nep-soc New Economics Papers
on Social Norms and Social Capital
Issue of 2006‒07‒09
sixteen papers chosen by
Fabio Sabatini
Universita degli Studi di Roma, La Sapienza

  1. The Legacy of History for Development: The Case of Putnam's Social Capital By Guido de Blasio; Giorgio Nuzzo
  2. Happiness and Loss Aversion: When Social Participation Dominates Comparision By Vendrik Maarten; Woltjer Geert
  3. How Does EU Enlargement Affect Social Cohesion? By Wolfgang Keck; Peter Krause
  4. Punishment, Inequality and Emotions By David Masclet; Marie-Claire Villeval
  5. Conditional cooperation: Behavioral regularities from the lab and the field and their policy implications By Simon Gaechter
  6. Peer Effects, Social Multipliers and Migrants at School: An International Comparison By Horst Entorf; Martina Lauk
  7. Who are Russia’s entrepreneurs? By Simeon Djankov; Edward Miguel; Yingyi Qian; Gerard Roland; Ekaterina Zhuravskaya
  8. The Formation of Network and Public Intervention: Theory and Evidence from the Chilean Experience By Alessandro Maffioli
  9. Intangible capital and economic growth By Carol Corrado; Charles Hulten; Daniel Sichel
  10. Decentralization and Political Institutions By Ruben Enikolopov; Ekaterina Zhuravskaya
  11. Neighborhood income inequality By Christopher H. Wheeler; Elizabeth A. La Jeunesse
  12. Institutions as Determinants of Preference Change – A One Way Relation? By M. Binder; U. Niederle
  13. A Big Push to Deter Corruption: Evidence from Italy By Antonio Acconcia; Claudia Cantabene
  14. Urban decentralization and income inequality: Is sprawl associated with rising income segregation across neighborhoods? By Christopher H. Wheeler
  15. Who Are China’s Entrepreneurs? By Simeon Djankov; Yingyi Qian; Gerard Roland; Ekaterina Zhuravskaya
  16. Entrepreneurship: First Results from Russia By Simeon Djankov; Edward Miguel; Yingyi Qian; Gerard Roland; Ekaterina Zhuravskaya

  1. By: Guido de Blasio (Bank of Italy, Research Dept.); Giorgio Nuzzo (Bank of Italy, Branch of L'Aquila)
    Abstract: Putnam (1993) argues that (i) center-northern Italy has developed faster than southern Italy because the former was better endowed with social capital; and (ii) that the endowments of social capital across Italian territories have been highly persistent over centuries. This paper provides an empirical investigation of Putnam’s case. To evaluate the relevance of social capital, we present a test based on worker productivity, entrepreneurship, and female labor market participation. Using as instruments regional differences in civic involvement in the late ninetieth century and local systems of government in the middle age, we show that social capital does have economic effects.
    Keywords: Social Capital, Economic Development
    JEL: Z10 O10 D10
    Date: 2006–05
  2. By: Vendrik Maarten; Woltjer Geert (METEOR)
    Abstract: A central finding in happiness research is that a person’s income relative to the average income in her social reference group is more important for her life satisfaction than the absolute level of her income. This dependence of life satisfaction on relative income can be related to the reference dependence of the value function in Kahneman and Tversky’s (1979) prospect theory. In this paper we investigate whether the characteristics of the value function like concavity for gains, convexity for losses, and loss aversion apply to the dependence of life satisfaction on relative income. This is tested with a new measure for the reference income for a large German panel for the years 1984-2001. We find concavity of life satisfaction in positive relative income, but unexpectedly strongly significant concavity of life satisfaction in negative relative income as well. The latter result is shown to be robust to extreme distortions of the reported-life-satisfaction scale. It implies a rising marginal sensitivity of life satisfaction to more negative values of relative income, and hence loss aversion (in a wide sense). This may be explained in terms of increasing financial obstacles to social participation.
