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on Social Norms and Social Capital |
| By: | Matthew O. Jackson (Stanford University); Benjamin Golub (Division of the Humanities and Social Sciences) |
| Abstract: | We study learning and influence in a setting where agents communicate according to an arbitrary social network and naïvely update their beliefs by repeatedly taking weighted averages of their neighbors’ opinions. A focus is on conditions under which beliefs of all agents in large societies converge to the truth, despite their naïve updating. We show that this happens if and only if the influence of the most influential agent in the society is vanishing as the society grows. Using simple examples, we identify two main obstructions which can prevent this. By ruling out these obstructions, we provide general structural conditions on the social network that are sufficient for convergence to truth. In addition, we show how social influence changes when some agents redistribute their trust, and we provide a complete characterization of the social networks for which there is a convergence of beliefs. Finally, we survey some recent structural results on the speed of convergence and relate these to issues of segregation, polarization and propaganda. |
| Keywords: | Social Networks, Learning, Diffusion, Bounded Rationality |
| JEL: | D85 D83 A14 L14 Z13 |
| Date: | 2007–06 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2007.64&r=soc |
| By: | Wim Groot (Maastricht University); Henriëtte Maassen van den Brink (Universiteit van Amsterdam); Bernard M.S. van Praag (Universiteit van Amsterdam) |
| Abstract: | There is a small but growing literature on the determinants of social capital. Most of these studies use a measure of trust to define social capital empirically. In this paper we use three different measures of social capital: the size of the individual’s social network, the extent of their social safety net and membership of unions or associations. A second contribution to the literature is that we analyze what social capital contributes to our well—being. Based on this, we calculate the compensating income variation of social capital. We find differences in social capital when we differentiate according to individual characteristics such as education, age, place of residence, household composition and health. Household income generally has a statistically significant effect. We find a significant effect of social capital on life satisfaction, Consequently, the compensating income variation of social capital is substantial. |
| Keywords: | life satisfaction; social capital |
| JEL: | D1 D6 |
| Date: | 2007–06–25 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:20070050&r=soc |
| By: | Sanjeev Goyal (University of Cambridge); Andrea Galeotti (University of Essex) |
| Abstract: | The important role of friends, neighbors and colleagues in shaping individual choices has been brought out in a number of studies over the years. The presence of significant ‘local’ influence in shaping individual behavior suggests that firms, governments and developmental agencies should explicitly incorporate it in the design of their marketing and developmental strategies. This paper develops a framework for the study of optimal strategies in the presence of social interaction. We focus on the case of a single player who exerts costly effort to get a set of individuals – engaged in social interaction – to choose a certain action. Our formulation allows for different types of social interaction (ranging from sharing of information to direct adoption externalities) and also allows for the player to have incomplete information concerning the connections among individuals. The analysis starts by showing that incorporating information on social interaction can have large effects on the profits of a player. We then show that an increase in the level and dispersion of social interaction can raise or lower the optimal strategy and profits of the player, depending on the content of the interaction. We then study the value of social network information for the player and find that it depends on the dispersion in social connections. The economic interest of these results is illustrated via a discussion of two economic applications: advertising in the presence of word of mouth communication and seeding a network. |
| Keywords: | Social Interaction, Seeding the Network, Word of Mouth Communication, Diffusion Strategy |
| JEL: | D8 L15 |
| Date: | 2007–06 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2007.70&r=soc |
| By: | Aljaž Ule (University of Amsterdam); Jacob K. Goeree (California Institute of Technology); Arno Riedl (University of Maastricht) |
| Abstract: | This paper reports results from a laboratory experiment on network formation among heterogeneous agents. The experimental design extends the Bala-Goyal (2000) model of network formation with decay and two-way flow of benefits by allowing for agents with lower linking costs or higher benefits to others. Furthermore, agents’ types may be common knowledge or private information. In all treatments, the (efficient) equilibrium network has a “star” structure. With homogeneous agents, equilibrium predictions fail completely. In contrast, with heterogeneous agents stars frequently occur, often with the high-value or low-cost agent in the center. Stars are not born but rather develop: with a high-value agent, the network’s centrality, stability, and efficiency all increase over time. Probit estimations based on best-response behaviour and other-regarding preferences are used to analyze individual linking behavior. Our results suggest that heterogeneity is a major determinant for the predominance of star-like structures in real-life social networks. |
| Keywords: | Network Formation, Experiment, Heterogeneity, Private Information |
| JEL: | C72 C92 D82 D85 |
| Date: | 2007–06 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2007.65&r=soc |
| By: | Jordi Brandts; Arthur Schram; Klarita Gërxhani |
