Satisfaction and Mortality: Evidence from an Increasing Mixed Proportional Hazard Model By Paul Frijters; John Haisken-DeNew; Michael Shields
  22. Development and the Interaction of Enforcement Institutions By Dhillon, Amrita; Rigolini, Jamele
  23. The Effect of Income on Positive and Negative Subjective Well-Being By Stefan Boes; Rainer Winkelmann
  24. Does Criminal Law Deter? A Behavioral Science Investigation By Paul Robinson
  25. Homelessness as an Impediment to Urban Revitalization: the Case of Dallas, Texas By Bernard L. Weinstein; Terry L. Clower
  26. Happiness and the Human Development Index: Australia is Not a Paradox By Andrew Leigh; Justin Wolfers

  1. By: Jesus Clemente; Carmina Marcuello; Antonio Montañes; Fernando Pueyo
    Abstract: The study of determinants of economic growth and development is a special interest area to the economists. Theoretical investigation in this topic is characterized by a growing complexity and empirical work has not obtained satisfactory results. The incorporation of human capital and technical progress with endogenous character have not obtained the appropriate results to explain with clarity the key mechanisms of this economic phenomenon. In the last years, the researchers have focused part of their efforts in a new factor, namely social capital. The underlying idea is that the physical factor (productive capital) and the human (human capital) are not sufficient to explain the economic growth and economic development. Recent work suggests that previous studies omit a relevant dimension: social character of the economic activity (social capital), as is emphasized in Temple and Johnson (1998) and in Knaff and Keefer (1997), among others. Nevertheless, the discussion on definition and mechanisms through social capital is created, disappears, is accumulated or influences on the economic activity is still opened. Although, many studies are discussing the social capital definition and measurement from interdisciplinary point of view (Paldman, 2000). Paldman examines different indicators of social capital, most of them related to the nonprofit organizations or associational activity of a country and expectations and trustworthiness in which economic agents operate. Our paper contributes to this line of research in order to advance in the discussion of these aspects: social capital definition, relationship between social capital and other socio-economics factors, role of social capital in economic growth –as productivity factor or thecnology–; the consideration of convenient data base set and the use of appropriate econometric thecniques. The final objective is to provide theoretical and empirical evidence on the relationship between social capital and economic growth. As well as, between the social capital and the traditional factors considerated, that is to say, human capital and physical capital. This general objective will proceed as follows. In the first section we approach the social capital definition. Social capital can be constituted in a variety of ways. It is a particular situation that requires a meticulous revision of the literature in order to adopt a methodological position that in our case will be fundamentally functional and is focused on the importance of the nonprofit sector as component of social capital . In second section, we analyze the relationship between social capital and physical capital and, mainly, with the human capital and the public sector. Social capital is a complex resource and we can observe that there are others factors, for example the educational level that is affected by social capital, but is itself an influence on social capital. We argue that there is a strong interaction between sanitary policy, fiscal policy, cultural context and social capital. In third section we examine theoretically the mechanisms of relationship between social capital, as capacity of working jointly, and economic growth. In the discussion is fundamental the arguments established by Paldman and Svendsen (2000). The authors pointed out two mechanisms: (a) social capital as productive factor -that is to say, nonprofit organizations, associational activiy indicates the work capacity in equipment and, consequently, it supposes an productive factor; b) social capital as technology: that is to say, indicates the capacity of a society to generate the mechanisms that reduce the transaction and control costs within productive system. In fourth section, we observe the problems derived to use data of different countries. These studies supposed the presence of a same behavior at aggregate level for heterogeneous countries, and we consider that, the empirical results are biased because they use non appropriate econometric techniques. Thus, we propose that the analysis at regional level improves the results obtained because of allows to reduce some of these limitations, owing to exist an evident homogeneity concerning educational level, tax system, culture, etc. Finally, we develop an empirical analysis for the Spanish case where it is considered to establish if the social capital is relevant to explain the economic growth of the Spanish regions. We use as indicator of social capital some proxies as the density of associational activity, composition of these associations, inequality index, etc. The paper concludes with the main results.
    Date: 2004–08
  2. By: Giorgio Topa; Stephen Ross; Patrick Bayer
    Abstract: We use a novel dataset and research design to empirically detect the effect of social interactions among neighbors on labor market outcomes. Specifically, using Census data that characterize residential and employment locations down to the city block, we examine whether individuals residing in the same block are more likely to work together than those in nearby blocks. We find evidence of significant social interactions operating at the block level: residing on the same versus nearby blocks increases the probability of working together by over 33 percent. The results also indicate that this referral effect is stronger when individuals are similar in sociodemographic characteristics (e.g., both have children of similar ages) and when at least one individual is well attached to the labor market. These findings are robust across various specifications intended to address concerns related to sorting and reverse causation. Further, having determined the characteristics of a pair of individuals that lead to an especially strong referral effect, we provide evidence that the increased availability of neighborhood referrals has a significant impact on a wide range of labor market outcomes including employment and wages.