    Keywords: public economics ;
    Date: 2006
  3. By: Wolfgang Keck; Peter Krause
    Abstract: The enlargement of the European Union in May 2004 by ten new member states bear increasing challenges in creating social cohesion among its citizens and regions. Social cohesion is understood here in a broad sense as a coalescence of European societies in such a way that living conditions and quality of life of its citizens converge. This paper's empirical focus is on the two core life domains that are currently taking center stage in EU policy debates: (1) employment and working conditions and (2) economic resources and social exclusion. The analyses show that the 15 former member states are converging in terms of lliving and work-ing conditions and the situation has improved in all of these countries during the 1990s. With the enlargement the situation becomes more diverse in the enlarged EU. In particular the post-socialist countries have to make great efforts to catch up with their EU counterparts. We can identify three emerging clusters of countries that share empirically very similar living stan-dards. The first, wealthy cluster consists of the old northern European member states. The second, intermediary country group contains the most well-off accession countries and the old Mediterranean member countries with a lower living standard. The third, less developed clus-ter embraces new member states that were former post-communist countries.
    Date: 2006
  4. By: David Masclet; Marie-Claire Villeval (GATE CNRS)
    Abstract: Cooperation among people who are not related to each other is sustained by the availability of punishment devices which help enforce social norms (Fehr and Gächter, 2002). However, the rationale for costly punishment remains unclear. This paper reports the results of an experiment investigating inequality aversion and negative emotions as possible determinants of punishment. We compare two treatments of a public good game, one in which costly punishment reduces the immediate payoff inequality between the punisher and the target, and one in which it does not affect inequality. We show that while inequality-aversion prevents some subjects from punishing in the equal cost treatment, negative emotions are the primary motive for punishment. Results also indicate that the intensity of punishment increases with the level of inequality, and reduces earnings inequality over time.
    Keywords: cooperation, experiment, free-Riding, inequity aversion, negative emotions
    JEL: A13 C92 D63
    Date: 2006–04
  5. By: Simon Gaechter (University of Nottingham)
    Abstract: This paper discusses the empirical evidence from lab and field experiments on voluntary cooperation. We present the most important findings from numerous public goods experiments and argue that conditional cooperation (contributions are conditional on other people’s contribution) is a primary motivation for many people to (not) contribute to the public good. We also discuss four experiments that test implications of conditional cooperation. We see these experiments as four behavioral models that can help interpreting naturally occurring phenomena, like charitable giving, work morale, and tax evasion. We conclude by discussing some policy implications of the observed behavioral regularities.
    Date: 2006–04
  6. By: Horst Entorf; Martina Lauk
    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-tonative 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. Students with a migration background and a disadvantageous parental status benefit from higher diversity within schools.
    Keywords: Peer effects, migration, education, social multipliers, school systems, parental socioeconomic background
    JEL: I21
    Date: 2006–07–04
  7. By: Simeon Djankov (The World Bank); Edward Miguel (UC Berkeley and NBER); Yingyi Qian (UC Berkeley and CEPR); Gerard Roland (UC Berkeley and CEPR); Ekaterina Zhuravskaya (New Economic School/CEFIR and CEPR)
    Abstract: Social scientists studying entrepreneurship have emphasized three distinct sets of variables: the institutional environment, sociological variables, and personal and psychological characteristics. We are conducting surveys in five large developing and transition economies to better understand entrepreneurship. In this short paper, using over 2,000 interviews from a pilot study in Russia, we find evidence that the three sets of variables matter: perceptions of the local institutional environment, social network effects and individual characteristics are all important in determining entrepreneurial behavior.