| Abstract: | This paper studies experimentally how the existence of social information networks affects the ways in which firms recruit new personnel. Through such networks firms learn about prospective employees' performance in previous jobs. Assuming individualistic preferences social networks are predicted not to affect overall labor market behavior, while with social preferences the prediction is that when bilaterally negotiated: (i) wages will be higher and (ii) that workers in jobs with incomplete contracts will respond with higher effort. Our experimental results are consistent with the social preferences view, both for the case of excess demand and excess supply of labor. In particular, the presence of information networks leads to more efficient allocations. |
| Keywords: | Labor Markets, Information Networks, Worker Recruitment, Indirect reciprocity, Experiments |
| JEL: | C90 J30 J40 |
| Date: | 2007–06–15 |
| URL: | http://d.repec.org/n?u=RePEc:aub:autbar:707.07&r=soc |
| By: | Florence Jusot; Michel Grignon; Paul Dourgnon |
| Abstract: | We study the psychosocial determinants of health, and their impact on social inequalities in health in France. We use a unique general population survey to assess the respective impact on selfassessed health status of subjective perceptions of social capital controlling for standard socio-demographic factors (occupation, income, education, age and gender). The survey is unique for two reasons: First, we use a variety of measures to describe self-perceived social capital (trust and civic engagement, social support, sense of control, and selfesteem). Second, we can link these measures of social capital to a wealth of descriptors of health status and behaviours. We find empirical support for the link between the subjective perception of social capital and health. Sense of control at work is the most important determinant of health status. Other important ones are civic engagement and social support. To a lesser extent, sense of being lower in the social hierarchy is associated with poorer health status. On the contrary, relative deprivation does not affect health in our survey. Since access to social capital is not equally distributed in the population, these findings suggest that psychosocial factors can explain a substantial part of social inequalities in health in France. |
| Keywords: | social capital, social support, relative deprivation, sense of control, social health inequalities, France |
| JEL: | J12 I10 |
| Date: | 2007–05 |
| URL: | http://d.repec.org/n?u=RePEc:mcm:sedapp:189&r=soc |
| By: | Duysters, Geert (UNU-MERIT); Vanhaverbeke, Wim (Technical University Eindhoven); Beerkens, Bonnie (Technical University Eindhoven) |
| Abstract: | Learning through networks has been considered as an important research topic for several years now. Technological learning is more and more based on a combination of internal and external learning and firms need to develop both technological and social capital for that purpose. This paper analyses the relationship between both types of capital and their impact on the technological performance of companies in high-tech industries. We claim and find empirical evidence for decreasing marginal returns on social capital. Technological capital and social capital mutually reinforce each other's effect on the rate of innovation for companies with small patent and alliance portfolios. However, when the patent portfolio and network of alliances are extensive, companies risk to over-invest since optimal levels of social capital become smaller at higher levels of technological capital and the marginal benefits of investing in technological capital decreases the higher the levels of social capital. Finally, we find empirical evidence that companies that explore novel and pioneering technologies have higher levels of innovation performance in subsequent years than companies that solely invest in incremental innovations. |
| Keywords: | Strategic Alliances, Networks, Innovation |
| JEL: | O32 O31 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:unumer:2007018&r=soc |
| By: | Luigi Mittone; Francesca Bortolami |
| Abstract: | This is an experiment on the effect of norm application in a public good game. We want to investigate whether a control norm affects the contribution level differently, only in relation to the way in which the norm is applied in the game. We compare the amount of public good provided in two different groups. In the first group (constituent group), experimental subjects create a control norm, and then they self-apply it in a basic public good game. In the second group (control group), the norm created by the constituent group is exogenously imposed. Experimental results show a significant difference between the two public good levels considered. Self determination implies a higher level of efficiency, as compared to the exogenous one. |
| Keywords: | public good games, free riding, norm of control, voluntary contribution |
| JEL: | H41 C92 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:trn:utwpce:0704&r=soc |
| By: | Jose Ignacio Gimenez (University of Zaragoza); Jose Alberto Molina (University of Zaragoza and IZA); Almudena Sevilla Sanz (University of Oxford) |