    Keywords: Neighborhood Effects, Job Referrals, Social Interactions, Informal Hiring Networks, Labor Market Outcomes
    JEL: J18 J22 J24 J31 R0
    Date: 2005–10
  3. By: Susan Rose-Ackerman (Yale Law School)
    Abstract: Trust implies confidence, but not certainty, that some person or institution will behave in an expected way. A trusting person decides to act in spite of uncertainty about the future and doubts about the reliability of others' promises. The need for trust arises from human freedom. As Piotr Sztompka (1999: 22) writes, "facing other people we often remain in the condition of uncertainty, bafflement, and surprise."Honesty is an important substantive value with a close connection to trust. Honesty implies both truth-telling and responsible behavior that seeks to abide by the rules. One may trust another person to behave honestly, but honesty is not identical to trustworthiness. A person may be honest but incompetent and so not worthy of trust. Nevertheless, interpersonal relationships are facilitated by the belief that the other person has a moral commitment to honesty or has an incentive to tell the truth. Corruption is dishonest behavior that violates the trust placed in a public official. It involves the use of a public position for private gain.I focus on honesty and trust as they affect the functioning of the democratic state and the market. I am interested in informal interactions based on affect-based trust only insofar as they substitute for, conflict with, or complement the institutions of state and market. The relationship between informal connections and formal rules and institutions is my central concern. The institutions of interest are democratic political structures, bureaucracies, law and the courts, and market institutions.As Mark Warren points out, governments are needed in just those situations in which people cannot trust each other voluntarily to take others' interests into account. The state is a way of managing inter-personal conflicts without resorting to civil war. Yet, this task is much more manageable if the citizenry has a degree of interpersonal trust and if the state is organized so that it is trusted by its citizens, at least, along some dimensions. The state may be able to limit its regulatory reach if interpersonal trust vitiates the need for certain kinds of state action (Offe 1999). Conversely, if the state is reliable and even-handed in applying its rules, that is, if people trust it to be fair, state legitimacy is likely to be enhanced (Offe 1999, Sztompka 1999: 135-136). Thus, there are three interrelated issues. First, do trust and reliability help democracy to function, and if so, how can they be produced? Second, do democratic governments help create a society in which trustworthiness and honesty flourish? Third, given the difficulty of producing trustworthiness and honesty, how can institutional reform be used to limit the need for these virtues?This paper provides a framework for thinking about these broad questions. Section I organizes the research on trust especially as it applies to the relationship between trust and government functioning. With this background, section II discusses the mutual interaction between trust and democracy. The alternative of limiting the need for trust leads, in section III, to a discussion of corruption in government and commercial dealings. Corruption occurs when dishonest politicians and public officials help others in return for payoffs. Because their actions are illegal, they need to trust their beneficiaries not to reveal their actions. Corrupt officials are also, of course, betraying the public trust insofar as their superiors are concerned. Reforms here can involve a reorganization of government to limit the scope for lucrative discretionary actions. Conversely, one might focus on changing the attitudes of both officials and private actors so that existing discretion is exercised in a fairer and more impartial manner.This paper analyzes the interactions between trust and democracy at a general level. However, its initial aim was to provide a context for a workshop at the Collegium Budapest on honesty, trust, and corruption in post-socialist countries. My companion paper in Kyklos makes that link explicit by bringing in survey evidence on public attitudes and behavior. Here, I conclude in section IV with some thoughts on the special character of the transition process. I highlight the tensions between interpersonal trust and trust in public institutions in the context of the transition to democracy and a market economy.
  4. By: Bat Batjargal; Bat Batjargal;
    Abstract: Most studies on entrepreneurs’ networks incorporate social capital and networks as independent variables that affect entrepreneurs’ actions and its outcomes. By contrast, this article examines social capital of the Chinese and Russian entrepreneurs and venture capitalists as dependent variables, and it examines entrepreneurs’ social capital from the perspectives of institutional theory and cultural theory. The empirical data are composed of structured telephone interviews with 159 software entrepreneurs, and the data of 124 venture capital decisions in Beijing and Moscow. The study found that social networks of the Chinese entrepreneurs are smaller in size, denser in structure, and more homogeneous in composition compared to networks of the Russian entrepreneurs due to the institutional and cultural differences between the two countries. Furthermore, the study revealed that dyadic (two-person) ties are stronger and interpersonal trust is greater in China than in Russia. The research and practical implications are discussed.
    Keywords: Social capital, entrepreneurs, venture capitalists, China and Russia.
    JEL: M13 F23 G24
    Date: 2005–07–01
  5. By: Abagail McWilliams (College of Business Administration, University of Illinois at Chicago, 601 South Morgan Street, Chicago, IL 60607-7123, United States); Donald S. Siegel (Department of Economics, Rensselaer Polytechnic Institute, Troy, NY 12180-3590, USA); Patrick M. Wright (School of Industrial and Labor Relations Cornell University, 393 Ives Hall, Ithaca, NY 14853-3901, United States)
    Abstract: In this introduction to the special issue, we provide a brief review of the CSR literature with attention to some of the difficulties in globalizing the existing CSR concepts. Following this we provide a brief summary of each of the four papers that comprise the special issue, with emphasis on the unique contribution of each.
    JEL: L15 L21 M14
    Date: 2006–03
  6. By: Catherine J. Morrison-Paul (Department of Agricultural and Resource Economics, University of California, Davis, One Shields Ave. Davis, CA 95616-8512, United States); Donald S. Siegel (Department of Economics, Rensselaer Polytechnic Institute, Troy, NY 12180-3590, USA)
    Abstract: We describe some perspectives on corporate social responsibility (CSR), in order to provide a context for considering the strategic motivations and implications of CSR. Based on this framework, which is based on characterizing optimal firm decision making and underlies most existing work on CSR, we propose an agenda for further theoretical and empirical research on CSR. We then summarize and relate the articles in this special issue to the proposed agenda.
