nep-soc New Economics Papers
on Social Norms and Social Capital
Issue of 2007‒12‒15
seventeen papers chosen by
Fabio Sabatini
University of Rome, La Sapienza

  1. Mind the Gap! Social Capital, East and West By Jan Fidrmuc; Klarita Gërxhani
  2. THE CREATIVE CLASS AND SOCIAL CAPITAL - civil society, regional development and high-tech employment in Japan By Westlund, Hans; Calidoni-Lundberg, Federica
  3. Institutions for Intuitive Man By Christoph Engel
  4. Academic Entrepreneurship - social norms, university culture and policies By Braunerhjelm, Pontus
  5. Sickness Absence and Peer Effects -Evidence from a Swedish Municipality By Bokenblom, Mattias; Ekblad, Kristin
  6. Testing Guilt Aversion By Ellingsen, Tore; Johannesson, Magnus; Tjøtta, Sigve; Torsvik, Gaute
  7. Family ties, incentives and development: a model of coerced altruism By Alger, Ingela; Weibull, Jörgen
  8. Trust in Private and Common Property Experiments By James C. Cox; Elinor Ostrom; James M. Walker; Jamie Castillo; Eric Coleman; Robert Holahan; Michael Schoon; Brian Steed
  9. Institutions and Entrepreneurship Development in Russia:A Comparative Perspective By Ruta Aidis; Saul Estrin; Tomasz Mickiewicz
  10. Cooperation in knowledge-intensive firms By Kvaløy, Ola; Olsen, Trond E.
  12. Innovation in Business Groups By Sharon Belenzon; Tomer Berkovitz
  13. Is Well-being U-Shaped over the Life Cycle? By Blanchflower, David G.; Oswald, Andrew J.
  14. Crescita Economica o Sviluppo Civile? Altre Vie per il Mezzogiorno. By Radhuber, Michael
  15. A Survey on Intangible Capital By YoungGak Kim
  16. DEMOCRATIZATION AND GROWTH By Elias Papaioannou; Gregorios Siourounis
  17. Economic Growth or Civil Development? Alternative ways for southern Italy. By Radhuber, Michael

  1. By: Jan Fidrmuc; Klarita Gërxhani
    Abstract: Recent Eurobarometer survey data are used to document and explain the stock of social capital in 28 European countries. Social capital in Central and Eastern Europe – measured by civic participation and access to social networks – lags behind that in Western European countries. Using regression analysis of determinants of individual stock of social capital, we find that this gap persists when we account for individual characteristics and endowments of respondents but disappears completely after we control for aggregate measures of economic development and quality of institutions. Informal institutions such as prevalence of corruption in post-communist countries appear particularly important. With the enlargement of the European Union, the gap in social capital should gradually disappear as the new member states catch up (economically and institutionally) with the old ones.
    Date: 2007–06
  2. By: Westlund, Hans (KTH and JIBS); Calidoni-Lundberg, Federica (Swedish Institute for Growth Policy Studies)
    Abstract: Do the social and cultural environments have any impact on regional development, expressed in terms of e.g. entrepreneurship, innovations and growth of new industries? A rapidly increasing field of research has found many indications on that such an impact of the civil society exists. In the literature, two partly contradicting hypotheses can be discerned: 1. Florida’s hypothesis, saying that a heterogeneous civil society with diverse values combined with tolerance is influencing regional growth in a positive way, and 2. Putnam’s hypothesis, saying that a homogenous civil society with common norms and values and trust between its citizens is having a positive impact on regional development.This paper studies the validity of these two hypotheses on the current regional development in Japan,measured in four alternative ways: population growth, the high-tech sector’s and high-tech services’ regional distribution, and the net growth of enterprises. As determining variables, we use data from the Japanese General Social Surveys’ International Comparative Survey on Values and Behavioral Patterns, Non-Profit Organizations per capita and share of the population being born abroad, plus control variables in the form of market accessibility and human capital. On detailed regional level (46 prefectures) the analysis does not give any significant support to any of the civil society hypotheses. However, on large-region level (8 regions) the civil society measure gives a significant result for high-tech industry and services.