| Abstract: | This paper complements conventional economic analysis and presents a social norms interpretation to explain cross-country differences in partnership formation rates, and the dramatic decrease in partnership formation rates in Southern Europe in particular. We argue that increases in female human capital - by raising the opportunity cost of entering a partnership - had a differential impact on partnership formation rates in Northern and Southern Europe due to the different social norms regarding the household division of labor. Social norms are modeled as a constraint on the allocation of household labor that (if binding) diminishes the gains to enter a partnership. Furthermore, highly educated women are less likely to form a partnership, because the utility loss when a partnership is formed is lower the higher the female opportunity cost. We test the predictions of the model using 7 waves of the European Community Household Panel (1995-2001). For each country and year we construct the average of the female to male ratio of childcare time as an indicator of social norms regarding the household division of labor. The empirical findings support the predictions of the model. After controlling for the time and country variation in the data, as well as for permanent individual heterogeneity and other aggregate variables at the country level, the results suggest that more traditional social norms regarding the household division of labor negatively affect a woman's probability of forming a partnership. Thus, a woman living in a country with a more traditional division of household labor has, ceteris paribus, a lower probability of forming a partnership. Furthermore, as predicted by the theory, social norms have a stronger negative effect for highly educated women. To the extent that female education has increased over the years, and that Southern European countries have more traditional social norms, this latter finding may partly explain the dramatic decrease in partnership formation rates in Southern Europe. |
| Keywords: | marriage market, gender roles, household labor |
| JEL: | E21 I29 |
| Date: | 2007–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2884&r=soc |
| By: | Andrew E. Clark (Paris School of Economics and IZA); Paul Frijters (Queensland University of Technology); Michael Shields (University of Melbourne and IZA) |
| Abstract: | The well-known Easterlin paradox points out that average happiness has remained constant over time despite sharp rises in GNP per head. At the same time, a micro literature has typically found positive correlations between individual income and individual measures of subjective well-being. This paper suggests that these two findings are consistent with the presence of relative income terms in the utility function. Income may be evaluated relative to others (social comparison) or to oneself in the past (habituation). We review the evidence on relative income from the subjective well-being literature. We also discuss the relation (or not) between happiness and utility and discuss some non-happiness research (behavioural, experimental, neurological) dealing with income comparisons. We last consider how relative income in the utility function affects economic models of behaviour in a number of different domains. |
| Keywords: | income, happiness, utility, comparison, habituation |
| JEL: | D01 D31 H00 I31 J28 |
| Date: | 2007–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2840&r=soc |
| By: | Stefan Krause; Fabio Mendez |
| Abstract: | In this paper, we study whether voters are more likely to “vote out” a corrupt incumbent than to re-elect him. Specifically, we examine whether they retract their support from political candidates who they think are corrupt by looking at changes in an index of corruption perceptions between the current and the last elections. Our results suggest that corruption in public office is effectively punished by voters. Furthermore, our findings support the idea that both the political system and the democratic experience are important determinants of the voters’ reaction and control of corruption: while voters in countries with parliamentary systems or with relatively low levels of democracy react negatively to an increase in corruption, no perceptible effect of this kind was found in countries with mature democracies; and the evidence is inconclusive in the case of countries with presidential systems. |
| Date: | 2007–06 |
| URL: | http://d.repec.org/n?u=RePEc:emo:wp2003:0709&r=soc |
| By: | John Knight; Lina Song; Ramani Gunatilaka |
| Abstract: | A national household survey for 2002, containing a specially designed module on subjective well-being, is used to estimate pioneering happiness functions in rural China. The variables predicted by economic theory to be important for happiness are relatively unimportant. The analysis suggests that we need to draw on psychology and sociology if we are to understand. Rural China is not a hotbed of dissatisfaction with life, possibly because most people are found to confine their reference groups to the village. Relative income within the village and relative income over time, both in the past and expected in the future, are shown to influence happiness. `Subjective well-being poverty` functions are estimated, in which income and various proxies for `capabilities` and `functionings` appear as arguments. Even amidst the poverty of rural China, social functionings, attitudes and expectations are important to subjective well-being. |
| Keywords: | Happiness, Subjective Well-being, Aspirations, Relative Deprivation, Reference Groups, Poverty, China |
| JEL: | I31 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:wpaper:334&r=soc |
| By: | Alan Manning; Sanchari Roy |
| Abstract: | There is economic evidence that diversity has consequences for economic performance (see Alesinaand La Ferrara, 2005). This might have consequences for immigration policy - how many immigrantsto allow into a country and from what cultural background. But, central to such a discussion is thepace of cultural assimilation among immigrants - this under-researched topic is the focus of thispaper. It investigates the extent and determinants of British identity among those living in Britain andthe views on rights and responsibilities in societies. We find no evidence for a culture clash in general,and one connected with Muslims in particular. The vast majority of those born in Britain, of whateverethnicity or religion, think of themselves as British and we find evidence that third-generationimmigrants are more likely to think of themselves as British than second generation. Newly arrivedimmigrants almost never think of themselves as British but the longer they remain in the UK, themore likely it is that they do. This process of assimilation is faster for those from poorer and lessdemocratic countries, even though immigrants from these countries are often regarded as a particularcause for concern. Our analysis of rights and responsibilities finds much smaller differences in viewsbetween the UK-born and immigrants than within the UK-born population. |