    JEL: L15 L21 M14
    Date: 2006–03
  7. By: Wendy Janssens (Amsterdam Institute for International Development); Jacques van der Gaag (Amsterdam Institute for International Development); Jan-Willem Gunning (Amsterdam Institute for International Development)
    Abstract: The literature on social capital clearly shows the significant relationship between social capital and individual outcomes such as educational attainment. However, there is little evidence so far on outcomes of very young children. This report studies the role of social capital in enhancing child outcomes. It investigates two potential sources of social capital. At the individual level, the authors consider social capital as the resources and information residing in the social networks of a child's parents. At the community level, we analyze social capital as the willingness of a community to cooperate and engage in collective action. We study the Mahila Samakhya programme in rural Bihar (India), a women's empowerment programme that emphasizes female education. The findings strongly suggest that the programme is successful in increasing parental awareness on the value of preschool and primary education. In other words, the programme seems to increase the informational resources of parents on education, a social capital effect. Moreover, the results indicate that programme members are significantly more likely than non- participants in their village to participate in school management and school activities, and to contribute to the construction of schools and preschools. That is, the results are highly suggestive of increased collective action as well. A second main finding is that these results do not remain limited to programme participants. We find that non-participating women in programme villages are significantly more aware of the importance of (preschool) education than women in control villages. In addition, non- participating households in programme villages are also significantly more likely to participate in school management and activities, and to contribute to school construction. These results suggest that the programme not only increases social capital among its members, but has potentially strong spillover effects to other community members as well. The programme seems to increase individual and community social capital throughout the wider community. Next, we study the relationship between the Mahila Samakhya programme and preschool and primary school enrolment. Controlling for child, household and community characteristics, we find that children in programme villages are significantly more likely to be enrolled in preschool. The number of preschools, itself strongly correlated with the presence of the programme, is highly predictive of enrolment. We also find a significant and additional relationship between individual participation in the programme and preschool enrolment. Finally, the evidence suggests that children living in programme villages, whose mothers do not participate themselves, are significantly more likely to be enrolled as well. In short, the programme seems to have a direct relationship with preschool enrolment For primary school the findings are approximately similar. The main difference is that the spillovers of the programme are much less visible. Only girls and children from the lowest castes seem to benefit of the presence of the programme regardless of whether their mother participates herself. A similar analysis of immunization coverage again shows the large spillovers of the programme: children in programme villages are significantly more likely to be immunized against tuberculosis, diphtheria and measles, regardless of the active participation in the programme. Surprisingly, this result is stronger than for individual membership. The differences in immunization coverage between the member households and non-member households are insignificant (except for measles). Note that the programme does not have any correlation with the immunization against polio. The impact of the recent mass polio campaigns organized by the government may obscure any programme effects. Finally, the report analyses the relationship of the programme with health indicators. In particular, it studies the partial correlations of programme village and programme membership on the prevalence of diarrhea. However, the logistic estimation does not confirm any significant relationship. In contrast, participants in the programme do have better knowledge on how to treat diarrhea once it occurs than control households. Again, this relationship is also significant for non-participants although its size is smaller. In summary, the evidence is strongly suggestive of the positive relationship between the Mahila Samakhya programme and increased individual and community social capital. In addition, the findings strongly suggest a positive relationship with pre- and primary school enrolment. Not only on members, but on non-members as well. We find similar results for immunization and the treatment of diarrhea, a proxy for health practices.
    Keywords: social capital early childhood development education immunization health india evaluation
    JEL: P Q Z
    Date: 2005–03–21
  8. By: Shihe Fu
    Abstract: Urban amenities can be capitalized into land values or property values. However, little attention has been paid to the capitalization of social amenities. This paper classifies three types of social-interaction-based social amenities: human capital, social capital, and cultural capital at residential neighborhood levels. We use the restricted version of the 1990 Massachusetts Census data and estimate hedonic housing models with social amenities. The findings are as follows: (1) Human capital has significant positive effects on property values. This tests the Lucas conjecture. (2) Different types of social capital have different effects on property values: an increase in the percentage of new residents has significant positive effects on property values, probably due to the strength of weak ties. However, an increase in the percentage of single-parent households has negative effects on property values. An increase in the home ownership rate has positive effects at large geographic levels. (3) Cultural capital effects vary from high to low geographic levels, the effects of English proficiency and racial homogeneity are positive at and beyond the tract level, but insignificant at the block level. This may imply that cultural capital is more important in social interactions at large geographic scale.
    Keywords: Urban amenities, capitalization, property values, human capital, social capital, cultural capital, hedonic model, social interaction
    JEL: A14 C21 D62 H41 R31
    Date: 2005–10
  9. By: Katinka Pantzy; Anthony Ziegelmeyer
    Abstract: We consider a modified pure public good game characterized by a pre-play negotiation stage, on which pairs of players can form binding cooperation commitments. As the introduced mechanism only supports pairwise rather than more inclusive commitments, it does not implement the efficient outcome. We theoretically derive the incentive compatible and efficient cooperative networks and evaluate the behavioral efficacy of the suggested mechanism to promote and stabilize cooperation. We present the results of two separate experiments. The first experiment serves to provide necessary methodological prerequisites and establishes that neither repetition with an unknown end nor voluntary costly monitoring are behaviorally sufficient to induce cooperative outcomes. In the second experiment we introduce the pairwise commitment mechanism. We show that the mechanism induces aggregate cooperation rates not only beyond the rates observed under the voluntary contribution mechanism operationalized in the first experiment, but also beyond the rate which is supported by the formation of incentive compatible networks. We observe a large heterogeneity between groups: while some groups converge to full cooperation by managing to coordinate on the formation of efficient networks over time, both networks and cooperation rates unravel in other groups. An extended version of our theoretical setting with inequity averse players in the form suggested by Fehr and Schmidt (1999) captures the stylized facts of both experiments.
