nep-soc New Economics Papers
on Social Norms and Social Capital
Issue of 2007‒11‒03
eleven papers chosen by
Fabio Sabatini
University of Rome, La Sapienza

  1. Changing Identity: The Emergence of Social Groups By Ulrich Horst; Alan Kirman; Miriam Teschl
  2. Reputation, Social Identity and Social Conflict By John Smith
  3. The Dynamic Interplay of Inequality and Trust - An Experimental Study By Ben Greiner; Axel Ockenfels; Peter Werner
  4. Ethnic Fragmentation and Police Spending: Social Identity and a Public Good By John Smith; Olugbenga Ajilore
  5. Educational Quality, Communities, and Public School Choice: a Theoretical Analysis. By Tarek Mostafa; Saïd Hanchane
  6. Family Networks and Orphan Caretaking in Tanzania By Christopher Ksoll
  7. Fair ultimatum: an experimental study of the Myerson value By Noemí NAVARRO; Róbert VESZTEG
  8. Ethnic Diversity, Democracy, and Corruption By Etienne B. Yehoue
  9. Volunteer Work, Informal Help, and Care among the 50+ in Europe : Further Evidence for 'Linked' Productive Activities at Older Ages By Karsten Hank; Stephanie Stuck
  10. Education and Crime over the Life Cycle By Giulio Fella; Giovanni Gallipoli
  11. Still the Economy, Stupid: Economic Voting in the 2004 Presidential Election By Jeffrey S. DeSimone; Courtney LaFountain

  1. By: Ulrich Horst (University of British Columbia); Alan Kirman (GREQAM, EHESS, Universite Aix-Marseille III, IUF); Miriam Teschl (College, University of Cambridge)
    Abstract: The original Homo Economicus has progressed from an atomistic and self-interested individual to a socially embedded agent in modern economics. In particular, social interaction models suggest that the individual’s own utility of undertaking an action may be influenced by the number of peers taking this same action. Hence, people gain by conforming to, or differentiating their behaviour from that of others. A number of papers have also suggested why people want to conform. In particular, Akerlof and Kranton (2000, 2002, 2005) suggest that people belong to certain groups and wish to adopt the corresponding social identity by behaving according to the behavioural prescriptions of these groups. In this paper, we present a social interaction model that is based on a different account of identity. The concept of identity used here is on a more personal level and suggests that people have desired self-images of themselves that they wish to attain at some time in the future. Hence, individuals aim to transform their current individual characteristics into those of their self-image. They try to achieve this by joining social groups and adopting the typical characteristics of these groups. However, groups will be modified over time by the people joining them. This may induce individuals to revise their previous choices and eventually to move on and to choose different groups. The model thus presents an endogeneous interaction structure and offers an account of endogenous group formation as well as an endogenous evolution of personal identity. We further study in what sense and under what conditions the dynamics at the individual and at the social level will reach an “equilibrium” and what the nature of such an equilibrium is.
    Keywords: Economic agent, social interaction, conformity, personal identity, self-image, change
    JEL: D01 D63 Z13
    Date: 2007–09
  2. By: John Smith (Rutgers University-Camden)
    Abstract: We interpret the psychology literature on social identity and examine its implications in a population partially composed of such agents. We model a population of agents from two exogenous and well defined social groups. Agents are randomly matched to play a reduced form bargaining game. We show that this struggle for resources drives a conflict through the rational destruction of surplus. We assume that the population contains both rational players and behavioral players. Behavioral players aggressively discriminate against members of the other social group. The existence and specification of the behavioral player is motivated by the social identity literature. For rational players, group membership has no payoff relevant consequences. We show that rational players can contribute to the conflict by aggressively discriminating and that this behavior is consistent with existing empirical evidence. Our paper relates to the empirical literature which finds that our measure of social heterogeneity tends to be increasing in economic variables which we interpret as signifying inefficiency. We provide an explanation that, as social groups compete for the benefits of public goods, disagreement and inefficiency can result. Our work also relates to the social conflict literature, which examines the relationship between macro level factors such as unemployment and civil disturbances. This literature finds that the amount of social conflict tends to be increasing in what we refer to as the inequitability of the environment.