    Keywords: Regional development; Social capital; Creative class; Civil society; Japan; High-tech industry
    JEL: J24 O33 R11 R12
    Date: 2007–12–11
  3. By: Christoph Engel (Max Planck Institute for Research on Collective Goods, Bonn)
    Abstract: By its critics, the rational choice model is routinely accused of being unrealistic. One key objection has it that, for all nontrivial problems, calculating the best response is cognitively way too taxing, given the severe cognitive limitations of the human mind. If one confines the analysis to consciously controlled decision-making, this criticism is certainly warranted. But it ignores a second mental apparatus. Unlike conscious deliberation, this apparatus does not work serially but in parallel. It handles huge amounts of information in almost no time. It only is not consciously accessible. Only the end result is propelled back to consciousness as an intuition. It is too early to decide whether the rational choice model is ultimately even descriptively correct. But at any rate institutional analysts and institutional designers are well advised to take this powerful mechanisms seriously. In appropriate contexts, institutions should see to it that decision-makers trust their intuitions. This frequently creates a dilemma. For better performance is often not the only goal pursued by institutional intervention. Accountability, predictability and regulability are also desired. Sometimes, clever interventions are able to get them both. Arguably, the obligation to write an explicit set of reasons for a court decision is a case in point. The judge is not obliged to report the mental processes by which she has taken her decision. Justification is only ex post control. Intuitive decision-making is even more desirable if the underlying social problem is excessively complex (NP hard, to be specific), or ill-defined. Sometimes, it is enough for society to give room for intuitive decision-making. For instance, in simple social dilemmas, a combination of cheater detection and punishing sentiments does the trick. However, intuition can be misled. For instance, punishing sentiments are triggered by a hurt sense of fairness. Now in more complex social dilemmas, there are competing fairness norms, and people intuitively choose with a self-serving bias. In such contexts, institutions must step in so that clashing intuitions do not lead to social unrest.
    Keywords: intuition, consciousness, rational choice, heuristics, ill-defined social problems, institutions
    JEL: B52 C72 D01 D02 D81 K40 K42
    Date: 2007–08
  4. By: Braunerhjelm, Pontus (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: Is a shift in intellectual property rights to universities the key instrument in increasing com-mercialization of publicly funded research? How much can actually be learned from the U.S. system, disregarding the ongoing debate as to whether the U.S. do actually outperform Europe in terms of commercializing university based research? Taking Sweden as a role model I claim that this policy will not work. This allegation stems from the analysis of a unique data-base giving individual university researchers view on participation in commercialization of public research, their commercialization experiences, and the obstacles researchers claim exist to increase academic entrepreneurship. Despite researchers positive attitudes towards engag-ing in commercial activities, the university culture, weak incentive structures and badly man-aged support facilities impede the creation of efficient links to markets. I conclude that meas-ures must be taken at primarily the national level, but also at the university level, to enhance commercialization activities.
    Keywords: academic entrepreneurship; commercialization; links; policies
    JEL: J24 O31 O57
    Date: 2007–12–11
  5. By: Bokenblom, Mattias (Department of Business, Economics, Statistics and Informatics); Ekblad, Kristin (Department of Business, Economics, Statistics and Informatics)
    Abstract: Social interactions and social norms are more and more acknowledged to play a vital role in economic decision making. In this study we test if work group absence behaviour influences the individual behaviour. Using detailed employment records of a large Swedish municipality each individual’s colleagues are identified down to the work group level. We find a positive and significant peer effect on the level of sickness absence among co-workers. The results suggest that peer effects are an intra gender and intra age-group phenomenon. Consequently, we cannot rule out the possibility of social norms being a reason for otherwise similar work groups developing different patterns of sickness absence.
    Keywords: Peer effects; sickness absence; social norms
    JEL: C31 D12 J22
    Date: 2007–11–26
  6. By: Ellingsen, Tore (Dept. of Economics, Stockholm School of Economics); Johannesson, Magnus (Dept. of Economics, Stockholm School of Economics); Tjøtta, Sigve (Department of Economics, University of Bergen); Torsvik, Gaute (Department of Economics, University of Bergen)
    Abstract: Guilt averse individuals experience a utility loss if they believe they let someone down. In particular, generosity depends on what the donor believes that the recipient expects to receive. In experimental work, several authors have identified a positive correlation between such second-order donor beliefs and generous behavior, as predicted by the guilt aversion hypothesis. However, the correlation could alternatively be due to a “false consensus effect,” i.e., the tendency of people to believe others to think like themselves. In order to test the guilt aversion hypothesis more rigorously, we conduct three separate experiments: a dictator game experiment, a complete information trust game experiment, and a hidden action trust game experiment. In the experiments we inform donors about the beliefs of their respective recipients, while eliciting these beliefs so as to maximize recipient honesty. The correlation between generous behavior and donors’ second-order beliefs is close to zero in all three experiments.