    Keywords: Strategic formation of networks, Social dilemma, Positive externalities, Experiments
    JEL: C92 D85 H41 Z13
    Date: 2006–05
  10. By: Sanner, Leif (Department of Business, Economics, Statistics and Informatics)
    Abstract: Suppliers have experienced unexpected consequences for their businesses due to changing situations for their important customers. Such events may also occur at short notice, at least when it comes to necessary and radical decisions. Often suppliers are not aware of the full extent of these events until it is too late for them to take countermeasures, i.e. develop appropriate strategies. With increasing turbulence in the marketplace, it is clear that firms need to be aware of relationship-oriented marketing strategies. To cope with change the supplier and its customer will need strategies based on jointly understood action. Action, both strategic and operational, is based on each party’s meanings concerning why they do business with one another (enactment). Dependence and trust between the parties are issues in their construction of meaning and will therefore underlie their enactment. The purpose of this paper is to investigate dependence and trust between suppliers and industrial customers, implications for action of dependence and trust, and, finally, draw conclusions about dependence and trust for business strategy. <p> Dependence. A firm can be dependent on a specific other firm due to investments in specific assets geared to that firm. A literature survey identifies five types of specific assets: Personal relations, competence, integration of governance systems, dedicated volume of goods/services, and product/process specialization. Another reason for dependence is the structure of the market, which may lack alternative providers of similar products. Then it becomes difficult or impossible due to large switching costs to substitute one firm with another for the provision of good/services. <p> Trust. A literature survey concerning trust leads to the conclusion that important aspects of trust probably vary between different environments and settings where trust is an issue. Since trust between suppliers and industrial customers is the issue in this study, the notion and implications of trust among strategic decision-makers in that empirical setting would be important. By using the trust literature together with an empirical investigation three types of trust for the study are discerned: Relationship-based, competence-based and moral based trust. <p> Dependence and trust. There is a temporal interplay between trust and dependence. Trust is expectation concerning the future. Dependence differs from trust by being formed in the present time and may therefore become a means to avoid the problems in assessing the future. But when you choose to trust someone, as a consequence you become dependent. Interrelationship between dependence and trust is thus complex and intertwined. It varies with task, situation and persons involved. The order of events in time has an impact. Earlier actions by actors influence later ones. Trust develops stepwise in repeated encounters between the parties. The parties’ actions towards each other and the evolvement of action processes seem to be the key to understanding suppliers’ and customers’ dependence and trust. This interplay is in the paper illustrated with dependence and trust development in two dyads of supplier – industrial customer. In the cases we could discern that meaning construction with dependence and trust, interrelated with action, can lead to improved or deteriorated business relations between the parties. As in the cases patterns of virtuous circles or vicious circles may emerge. Expectations concerning the other party, i.e. trust, could thus change substantially, leading to different types of action than before. <p> Conclusions concerning business strategy. Dependence and trust have different impacts on a firm’s strategy and consequently on strategic change. Dependence indicates preconditions for action and what action is precluded due to the characteristics of business between the parties in terms of specific assets and substitutability. In all, dependence sets limits for strategy, wide or narrow. Trust, on the other hand, can be a driving force shaping strategy, opening up possibilities in markets and products as well as governance systems linking parties. But lack of trust and deteriorating trust may also preclude business that could otherwise have been done. There needs to be trust backing up any viable strategy and strategic change. Furthermore, it is vital that the parties concerned convey in their communication what they consider to be meanings in their business. If they have dissimilar views on dependence, action may become disjointed and not understood by the other party. Likewise, openness concerning trust in one another is needed in order to display mutuality in trust or build mutual trust. On industry level trust in supplier relationships at firm level can be promoted by providing information exchange and arenas for that purpose to support potential business partners to embark upon trust development. Society, in its policy-making, can promote trust on firm level by clear-cut rules of the game, which – among other things – will reduce the risks that parties in an exchange will go to disjointed action due to different interpretations of what society requires from firms in business.
    Keywords: supply chain; strategy; business relationship
    JEL: M10
    Date: 2005–09–01
  11. By: Oliver Gürtler (Department of Economics, BWL II, University of Bonn, Adenauer-allee 24-42, D-53113 Bonn, Germany. Tel.:+49-228-739214, Fax:+49-228-739210
    Abstract: In this paper, a principal’s decision between delegating two tasks or handling one of the two tasks herself is analyzed. We assume that the principal uses both, formal contracts and informal agreements sustained by the value of future relationships (relational contracts) as incentive device. It is found that the principal is less likely to delegate both tasks in a dynamic setting than in a static one (where formal contracts are the only feasible incentive device), as handling one task herself enables a much wider use of relational contracts.
    Keywords: Job design, relational contracts, formal contracts, delegation
    JEL: D82 J33 L23 M52 M54
    Date: 2006–05
  12. By: Jane Frances (New Zealand Treasury)
    Abstract: This paper reviews the literature on institutions and explores the ways in which institutions can influence economic growth, with a particular focus on how institutions affect the use that firms make of human capital to improve their productivity. It discusses the influence of underlying institutions, such as law and order and secure property rights, on the general environment within which the economic activities of production and exchange takes place. It also explores the influence of activity-specific institutions, such as labour market institutions, on firm decisions about resource use and innovation and through these on economic activity and economic growth.
    Keywords: institutions; human capital; regulation; norms; firms; economic growth; New Zealand
    JEL: D00 D20 J24 K00 L51 O40 P00 Z13
    Date: 2004–09
  13. By: Alison Booth; Jan van Ours
    Abstract: Taking into account inter-dependence within the family, we investigate the relationship between part-time work and happiness. We use panel data from the new Household, Income and Labor Dynamics in Australia Survey. Our analysis indicates that part-time women are more satisfied with working hours than full-time women. Partnered women’s life satisfaction is increased if their partners work full-time. Male partners’ life satisfaction is unaffected by their partners’ market hours but is increased if they themselves are working full-time. This finding is consistent with the gender identity hypothesis of Akerlof and Kranton (2000).
    Keywords: part-time work, happiness, gender identity.
    JEL: J22 I31 J16
    Date: 2005–12
  14. By: Benno Torgler; Sascha L. Schmidt; Bruno S. Frey
    Abstract: Many studies have established that people care a great deal about their relative economic position and not solely, as standard economic theory assumes, about their absolute economic position. However, behavioral evidence is rare. This paper provides an empirical analysis on how individuals’ relative income position affects their performance. Using a unique data set for 1040 soccer players over a period of eight seasons, our analysis suggests that the larger the income differences within a team, the worse the performance of the soccer players is. The more the players are integrated in a particular social environment (their team), the more evident this negative effect is. Moreover, we find that positional effects lowering performance are stronger among high performing teams.