    Keywords: reputation, conflict, identity
    JEL: C72 D74 L14
    Date: 2007–10–14
  3. By: Ben Greiner; Axel Ockenfels; Peter Werner
    Abstract: We study the interplay of inequality and trust in a dynamic game, where trust increases efficiency and thus allows higher growth of the experimental economy in the future. We find that trust is initially high in a treatment starting with equal endowments, but decreases over time. In a treatment with unequal endowments, trust is initially lower yet remains relatively stable. The difference seems partly due to the fact that equal start positions increase subjects’ inclination to condition their trust decisions on wealth comparisons, whereas conditional trust is much less prevalent with unequal initial endowments. As a result, with respect to efficiency, the initially more unequal economy fares worse in the short run but better in the long run, and the disparity of wealth distributions across economies mitigates over time.
    Keywords: inequality, trust, growth, laboratory experiments
    JEL: C73 C92 D63 E25 O15
    Date: 2007–10–12
  4. By: John Smith (Rutgers University-Camden); Olugbenga Ajilore (University of Toledo)
    Abstract: We present evidence that more ethnically fragmented communities spend, all else equal, more on police services than less fragmented communities. We introduce a model of spending on police services which we use to interpret the data. In this model, we assume that the decision to commit a crime is a rational consideration of the costs and benefits and that spending on police services reduces the attractiveness of committing a crime. We also assume that being a victim of crime affects a loss in utility. However this victimization cost, if victim and perpetrator are a different ethnicity, is greater than or equal to that if the perpetrator is the same ethnicity. A consequence of the model is that a higher level of spending on police services is associated with more ethnically fragmented communities only when agents suffer this differential cost of victimization. These results contribute to our understanding of the stylized fact that spending on police services is increasing at a time in which crime rates are falling. Further, our results provide empirical support for the contention that people have a larger cost of victimization when the perpetrator is a different ethnicity.
    Keywords: Ethnic Fragmentation, Police, Crime, Social Identity, Public Goods
    JEL: D70 H76 H41
    Date: 2007–10–11
  5. By: Tarek Mostafa (LEST - Laboratoire d'économie et de sociologie du travail - CNRS : UMR6123 - Université de Provence - Aix-Marseille I - Université de la Méditerranée - Aix-Marseille II); Saïd Hanchane (LEST - Laboratoire d'économie et de sociologie du travail - CNRS : UMR6123 - Université de Provence - Aix-Marseille I - Université de la Méditerranée - Aix-Marseille II)
    Abstract: In this paper, we develop a multicommunity model where public mixed finance and private schools coexist. Students are differentiated by income, ability and social capital. Schools maximize their profits under a quality constraint; the pricing function is dependent on the cost of producing education and on the position of an individual relatively to mean ability and mean social capital. Income plays an indirect role since it determines the type of schools and communities that can be afforded by a student given his ability and social capital.<br /><br />Three dimensional stratification results from schools’ profit maximization and individuals’ utility maximization. We study majority voting over tax rates; property tax is used to finance education not only in pure public schools but also in mixed finance schools. We provide the necessary conditions for the existence of a majority voting equilibrium determined by the median voter. Finally, we analyze the consequences of introducing public school choice.
    Keywords: Education market; Majority voting equilibrium; Peer group effects; Social Capital; Students; Formation of communities; School choice
    Date: 2007–10–08
  6. By: Christopher Ksoll
    Abstract: This paper studies the effects of orphanhood on health and education outcomes of children in Tanzania. Using an original dataset on members of the extended family networks of orphaned children, I assess by how much the effects of orphanhood are reduced due to a systematic placement of the orphans within the family network. I find that orphanhood has significant negative impacts on female orphans` welfare in terms of health and education, not however for male orphans. I then provide evidence that the selection of caretakers reduces the negative impact of orphanhood on years of education by one year relative to caretaking by the average family within the family network.
    Keywords: Orphans, Extended Family, Caregiving, Tanzania
    JEL: O15 D10 I3 J12
    Date: 2007
  7. By: Noemí NAVARRO; Róbert VESZTEG
    Abstract: We conduct a laboratory experiment to test the empirical behavior of the bid-and-propose mechanism, defined in Navarro and Perea (2005). This mechanism implements the Myerson value for networks, and therefore its outcome posesses fairness properties. Since the bid-and-propose mechanism includes an ultimatum game in the last stage, we design an experiment with several treatments, where subjects also play the simple ultimatum game. In order to check whether subjectsbehave fairly in the sense of Myerson or they are inequity averse, we compare resultsfrom games with symmetric and asymmetric outside options.
