nep-soc New Economics Papers
on Social Norms and Social Capital
Issue of 2008‒09‒20
ten papers chosen by
Fabio Sabatini
University of Siena

  1. Did the Decline in Social Capital Depress Americans’ Happiness? By Stefano Bartolini; Ennio Bilancini; Maurizio Pugno
  2. Is altruism bad for cooperation? By Sung Ha Hwang; Samuel Bowles
  3. The Social Multiplier of Tax Evasion: Evidence from Italian Audit Data By Roberto Galbiati; Giulio Zanella
  4. Democracy, Collective Action and Intra-Elite Conflict By Sayantan Ghosal; Eugenio Proto
  5. Gift Exchange in the Workplace By Robert Dur
  6. Reciprocity and Incentive Pay in the Workplace By Robert Dur; Arjan Non; Hein Roelfsema
  7. Can Policy Interact with Culture? Minimum Wage and the Quality of Labor Relations By Aghion, Philippe; Algan, Yann; Cahuc, Pierre
  8. The feedback-seeker in his social labyrinth: the mediating role of goals and cooperative norms in linking empowering leadership to feedback-seeking behavior By De Stobbeleir, K.; Buyens, D.
  9. Easterlin-types and Frustrated Achievers: the Heterogeneous E¤ects of Income Changes on Life Satisfaction By Leonardo Becchetti; Luisa Corrado; Fiammetta Rossetti
  10. The Concept of Institution: Context and Meaning By Piet Keizer

  1. By: Stefano Bartolini; Ennio Bilancini; Maurizio Pugno
    Abstract: Most popular explanations cannot fully account for the declining trend of U.S. reported well-being during the last thirty years. We test the hypothesis that the relationship between social capital and happiness at the individual level accounts for what is left unexplained by previous research. We provide three main findings. First, several indicators of social capital are significantly correlated with reported happiness. Second, social capital indicators for the period 1975-2004 show a declining trend. Finally, the trend of happiness can be largely accounted for by the increasing trend of income, the increasing trend of reference income and the declining trend of social capital – in particular by the decline of its relational and non-instrumental components
    Keywords: happiness, social capital, economic growth, relational goods, intrinsic motivations
    JEL: I3 O1
    Date: 2008–08
  2. By: Sung Ha Hwang (University of Massachusetts, Amherst); Samuel Bowles (Santa Fe Institute, University of Siena and University of Massachusetts)
    Abstract: Some philosophers and social scientists have stressed the importance for good government of an altruistic citizenry that values the well being of one another. Others have emphasized the need for incentives that induce even the self interested to contribute to the public good. Implicitly most have assumed that these two approaches are complementary or at worst additive. But this need not be the case. Behavioral experiments find that if reciprocity-minded subjects feel hostility towards free riders and enjoy inflicting harm on them, near efficient levels of contributions to a public good may be supported when group members have opportunities to punish low contributors. Cooperation may also be supported if individuals are sufficiently altruistic that they internalize the group benefits that their contributions produce. Using a utility function embodying both reciprocity and altruism we show that unconditional altruism towards other members attenuates the punishment motive and thus may reduce the level of punishment inflicted on defectors, resulting in lower rather than higher levels of contributions. Increases in altruism may also reduce the level of benefits from the public project net of contribution costs and punishment costs. The negative effect of altruism on cooperation and material payoffs is greater the stronger is the reciprocity motive among the members. JEL Categories: D64 (altruism); H41 (public goods)
    Keywords: public goods, altruism, spite, reciprocity, punishment, cooperation
    Date: 2008–09
  3. By: Roberto Galbiati; Giulio Zanella
    Abstract: We investigate the role of individual interdependencies in tax evasion, arising from congestion on the auditing resources available to local tax authorities. Identification exploits a novel method based on comparison of the variance of individual behavior — concealed income in this case — at different levels of aggregation, within different subpopulations (Graham, 2008). This method allows us to mitigate some of the most severe problems that surround identification of neighbourhood effects, at the cost of identifying restrictions that arise naturally from our model. We employ a unique dataset of tax audits to about 75,000 self-employed individuals in Italy. Surprisingly, this sample is not statistically different from a random sample of taxpayers. We find a social multiplier of about 3, meaning that the equilibrium response to a shock that induces an exogenous variation in mean concealed income — such as tougher or looser tax enforcement — is about three times the initial average response