    Keywords: Relative income; positional concerns; envy; performance; social integration
    JEL: D00 D60 L83
    Date: 2006–05
  15. By: Stephen Roper
    Abstract: There is now general agreement that inter-firm cooperation through networks, partnerships and supply-chains can, by facilitating knowledge exchange and reducing transaction costs, contribute both to innovation and company competitiveness. Dense patterns of ‘association’, reinforced by links between firms and other support institutions, have also been linked to cluster and regional growth. Case-studies of areas with high levels of co-operation have been characterised by social and economic uniformity, geographical contiguity, high levels of social capital (i.e. trust) and stable and supportive governance and support institutions. Border regions are often characterised by exactly the opposite conditions: poor infrastructure, low population and business densities, low levels of social capital and governance which is at best divided, and at worst, antagonistic. In this context, cross-border cooperation can play an important role, countering the structural discontinuity of border regions and generating a potentially positive growth dynamic In terms of the Northern Ireland-Ireland border the general socio-economic difficulties of border areas have been exacerbated by violent social and political unrest. Although the security situation has been more stable in recent years, the economic and social legacy of the past persists. In this context, cross-border co-operation has been seen as one way in which past divisions can be healed and an integrated all-island economy developed. The aims of this paper are two-fold. First, to augment the relatively limited empirical literature on the economic determinants of the probability that firms will engage in cross-border cooperation. In particular, we adopt a transactions cost perspective and seek to identify those factors which are either specific to, or disproportionately important, in shaping the probability of cross-border interaction. The second objective is to contribute some positive evidence to the, all too often, opinion-driven debate on North-South cooperation on the island of Ireland. Specifically, we focus on identifying any differences in the determinants of cross-border co-operation in Ireland and Northern Ireland This provides some insight into current levels of co-operative activity as well as highlighting potential areas for policy intervention. The paper adopts a simultaneous probit approach to examining the determinants of cross-border and local cooperation between firms in Ireland and Northern Ireland. The conceptual approach draws on the transactions cost literature, arguing that firms will engage in cooperation where the costs involved are less than those of market interaction. Cross-border cooperation is modelled as an alternative – and possible complement or substitute – for local co-operative activity. The study is based on a large-scale interview survey conducted in 2002. The results identify a number of factors which help to predict the probability that a firm will engage in cross-border cooperation. Perhaps unsurprisingly it proves easier to predict cross-border cooperation by firms in Northern Ireland than in the larger and more buoyant, Ireland. The results also suggest some complementarity between local and cross-border co-operation, and a declining probability of cross-border cooperation the further a firm is located from the border. Somewhat surprisingly, however, no clear size or sectoral bias is found in the probability of engaging in cross-border cooperation.
    Date: 2005–08
  16. By: Charles Efferson; Rafael Lalive; Peter J. Richerson,; Richard McElreath; Mark Lubell
    Abstract: We conducted an experiment to describe precisely how social learners use information about the distribution of behaviors in a relevant social group. Players chose between two technologies repeatedly. Payoffs were random, but one technology was better in the sense that its expected payoff was higher. Players were divided into two groups: 1) individual learners who knew their realized payoffs after each choice and 2) social learners who had information about the relative frequencies of the two technologies among the individual learners but no private feedback about their own payoffs. For a subset of the social learners, a theoretical model of conformity matches the data very closely. The remaining social learners, however, made choices without responding to the social information provided. This kind of heterogeneity among social learners has received little theoretical attention with respect to aggregate behavioral dynamics.
    Keywords: social learning, conformity, gene-culture coevolution, laboratory experiment
    JEL: C92 O31 Z13
    Date: 2006–05
  17. By: Zeynep Hansen; Hideo Owan; Jie Pan
    Abstract: An important yet under-explored question in the teamwork literature concerns how group characteristics affect productivity. Within a given teamwork setting, it is not obvious how group member diversity affects the performance of the individual and the group. The group may gain from knowledge transfer and sharing while it may be crippled by communication and coordination problems that are prevalent in heterogeneous groups. In this study, we combine class performance data from an undergraduate management class with students’ personal records to explore diversity and knowledge spillover effects. A major advantage of our dataset is the exogenous assignment of groups, which rules out the troublesome yet common self-selection issue in team literature. Our results indicate that male-dominant groups performed worse both in group work and in individually taken exams than female-dominant and equally-mixed gender groups after controlling for other group characteristics. Individual members from a group with more diversity in age and gender scored higher in exams. However, we did not find any significance of a group’s racial composition over group and individual performances. Another novel aspect of this natural experiment is that each group chooses their own group contract form – members of “autonomous” groups receive equal grade for their group work while those in "democratic" groups can adopt differentiated point allocation, thus, providing a proper mechanism to punish free riders. Our estimation results show a significant correlation between the choice of a democratic contract and the group and individual performance. To address the endogeneity problem in groups’ contract choices, we use a maximum likelihood treatment effect model and found that the democratic group contract has a positive and significant effect on group performance.