    JEL: M13 P12
    Date: 2005–10
  8. By: Alessandro Maffioli (ISLA, Universita' Bocconi, Milano)
    Abstract: The first part of the paper deals with the theoretical foundations of new industrial policy tools aimed at promoting a process of interacting learning among firms. I discuss the issue at three different levels: first, I define the theoretical boundaries of my research interest within the considerable economic literature dealing with industrial networks; secondly, I concentrate on some endogenous growth and development models, in order to analytically define the existing relationship between firm interactions, knowledge flows, and productivity. Then, I discuss the relationship between knowledge diffusion and productivity, with particular emphasis on the fundamental concept of network multiplier. Finally, I carry out a microeconomic analysis of the motivations that bring firms to interact with each other, and look for a role for public institutions in promoting such interaction. I discuss in which cases public intervention promoting the formation of a knowledge-sharing network is justified by the existence of a sort of “market failure”, and identify which variables are involved. In the second part of the paper I analyze the most important Chilean networking program, the PROFO program. The availability of relational data on a significant number of firm networks allows me to investigate in detail the relationship between network structure, public intervention and firm competitiveness. The econometric analysis confirms a strong correlation between PROFO firms’ innovativeness and industrial cooperation, proving the existence of an interactive learning process among participant firms. I used sociometric data to refine my analysis of the impact of the program on the network multiplier: not only do participant firms also achieve better performance in terms of productivity, but this performance is quite strongly correlated with firm centrality and network density, which are the two variables best representing the structure and function of the network multiplier and that, as I previously mentioned, are strongly affected by PROFO.
    Keywords: learning, productivity, public intervention
    JEL: D83 O38
    Date: 2005–05
  9. By: Carol Corrado; Charles Hulten; Daniel Sichel
    Abstract: Published macroeconomic data traditionally exclude most intangible investment from measured GDP. This situation is beginning to change, but our estimates suggest that as much as $800 billion is still excluded from U.S. published data (as of 2003), and that this leads to the exclusion of more than $3 trillion of business intangible capital stock. To assess the importance of this omission, we add intangible capital to the standard sources-of-growth framework used by the BLS, and find that the inclusion of our list of intangible assets makes a significant difference in the observed patterns of U.S. economic growth. The rate of change of output per worker increases more rapidly when intangibles are counted as capital, and capital deepening becomes the unambiguously dominant source of growth in labor productivity. The role of multifactor productivity is correspondingly diminished, and labor's income share is found to have decreased significantly over the last 50 years.
    Date: 2006
  10. By: Ruben Enikolopov (Harvard University and CEFIR); Ekaterina Zhuravskaya (New Economic School/CEFIR and CEPR)
    Abstract: Does fiscal decentralization lead to more efficient governance, better public goods, and higher economic growth? This paper tests Riker’s theory (1964) that the results of fiscal decentralization depend on the level of countries’ political centralization. We analyze crosssection and panel data from up to 75 developing and transition countries for 25 years. Two of Riker’s predictions about the role of political institutions in disciplining fiscally-autonomous local politicians are confirmed by the data. 1) Strength of national political parties significantly improves outcomes of fiscal decentralization such as economic growth, quality of government, and public goods provision. 2) In contrast, administrative subordination (i.e., appointing local politicians rather than electing them) does not improve the results of fiscal decentralization.
    Date: 2006–05
  11. By: Christopher H. Wheeler; Elizabeth A. La Jeunesse
    Abstract: This paper offers a descriptive empirical analysis of the geographic pattern of income inequality within a sample of 359 US metropolitan areas between 1980 and 2000. Specifically, we decompose the variance of metropolitan area-level household income into two parts: one associated with the degree of variation among household incomes within neighborhoods - defined by block groups and tracts - and the other associated with the extent of variation among households in different neighborhoods. Consistent with previous work, the results reveal that the vast majority of a city*s overall income inequality - at least three quarters - is driven by within-neighborhood variation rather than between-neighborhood variation, although we find that the latter rose significantly during the 1980s, especially between block groups. We then identify a number of metropolitan area-level characteristics that are associated with both levels of and changes in the degree of each type of residential income inequality.