| Keywords: | Immigration, Identity, Assimilation |
| JEL: | J61 |
| Date: | 2007–04 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp0790&r=soc |
| By: | Alan Manning |
| Abstract: | Becker (1974) introduced to modern economics the idea that others care about what othersthink about them and derived many useful insights from this assumption. But he did notprovide a very complete description of the general equilibrium of an economy in whichpeople both demand respect from and supply respect to others. This paper analyzes theequilibrium price of respect, showing how it depends on the distribution of materialendowments and discussing whether we would expect that, as society gets richer, the marketfor respect becomes more or less important. It explains why a demand for respect is a humanuniversal in terms of Becker's observation that this helps to provide insurance where marketsare absent. Although the demand for respect is universal, the activities that command respecthave enormous cultural diversity - the paper explains how there can be many Nash equilibriaif respect is withheld from those who violate prescribed behaviour. Finally the paperdiscusses where, in a modern economy, respect is demanded and supplied arguing it isprimarily bundled up with other goods and services because of the nature of the costs ofsupplying it. |
| Keywords: | Respect, Status, Pro-Social Preferences |
| JEL: | D51 I31 |
| Date: | 2007–05 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp0793&r=soc |
| By: | Andrés Alonso, Pablo de; Azofra Palenzuela, Valentín (Departamento de Economía Financiera y Contabilidad, Facultad de Ciencias Económicas y Empresariales, Universidad de Valladolid); Romero Merino, Mª Elena (Departamento de Economía Financiera y Contabilidad, Facultad de Ciencias Económicas y Empresariales, Universidad de Valladolid) |
| Abstract: | Recently, many empirical studies have shed light on the determinants of boards of directors. Our aim in this paper goes far from the corporate setting. We explain how nonprofits boards are structured. As opposed to corporations’ goals, the objectives of nonprofits are non-lucrative. They can not disburse profits to their contributors, but the role played by their boards of trustees in monitoring and advising managers is analogous to that of boards of directors. Using a sample of Spanish foundations, we show that nonprofit board determinants, such as organizational complexity and financing structure, are mostly similar to those of corporate boards. Nonprofit age, however, illustrates the different nature of these organizations and their voluntary boards. |
| Keywords: | Nonprofit Governance, Board of Trustees, Foundations, Efficiency. |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:ntd:wpaper:2006-15&r=soc |
| By: | Christian Belzil (Centre National de la Recherche Scientifique, CIRANO, CIREQ and IZA) |
| Abstract: | This paper considers the estimation of sequential schooling decisions made by agents who are endowed with subjective beliefs about their own ability. I use unique Italian panel data which provide information on i) the curvature of the per-period utility function, ii) schooling decisions, iii) post-schooling earnings, in order to estimate the future component of the differences in intertemporal utilities of school and work independently from the present component, (as in Geweke and Keane, 1995, 2001), and evaluate the importance of "present bias". Under certain conditions, which include imposing equality between the modal belief and true ability, I recover individual specific subjective probability distributions. I estimate both the degree of confidence (a measure of spread) and the incidence of over (and under) estimation. I find that the future component of intertemporal utilities dominates schooling decisions. I find a strong incidence of under-estimation among the more able and a much smaller incidence of over-estimation among the low ability group. At the medium ability spectrum, there is evidence of some over-estimation. The degree of confidence is high and implies that agents have a substantial amount of inside information (36% of the population act on a degenerate subjective distribution). Overall, the variance of the objective ability heterogeneity distribution is 4 times as large the variance of the distribution characterizing subjective beliefs. |
| Keywords: | subjective distributions, expectation parameterization, rational expectation, schooling, dynamic programming, present bias, over-confidence |
| JEL: | J24 |
| Date: | 2007–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2820&r=soc |
| By: | Ali T. Akarca (University of Illinois at Chicago); Aysit Tansel (Middle East Technical University and IZA) |
| Abstract: | 1995 Turkish parliamentary election was held almost under the conditions of a controlled experiment. The unique cross-section data pertaining to this election is utilized to study the voter behavior in Turkey. Turkish voters are found to take government’s economic performance into account but not look back beyond one year. A poor performance is found to benefit the extremist opposition parties at the expense of the major incumbent party. The minor incumbent and the centrist opposition parties appear to be unaffected by economic conditions. Voters also exhibit a tendency to vote against the parties holding power. The party preferences of Turkish voters depend on their socioeconomic characteristics as well. |
| Keywords: | elections, voter behavior, economic voting, party preference, Turkey |
| JEL: | D72 |
| Date: | 2007–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2881&r=soc |