    Keywords: experiments; fairness; Myerson value; ultimatum game
    JEL: C72 C91 D63
    Date: 2007–08
  8. By: Etienne B. Yehoue
    Abstract: I study the link between ethnic diversity, democracy, and corruption. In a static model, I show that contrary to conventional wisdom, corruption might emerge as a negative externality of democracy. This occurs through ethnicity, which appears as a rent-extracting technology in a democratic society. Extending the model into a dynamic framework, I find that this technology of extraction operates only at the early stage of democracy. Its impact tends to phase out as democracy matures. In other words, the model predicts that democracy exhibits a threshold effect on corruption.
    Keywords: Working Paper , Corruption , Governance , Economic models ,
    Date: 2007–09–17
  9. By: Karsten Hank; Stephanie Stuck
    Abstract: Objectives - Taking a cross-national comparative perspective, we investigate linkages between volunteer work, informal helping, and caring among Europeans aged 50 or older: Is the relationship between these activities characterized by complementarity or by substitution? Is there evidence for the existence of (unobserved) personality traits that foster engagement independent of a specific activity? Methods - Based on 27,305 personal interviews from the 2004 Survey of Health, Ageing and Retirement in Europe (SHARE), we estimate univariate and multivariate probit models, which allow us to analyze the interrelationship between different productive activities and the derterminants of individuals' engagement therein. Results - There is substantial variation in the participation in volunteering, helping, and caring between countries and regions. Independent of the general level of activity in a country, we find evidence for a complementary and interdependent relationship between all three activities. Discussion - Our findings not only suggest an important role of societal opportunity structures in elders' productive engagement, but they also support recent notions of the existence of a general motivation for engagement in productive activities, independent of a specific domain of activity. Thus, the study of motivations should be an important aspect of future research on productive aging.
    Date: 2007
  10. By: Giulio Fella (Queen Mary, University of London, UK and The Rimini Centre for Economics Analysis, Rimini, Italy.); Giovanni Gallipoli (University of British Columbia, Canada.)
    Abstract: In this paper we ask whether policies targeting a reduction in crime rates through changes in education outcomes can be considered an effective and cost-viable alternative to interventions based on harsher punishment alone. In particular we study the effect of subsidizing high school completion. Most econometric studies of the impact of crime policies ignore equilibrium effects and are often reduced-form. This paper provides a framework within which to study the equilibrium impact of alternative policies. We develop an overlapping generation, life-cycle model with endogenous education and crime choices. Education and crime depend on different dimensions of heterogeneity, which takes the form of differences in innate ability and wealth at birth as well as employment shocks. PSID, NIPA and CPS data are used to estimate the parameters of a production function with different types of human capital and to approximate a distribution of permanent heterogeneity. These estimates are used to pin down some of the modelÕs parameters. The model is calibrated to match education enrolments, aggregate (property) crime rate and some features of the wealth distribution. In our numerical experiments we find that policies targeting crime reduction through increases in high school graduation rates are more cost-effective than simple incapacitation policies. Furthermore, the cost-effectiveness of high school subsidies increases significantly if they are targeted at the wealth poor. We also find that financial incentives to high school graduation have radically different implications in general and partial equilibrium (i.e. the scale of the programmes can substantially change its outcomes).
    Date: 2007–07
  11. By: Jeffrey S. DeSimone; Courtney LaFountain
    Abstract: Given President Bush's popularity among relatively poor rural residents and lack thereof among wealthier urban dwellers in the 2004 presidential election, analysts have suggested that voters contradicted their economic self-interests. We investigate whether this conventional wisdom implied an absence of economic voting. Using exit poll data, we estimate whether a change in previous four-year financial status affected the propensity to vote for Bush. The main econometric concern is that underlying preferences for Bush might dictate financial status change responses. Beyond income and several other demographic variables, therefore, the regressions hold constant indicators for state and congressional district, religious affiliation, political philosophy and party, and Iraq war support. Even further controlling for approval of Bush's job performance, economic voting is statistically and quantitatively significant. Effects are asymmetric, with status worsening hurting Bush more than status improvement helped, and persist even among subgroups that provided particularly strong or weak support for Bush.
    JEL: H0
    Date: 2007–10

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