    Keywords: Income distribution ; Income
    Date: 2006
  12. By: M. Binder; U. Niederle
    Abstract: In recent economic literature, there has been an increasing interest in modelling preferences as endogenous. Some arguments go along the lines that institutions shape preferences. This paper suggests that adopting a more substantive concept of preferences furthers our understanding of how they systematically shape institutions. We integrate social-psychological concepts and combine them with an account of learning. Thus, a model of the dynamic interrelation between preferences and institutions can be developed. While institutional change can certainly be partly explained in terms of changing incentives, we offer an approach that goes beyond the standard explanation.
    Keywords: endogenous preferences, institutional change, learning, attitudes, wants, social instincts
    JEL: O12 D79 Z00
    Date: 2006–07
  13. By: Antonio Acconcia (Università di Napoli Federico II and CSEF); Claudia Cantabene (Università di Napoli Federico II)
    Abstract: During the first half of the 1990s a pool of Italian judges carried out an investigation, named Mani Pulite (literally clean hands), that led many people to be prosecuted and convicted because of corruption. The impact of Mani Pulite was so much influential that since then many indicators suggest a steadily decreasing path for bureaucratic corruption in Italy. This paper shows that Mani Pulite was mainly effective in deterring corruption as it broke up the feed due to infrastructure investments, mainly those related to public buildings, sanitation, and land reclamation.
    Keywords: Corruption, Public Investment, Deterrence
    JEL: D73 H54 K42
    Date: 2006–06–01
  14. By: Christopher H. Wheeler
    Abstract: Existing research has found an inverse relationship between urban density and the degree of income inequality within metropolitan areas, suggesting that, as cities spread out, they become increasingly segregated by income. This paper examines this hypothesis using data covering more than 160000 block groups within 359 US metropolitan areas over the years 1980, 1990, and 2000. The findings indicate that income inequality - defined by the variance of the log household income distribution - does indeed rise significantly as urban density declines. This increase, however, is associated with rising inequality within block groups as cities spread out. The extent of income variation exhibited between different block groups, by contrast, shows virtually no association with population density. There is, accordingly, little evidence that sprawl is systematically associated with greater residential segregation of households by income.
    Keywords: Income distribution ; Income
    Date: 2006
  15. By: Simeon Djankov (The World Bank); Yingyi Qian (UC Berkeley and CEPR); Gerard Roland (UC Berkeley and CEPR); Ekaterina Zhuravskaya (New Economic School/CEFIR and CEPR)
    Abstract: Social scientists studying the determinants of entrepreneurship have emphasized three distinct perspectives: the role of institutions, the role of social networks and the role of personal characteristics. We conduct a survey from five large developing and transition economies to better understand entrepreneurship in view of these three perspectives. Using data from a pilot study with over 2,000 interviews in 7 cities across China, we find that compared to non entrepreneurs, entrepreneurs are much more likely to have family members who are entrepreneurs as well as childhood friends who became entrepreneurs, suggesting that social networks play an important role in entrepreneurship. Entrepreneurs also differ strongly from non entrepreneurs in their attitudes towards risk and their work-leisure preferences.
    Date: 2005–10
  16. By: Simeon Djankov (The World Bank); Edward Miguel (UC Berkeley and NBER); Yingyi Qian (UC Berkeley); Gerard Roland (UC Berkeley and CEPR); Ekaterina Zhuravskaya (New Economic School/CEFIR and CEPR)
    Abstract: We study the determinants of the decision to become an entrepreneur in 7 Russian cities. Using data on 400 entrepreneurs and 440 non-entrepreneurs, we find considerable variation in the proportion of entrepreneurs, ranging from 6% of adult population in Nizhny Novgorod, to 16% in Perm and 18% in Taganrog. We find evidence that social network effects play a large role in determining entrepreneurial behavior: those individuals whose relatives and childhood friends are entrepreneurs are more likely to be entrepreneurs. Individual characteristics including academic success and educational background, performance on a test of cognitive ability, personal confidence, greed, and willingness to take risks are also important determinants of entrepreneurship in Russia, echoing the claims of Schumpeter. Certain aspects of the institutional environment play a role, but are secondary to individual characteristics.
    Date: 2004–08

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