    Keywords: guilt aversion; beliefs; generosity; experiments
    JEL: C91 D64
    Date: 2007–12–07
  7. By: Alger, Ingela (Carleton University); Weibull, Jörgen (Dept. of Economics, Stockholm School of Economics)
    Abstract: We analyze the effects of family ties on the incentives for production of effort, where family ties are defined as a mixture of true and coerced altruism between family members. We model families as pairs of siblings. Each sibling exerts effort in order to obtain output under uncertainty. A social norm dictates that a sibling with a high output must share a specified amount of this output with his sibling, if the latter's output is low. Siblings may be truly altruistic towards each other, but not to a larger degree than dictated by the social norm. We compare such informal family insurance with actuarially fair formal insurance. We show that coerced family altruism reduces individual efforts in equilibrium. However, individuals always benefit ex ante from living in families with coerced altruism, as compared with living in autarky. We show that a certain degree of coerced family altruism is robust as a social norm in a society of selfish individuals. Finally, we show that if family members are sufficiently altruistic to each other, then informal family insurance by way of coerced altruism may outperform actuarially fair insurance programs.
    Keywords: altruism; coerced altruism; family ties; insurance; moral hazard
    JEL: D02 D13
    Date: 2007–10–24
  8. By: James C. Cox; Elinor Ostrom; James M. Walker; Jamie Castillo; Eric Coleman; Robert Holahan; Michael Schoon; Brian Steed
    Abstract: We report the results from a series of experiments designed to investigate behavior in two settings that are frequently posited in the policy literature as generating different outcomes: private property and common property. The experimental settings closely parallel earlier experimental studies of the investment or trust game. The primary research question relates to the effect of the initial allocation of property rights on the level of trust that subjects will extend to others with whom they are linked. We find that assigning the initial endowments as common property of each of N pairs of a first mover and second mover leads to marginally greater cooperation or trust than when the initial endowments are fully owned by the two individual movers as their, respective, private property. Subjects’ decisions are also shown to be correlated with attitudes toward trust and fairness that are measured in post-experiment questionnaires.
    Date: 2007–11
  9. By: Ruta Aidis; Saul Estrin; Tomasz Mickiewicz
    Abstract: In this paper we use a comparative perspective to explore the ways in which institutions and networks have influenced entrepreneurial development in Russia. We utilize Global Entrepreneurship Monitor (GEM) data to study the effects of the weak institutional environment in Russia on entrepreneurship, comparing it first with all available GEM country samples and second, in more detail, with Brazil and Poland. Our results suggest that Russia’s institutional environment is important in explaining its relatively low levels of entrepreneurship development, where the latter is measured in terms of both number of startups and of existing business owners. In addition, Russia’s business environment and its consequences for the role of business networks contribute to the relative advantage of entrepreneurial insiders (those already in business) to entrepreneurial outsiders (newcomers) in terms of new business start-ups.
    Date: 2007–06
  10. By: Kvaløy, Ola (Norwegian School of Hotel Management, Dept. of Business Administration, University of Stavanger); Olsen, Trond E. (Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration)
    Abstract: The extent to which a knowledge-intensive firm should induce cooperation between its employees is analyzed in a model of relational contracting between a firm (principal) and its employees (two agents). The agents can cooperate by helping each other, i.e. provide effort that increases the performance of their peer without affecting their own performance. We extend the existing literature on agent-cooperation by analyzing the implications of incomplete contracts and agent hold-up. A main result is that if the agents' hold-up power is sufficiently high, then it is suboptimal for the principal to implement cooperation, even if helping effort is productive per se. This implies, contrary to many property rights models, that social surplus may suffer if the investing parties (here the agents) are residual claimants. The model also shows that long-term relationships facilitate cooperation even if the agents cannot monitor or punish each others effort choices.