    JEL: D2 I2
    Date: 2006–05
  18. By: Ben Immers; Mike Duijn
    Abstract: This paper discusses the seemingly inespacable tension between two dominant approaches to governance that are implemented with regard to the planning, design and development of infrastructure networks, such as roads and railways. Roughly, these approaches can be framed in two styles of governance, the hierarchical and the consensual style (Smits, 1995). In today’s (western) societies, hierarchical approaches to governance seem to become more and more obsolete. This is especially the case with regard to ´problematic situations´ that have a large spatial and environmental impact. For example, the planning, design and development of infrastructure networks have such a widespread, trans-sectoral impact, that a top down approach is considered to be no longer viable. The impact of large scale projects (such as the Betuwelijn, the development of the Tweede Maasvlakte or the High Speed Train Network) spreads into spatial, environmental, financial, legal, economic (with regard to exploitation and maintenance) and social aspects of everyday life. As a consequence, it is more and more to be considered as ´a normal procedure´ to at least consult the stakeholders concerned. The almost inevitable involvement of large groups of stakeholders with different characteristics cannot be achieved with hierarchical approaches to governance. Top down is assumed to be inappropriate and thus, un-called for in these types of policy processes. Following this widely accepted assumption, consensual approaches are designed and implemented, under various appealing banners, such as co-production, open planning processes and participatory policy making. These appealing names lead to innovative forms of interaction and participation of stakeholders. Stakeholders are enticed to participate in design workshops, brainstorms, coffee table talks, internet based discussions and surveys and market consultations. Stakeholders are invited to information centres and travelling exhibitions. All these efforts are undertaken based on the assumption that (this time) ´government will really listen and make effective use of all ideas, concerns and energy´. The question arises how effective and efficient these participatory efforts have been thus far. Is a consensual style of governance a solution for the ever increasing complexity of the impact of large scale infrastructural projects? Or has the hierarchical style still have some value for this type of policy processes? And if so, what kind value is this? And in addition, can hierarchical and consensual styles of governance simultaneously be helpful in planning, design and development of infrastructural networks, and if so, how and to what extend? Or must they be considered to be ´natural enemies´ with regard to designing and implementing policy processes? In this paper these questions will be addressed by assessing a (virtual) case study, the further advancement of the road infrastructure network around the city of Rotterdam (also known as the Rotterdamse Ruit). Subsequently we will discuss the two dominant styles of governance, the hierarchical and consensual style. Second, we will describe the role and value of hierarchical (top down) and consensual (bottom up) approaches in planning, designing and development of (road) infrastructural networks and projects. Third, we will make an attempt to combine both approaches, into a hybrid, cross over like, approach that incorporates both hierarchical and consensual approaches in governance. And fourth, we will apply (test) our hybrid, cross over approach to our (virtual) case study, thus proposing an approach for future governance to support the further advancement of the (road) infrastructure network in and around Rotterdam.
    Date: 2005–08
  19. By: Hvenmark, Johan (Center for Organization & Management, Stockholm School of Economics); Wijkström, Filip (Center for Organization & Management, Stockholm School of Economics)
    Abstract: The existence and scale of formal memberships in a country or a region have often been used as an indicator of the country’s degree of civility or the civic and voluntary engagement in the population (Almond and Verba 1963; Curtis, Grabb and Baer 1992; Curtis Baer and Grabb 2001; Putnam 2000). At the same time, many of the larger nonprofit organisations that exist today, and attract scholarly as well as political interest on national as well as international level, are often organised as federative, membership-based organizations. Despite this interest in memberships on a macro level, the organisational level is often left out of the analysis, thus ignoring the primary context in which these memberships are defined and develop. Furthermore, only a very limited line of research has hitherto recognised the importance of member-based organizations and their federated organizational structures in the last couple of decades of nonprofit or voluntary sector literature (6 and Kendall 1997; Smith 2000a; Young 2001). <p> In this paper, we line out and develop an argument where a popular movement tradition dominates the Swedish civil society and its organizations, but it is fairly easy to imagine also other dominant traditions or frameworks in other countries. In France we would, for example, probably find a tradition inspired from or developed out of the social economy paradigm so strong in the French-speaking civil society culture (Archambault 1996). In the Netherlands we would instead probably find a tradition that in some way includes the “three-pillar-system” that stands central in this country (Burger and Dekker 2001), while the charity or voluntary tradition found in Britain (Kendall 2003) and other countries where the Anglo-Saxon influence has been strong, are so dominating that it sometimes is used as a frame even for international civil society comparisons or theoretical work. <p> The main aim of this paper is to line out, describe and analyse one of the most central elements in a wider and dominant civil society framework in Sweden, the membership. In this paper we will argue that a certain group of nonprofit organizations in Sweden, the popular movement organizations (folkrörelserna), have so many organizational attributes in common that they constitute an institutionalized organizational field in the way for example DiMaggio and Powell (1983, p. 148) use the term. The main empirical material used in the paper are in-depth interviews with top-level national leaders in a number of large Swedish federations often understood to be popular movement organizations. In the analysis of the interviews, we focus on the use of two central aspects that often are seen as central for the understanding of the popular movement concept – membership and democracy. These features are repeatedly used and given meaning both by top-level leaders of Swedish voluntary or nonprofit organizations and others. <p> A second purpose of the paper is to point at and discuss the relation between this wider civil society framework and the nonprofit or voluntary organizations found in a particular country. In this paper, Sweden is used as the empirical example and we will report on a specific legal case where the dominant civil society tradition was challenged and defended. We will argue that an important element in the relationship between the wider popular movement framework and the organizations in Swedish civil society in this case can well be understood as one of coercive isomorphism, one of the mechanisms identified by DiMaggio and Powell (1983). As indicated, our paper and research is inspired by a line of institutional theory and research in which organizations and organizational arrangements are found at the core of the analysis and where the work of authors like Meyer and Rowan (1977), DiMaggio and Powell (1983) and Deephouse (1996) stand central. <p> Through the use of a mix of empirical evidence our intention is to explore and make visible what we have chose to term a popular movement marinade. This “marinade” is a metaphor for the organizational cultural context in which not only Swedish nonprofits or voluntary organizations and their members are found, but also for example the legal system around the civil society arena, the construction of various public subsidy structures or the political debate. In the paper, we argue that this strong popular movement tradition or understanding represents something so heavily embedded and well institutionalised in Sweden that it often seems to be taken for granted. The popular movement tradition can be described as a frame so strong that not only civil society social practice but also thinking could be understood as more or less marinated in it (see also Wijkström 2004a; Wijkström, Einarsson et al. 2004).