    Keywords: Relational contracts; multiagent moral hazard; endogenous hold-up
    JEL: D23 J33 L14
    Date: 2007–11–30
  11. By: Wilhelmsson, Mats (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: Accumulation of human capital is essential for economic growth. An important question is how knowledge spillover into innovations and production. One way of knowledge diffusion is within innovation networks. We investigate innovative networks in patent data in Sweden from 1994-2001. We define research networks with the help of direct and indirect ties among inventors. The main result clearly indicates that those researchers that collaborating, in innovation networks, improves the efficiency of the innovation process by getting more patents applications approved. The odds getting a patent application approved are in the range 1.1 to 1.5 times better if an application is a result from research collaboration. Moreover, the result suggests that collaboration is more important in the IT sector than in the mechanical engineering sector. Finally, the empirical outcomes indicate that networking is more important in less dense areas compared to the denser labor markets. Thus, networks in such areas might be a substitute for agglomeration advantages.
    Keywords: Innovation network analysis; patents; success and failure in innovation
    JEL: N34 O31 R11
    Date: 2007–12–11
  12. By: Sharon Belenzon; Tomer Berkovitz
    Abstract: Using novel data on European firms, this paper examines the effect of business group affiliation oninnovation. We find that business groups foster the scale and novelty of corporate innovation. Groupaffiliation is particularly important in industries that rely more on external finance and have a higherdegree of information asymmetry. We also find that the innovation of affiliates is less sensitive tooperating cash flows. We interpret our results as supporting the 'bright side' of business groupinternal capital markets and explain how legal boundaries between group affiliates mitigate theinefficiencies found in internal capital markets of US conglomerates.
    Keywords: business groups, innovation, internal capital markets
    JEL: G34 L22 L26 O32
    Date: 2007–11
  13. By: Blanchflower, David G. (Dartmouth College, USA, University of Stirling, NBER, IZA, CESifo and Member, Monetary Policy Committee Bank of England); Oswald, Andrew J. (Department of Economics, University of Warwick UK)
    Abstract: We present evidence that psychological well-being is U-shaped through life. A difficulty with research on this issue is that there are likely to be omitted cohort effects (earlier generations may have been born in, say, particularly good or bad times). First, using data on 500,000 randomly sampled Americans and West Europeans, the paper designs a test that can control for cohort effects. Holding other factors constant, we show that a typical individual’s happiness reaches its minimum -- on both sides of the Atlantic and for both males and females -- in middle age. Second, evidence is provided for the existence of a similar U-shape through the life-course in East European, Latin American and Asian nations. Third, a U-shape in age is found in separate well-being regression equations in 72 developed and developing nations. Fourth, using measures that are closer to psychiatric scores, we document a comparable well-being curve across the life cycle in two other data sets : (i) in GHQ-N6 mental health levels among a sample of 16,000 Europeans, and (ii) in reported depression and anxiety levels among 1 million U.K. citizens. Fifth, we discuss some apparent exceptions, particularly in developing nations, to the U-shape. Sixth, we note that American male birth-cohorts seem to have become progressively less content with their lives. Our paper’s results are based on regression equations in which other influences, such as demographic variables and income, are held constant.
    Keywords: Happiness ; aging ; well-being ; GHQ ; cohorts ; mental-health ; depression ; life-course
    JEL: D1 I3
    Date: 2007
  14. By: Radhuber, Michael
    Abstract: Per più di sessant'anni notevoli somme di denaro sono state deviate verso il Mezzogiorno d'Italia. Nonostante ciò l'esito dell'intervento a favore delle regioni meridionali è stato limitato. Redditi bassi ed un'economia stagnante caratterizzano ancora la la bassa penisola. Il crimine organizzato, cattivi servizi pubblici e molti altri problemi sociali rendono la vita dura ai cittadini meridionali. Allora perché tutti gli sforzi non sono ancora bastati per ridurre il divario economico fra le “due Italie”? In questo saggio verranno analizzati i fattori economici che finora hanno impedito l'azzero del divario fra Mezzogiorno e Centro-Nord. Significanti conclusioni si possono trarre dall'analisi di un modello input-output per l'economia meridionale, che rivela un equilibrio economico intrappolato in una situazione che impedisce il formarsi di un tessuto economico più dinamico. Si da anche un'occhiata alle prospettive del settore logistico, che più volte è stato ritenuto critico per la ripresa economica del Sud. La caratteristica principale di questo libro è però che in seguito si sceglie di andare oltre il classico approccio economico ai problemi meridionali. In modo rigorosamente scientifico ed a base di risultati empirici verrà analizzato un possibile nesso fra crisi economica e quadro sociale del Mezzogiorno. Può essere che i problemi sociali del Mezzogiorno siano responsabili della crisi economica, e quanta importanza ci si può attribuire? È questa la domanda che potrebbe essere decisiva per il futuro delle regioni meridionali.