    Keywords: popular movement; civil society; discourse analysis; membership; federation; Sweden
    Date: 2004–07–11
  20. By: Nadisic, Thierry
    Abstract: The article proposes an answer to the question of why people care about justice in the workplace.
    Keywords: models of organizational justice; material benefits; relational benefits; the fair process effect; the fair outcome effect; the interactive effect; the fairness preference effect; motives of organizational justice; controlled and cognitively driven justice judgements; automatic and emotionally driven justice judgments.
    JEL: D23 O15
    Date: 2006–01–01
  21. By: Paul Frijters; John Haisken-DeNew; Michael Shields
    Abstract: The socio-economic gradient in health remains a controversial topic in economics and other social sciences. In this paper we develop a new duration model that allows for unobserved persistent individual-specific health shocks and provides new evidence on the roles of socio-economic characteristics in determining length of life using 19-years of high-quality panel data from the German Socio-Economic Panel. We also contribute to the rapidly growing literature on life satisfaction by testing if more satisfied people live longer. Our results clearly confirm the importance of income, education and marriage as important factors in determining longevity. For example, a one-log point increase in real household monthly income leads to a 12% decline in the probability of death. We find a large role of unobserved health shocks, with 5-years of shocks explaining the same amount of the variation in length of life as all the other observed individual and socio-economic characteristics (with the exception of age) combined. Individuals with a high level of life satisfaction when initially interviewed live significantly longer, but this effect is completely due to the fact that less satisfied individuals are typically less healthy. We are also able to confirm the findings of previous studies that self-assessed health status has significant explanatory power in predicting future mortality and is therefore a useful measure of morbidity. Finally, we suggest that the duration model developed in this paper is a useful tool when analysing a wide-range of single-spell durations where individual-specific shocks are likely to be important.
    Keywords: education, marriage, life satisfaction, shocks, mortality, duration analysis
    JEL: I1 C23
    Date: 2005–09
  22. By: Dhillon, Amrita (Department of Economics, University of Warwick); Rigolini, Jamele (The World Bank & University of Warwick)
    Abstract: We examine how institutions that enforce contracts between two parties, producers and consumers, interact in a competitive market with one-sided asymmetric information and productivity shocks. We compare an informal enforcement mechanism, reputation, the efficacy of which is enhanced by consumers investing in “connectedness,” with a formal mechanism, legal enforcement, the effectiveness of which can be reduced by producers by means of bribes. When legal enforcement is poor, consumers connect more with one another to improve informal enforcement; in contrast, a well-connected network of consumers reduces producers’ incentives to bribe. In equilibrium, the model predicts a positive relationship between the the frequency of productivity shocks, bribing, and the use of informal enforcement, providing a physical explanation of why developing countries often fail to have efficient legal systems. Firm-level estimations confirm the partial equilibrium implications of the model
    Keywords: Contracts, Institutions, Corruption, Reputation, Uncertainty.
    JEL: D02 D7 L14 O12
    Date: 2006
  23. By: Stefan Boes (Socioeconomic Institute, University of Zurich); Rainer Winkelmann (Socioeconomic Institute, University of Zurich)
    Abstract: Increasing evidence from the empirical economic and psychological literature suggests that positive and negative well-being are more than opposite ends of the same phenomenon. Two separate measures of the dependent variable may be needed when analyzing the determinants of subjective well-being. We argue that this conclusion reflects in part the use of too restrictive econometric models. A flexible multiple-index ordered probit panel data model with varying thresholds can identify response asymmetries in single-item measures of subjective well-being. An application to data from the German Socio-Economic Panel for 1984-2004 shows that income has only a minor effect on positive subjective well-being but a large effect on negative well-being.
    Keywords: generalized ordered probit model, marginal probability effects, random and fixed effects, life-satisfaction
    JEL: I31 D12 C23
    Date: 2006–05
  24. By: Paul Robinson (University of Pennsylvania Law School)
    Abstract: Does criminal law deter? Given available behavioral science data, the short answer is: generally, no. Having a criminal justice system that imposes liability and punishment for violations deters.1 Allocation of police resources or the use of enforcement methods that dramatically increase the capture rate can deter. But criminal law the substantive rules governing the distribution of criminal liability and punishment does not materially effect deterrence, we will argue, contrary to what law- and policy-makers have assumed for decades. Our claim is not that criminal law formulation can never influence behavior but rather that the conditions under which it can do so are not typical. By contrast, criminal law makers and adjudicators formulate and apply criminal law rules on the assumption that they nearly always influence conduct. And it is that working assumption that we find so disturbing and so dangerous. Our skepticism of criminal law's deterrent effect is derived in large part from a behavioral science research critique of the alleged path of influence from doctrine to behavioral response. That critique finds that the transmission of influence faces so many hurdles and is so unlikely to clear them all that it will be the unusual instance in which the doctrine can ultimately influence conduct. Yet this is a startling conclusion because it contradicts the common wisdom and standard practice of law makers and scholars. If, as appears to be the case, doctrinal formulation does not affect conduct, then most of the criminal analysis of the past forty years has been misguided. Where doctrine has been formulated to maximize deterrence, overriding other goals, such as doing justice, such deterrence analysis has frustrated those other goals for no apparent benefit. Let us briefly sketch our line of argument: The behavioral sciences increasingly call into question the assumption of criminal law's ex ante influence on conduct. Potential offenders commonly do not know the legal rules, either directly or indirectly, even those rules that have been explicitly formulated to produce a behavioral effect. Even if they know the rules, the cost-benefit analysis potential offenders perceive which is the only cost-benefit analysis that matters commonly leads to a conclusion suggesting violation rather than compliance, either because the perceived likelihood of punishment is so small, or because it is so distant as to be highly discounted, or for a variety of other or a combination of reasons. And, even if they know the legal rules and perceive a cost-benefit analysis that urges compliance, potential offenders commonly cannot or will not bring such knowledge to bear to guide their conduct in their own best interests, such failure stemming from a variety of social, situational, or chemical influences. Even if no one of these three hurdles is fatal to law's behavioral influence, their cumulative effect typically is. Part I reviews the behavioral science evidence. But some might argue that, although a behavioral science analysis of criminal law's action path says doctrinal formulation can rarely influence conduct, it might in fact 3 do so in some mysterious way presently beyond the understanding of human knowledge. We can test this argument by looking at the effect of specific doctrinal formulations on the crime rates they are intended to lower. The available studies of what one might call 'aggregated effects' -- that is, studies that do not concern themselves with how a deterrent effect might come about but look strictly to whether an effect of doctrine on crime rate can be found -- seem consistent with our conclusion above. A majority of these studies find no discernible deterrent effect of doctrinal formulation, which does not surprise us. But others claim to find such an effect and we must explain these results. Even if the mechanism of transmission from doctrinal formulation to behavioral influence is unknown, the finding of such a connection may be inconsistent with some of our claims and must be dealt with, especially since many deterrence advocates will speculate that the causal mechanism in the 'black box' is deterrence. We find that some of the aggregated-effect studies are simply poorly done and cannot reliably support a conclusion that doctrine affects crime rates. Others seem undeniably to have found an effect on crime rate, but we suspect that much if not most of this is the result of incapacitative rather than deterrent effects. Increasing prison terms, for example, could be taken as providing a greater deterrent threat, but a resulting reduction in crime may be the result of the isolating effect of longer incarcerations rather than their deterrent effect. But even if one concludes that some of these studies show a deterrent effect from doctrinal formulation, which we do, the specific circumstances of those studies serve generally to affirm our points about the prerequisites of deterrence. That is, these studies involve rules and target audiences that do what is rarely done: to satisfy the prerequisites to deterrence. The circumstances of these studies only serve to illustrate that the existence of such prerequisites are not typical. Part II reviews these aggregated effect studies.
  25. By: Bernard L. Weinstein; Terry L. Clower
    Abstract: Homelessness has long been recognized as a serious problem in many American cities, and Dallas in no exception. What’s more, the homeless tend to congregate in the downtown districts (DD) since most service providers are also located in the urban core. Though homelessness is typically considered a social problem, it also has economic consequences. The latest homeless census for the city of Dallas totaled 6,000, and annual outlays by governmental, non-profit, charitable, and faith-based organizations to provide them with services probably exceed $50 million. This estimate doesn’t include thousands of volunteer hours. But the true economic cost of homelessness is much greater. A survey of downtown business owners found that the presence of homeless persons is having a negative affect on their operations and burdening many of them with additional costs for security and cleaning. A majority of retail respondents report that proximity to the homeless was scaring off customers and reducing their sales. An examination of downtown properties using Dallas County Appraisal District (DCAD) records reveals that average values in the southern sector, where most of the homeless are concentrated, are well below those in the northern half of downtown. Consequently, the City of Dallas, Dallas County, and the Dallas Independent School District are losing $2.4 million per year due to valuation disparities from a lack of development in the southern half of the DD. What’s more, we estimate the southern half of downtown can potentially support almost 2.2 million square feet of additional commercial, office and residential space. This development scenario would create more than 5,000 new jobs and generate about $6.6 million per year for local taxing entities. But the revitalization of Dallas’ DD, an avowed goal of the city’s political and business leaders, will not be fully realized until a comprehensive plan for improving homeless services is developed and implemented. Most importantly, the proposed central intake facility should be located away from—but close to—the downtown district. In this regard, the City of Miami can serve as a model. Miami has significantly reduced the visible homeless count and greatly improved the delivery of services. By creating an umbrella agency to oversee all homeless programs—whether provided by government, voluntary or faith-based institutions—the city has avoided duplication and overlap of services. Significantly, Miami has located both of its central intake facilities, known as Homeless Assistance Centers (HACs), away from their downtown district. Miami’s businesses community has recognized that reducing homelessness is a community and economic development issue as well as a social problem, and to that end they have contributed about $50 million over the past decade. The results are tangible, as evidenced by the construction boom currently underway in Miami’s downtown. As with Miami, an effective approach for dealing with Dallas’ homeless population must include greater participation and support by the region’s business leaders. Homelessness has significant economic as well as social consequences for the City of Dallas. While offering our compassion to the homeless, we should also acknowledge that the overwhelming presence of homeless persons on the streets of downtown has negative economic impacts on individual businesses, the prospects for redevelopment, and the city’s finances.
    Date: 2004–08
  26. By: Andrew Leigh; Justin Wolfers
    Abstract: In “Happiness and the Human Development Index: The Paradox of Australia,” Blanchflower and Oswald (2005) observe an apparent puzzle: they claim that Australia ranks highly in the Human Development Index (HDI), but relatively poorly in happiness. However, when we compare their happiness data with the HDI, Australia appears happier, not sadder, than its HDI score would predict. This conclusion also holds when we turn to a larger cross-national dataset than the one used by Blanchflower and Oswald, when we analyse life satisfaction in place of happiness, and when we measure development using GDP per capita in place of the HDI. Indeed, in the World Values Survey, only one other country (Iceland) has a significantly higher level of both life satisfaction and happiness than Australia. Our findings accord with numerous cross-national surveys conducted since the 1940s, which have consistently found that Australians report high levels of wellbeing.
    Keywords: happiness, life satisfaction, Human Development Index, income, Australia
    JEL: I31 O57
    Date: 2005–12

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