    Keywords: Mezzogiorno; sviluppo; civile; crescita; economica; input-output; logistica; istituzioni; sistema; legale; capitale; sociale;
    JEL: O1 R0 O2
    Date: 2007–11
  15. By: YoungGak Kim
    Abstract: This study provides a survey of topics related to intangible capital, including concepts, definitions, measurement issues, and classifications. It shows that despite the growing importance of intangible capital, we do not know enough about it and only have imperfect methods of measuring it. While at the macroeconomic level, measurement of intangibles is now available for many countries, definitional and measurement issues pose a greater problem at the microeconomic level. This study points out that researchers not only have to confront data deficiencies but also need to grapple with conceptual issues. Finally, it also provides brief surveys of studies dealing with particular detailed topics. Many of these studies prove the existence of intangible capital at the microeconomic level as well as at macroeconomic level.
    JEL: L23 O47
    Date: 2007–12
  16. By: Elias Papaioannou; Gregorios Siourounis
    Abstract: This paper challenges cross-sectional findings that democratic institutions have a negligible direct effect on economic growth. We employ a newly constructed data-set of permanent democratic transitions during the so-called Third Wave of Democratization and examine the within effect of democratization in countries that abandoned autocracy and consolidated representative institutions. We study democratization in a before-after event study approach that enables us to control for time-invariant country-specific effects and general time trends. The panel estimates imply that on average democratizations are associated with a one half to one percent increase in annual per capita growth. The dynamic analysis also reveals a J-shaped growth pattern: during the transition growth is slow and on average negative; in the medium and especially long run, however, growth stabilizes at a higher level. The evidence supports "development" theories of democracy and growth that highlight the positive impact of representative institutions on economic activity. They also favour Friedrich Hayek (1960)’s idea that the merits of democracy appear in the long run.
    Date: 2007–10
  17. By: Radhuber, Michael
    Abstract: For over 60 years conspicuous sums of money have been diverted to southern Italian regions. Nonetheless the positive effect of the so called extraordinary intervention has been limited. The south continues to be characterized by stagnant economies with high unemployment rates and rather low levels of income. Associated therewith are high rates of organized crime, poor public services and many social problems that make life difficult in the Mezzogiorno of Italy. So why did more than 60 years of special policies not lead to the desired outcome? This book is about analysing the economic situation of the Mezzogiorno of Italy on the basis of a comparative descriptive approach, which is later on extended to a sectoral analysis of the southern economy based on an input-output model elaborated by IRPET. This allows for analysis of exogenous growth options (trade) as well as endogenous ones. Special attention is furthermore drawn to the the logistics, that appears to offer significant potential for an economic revival of the southern regions. The characteristic of this book is that it focuses not only on economic issues, but proceeds to check for a link between the economic situation and social issues. Policies have so far been directed mainly to the economic environment. Recent literature has however increasingly focused on social matters that impede higher rates of economic growth. Not only human capital or crime matter, but especially political and institutional characteristics, that can be considered simple mirrors for the grade of civil development of the southern societies. Bureaucracy and the legal system figure amongst the principal culprits for the problematic situation of the Mezzogiorno. In the end civil issues can be considered at least as important for economic prosperity in southern Italy as strictly economic factors.
    Keywords: Mezzogiorno; civil; development; growth; input-output; logistics; institutions; legal; system; social; capital;
    JEL: O1 R0 O2
    Date: 2007–11

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