    Keywords: social interactions, social multiplier, tax evasion, tax compliance, excess variance
    JEL: H26 C31 Z13 Z19
    Date: 2008–08
  4. By: Sayantan Ghosal; Eugenio Proto
    Abstract: This paper studies the conditions under which intra-elite conflict leads to a democ- racy. There are two risk averse elites competing for the appropriation of a unit of so- cial surplus, with an ex-ante uncertainty about their future relative bargaining power, and a large non-elite class unable to act collectively. We characterize a democracy as consistng of both franchise extension to, and lowering the cost of collective political activity for, individuals in the non-elite. In the absence of democracy, the stronger elite is always able to appropriate the entire surplus. We show that in a democ- racy, the newly enfranchised non-elite organize and always prefer to form a coalition with weaker elite against the stronger resulting in a more balanced surplus allocation between the two elites. Accordingly, the elites choose to democratize if they are sufficiently risk averse. Our formal analysis can account for stylized facts that emerge from a comparative analysis of Indian and Western European democracies.
    Date: 2008–06
  5. By: Robert Dur (Erasmus University Rotterdam, and CESifo)
    Abstract: We develop a model of manager-employee relationships where employees care more for their manager when they are more convinced that their manager cares for them. Managers can signal their altruistic feelings towards their employees in two ways: by offering a generous wage and by giving attention. Contrary to the traditional gift-exchange hypothesis, we show that altruistic managers may offer lower wages and nevertheless build up better social-exchange relationships with their employees than egoistic managers do. In such equilibria, a low wage signals to employees that the manager has something else to offer -- namely, a lot of attention -- which will induce the employee to stay at the firm and work hard. Our predictions are well in line with some recent empirical findings about gift exchange in the field.
    Keywords: manager-employee relationships; wages; extra-role behavior; sabotage; gift exchange; social exchange; conditional altruism; reciprocity; signaling game
    JEL: D86 J41 M50 M54 M55
    Date: 2008–09–03
  6. By: Robert Dur (Erasmus University Rotterdam, and CESifo); Arjan Non (Erasmus University Rotterdam); Hein Roelfsema (Utrecht University)
    Abstract: We study optimal incentive contracts for workers who are reciprocal to management attention. When neither worker's effort nor manager's attention can be contracted, a double moral-hazard problem arises, implying that reciprocal workers should be given weak financial incentives. In a multiple-agent setting, this problem can be resolved using promotion incentives. We test these predictions using German Socio-Economic Panel data. We find that workers who are more reciprocal are significantly more likely to receive promotion incentives, while there is no such relation for individual bonus pay.
    Keywords: reciprocity; social exchange; incentive contracts; double moral hazard; GSOEP
    JEL: D86 J41 M51 M52 M54 M55
    Date: 2008–09–03
  7. By: Aghion, Philippe (Harvard University); Algan, Yann (Sciences Po, Paris); Cahuc, Pierre (Ecole Polytechnique, Paris)
    Abstract: Can public policy interfere with culture, such as beliefs and norms of cooperation? We investigate his question by evaluating the interactions between the State and the Civil Society, focusing on the labor market. International data shows a negative correlation between union density and the quality of labor relations on one hand, and state regulation of the minimum wage on the other hand. To explain this relation, we develop a model of learning of the quality of labor relations. State regulation crowds out the possibility for workers to experiment negotiation and learn about the true cooperative nature of participants in the labor market. This crowding out effect can give rise to multiple equilibria: a "good" equilibrium characterized by strong beliefs in cooperation, leading to high union density and low state regulation; and a "bad" equilibrium, characterized by distrustful labor relations, low union density and strong state regulation of the minimum wage. We then use surveys on social attitudes and unionization behavior to document the relation between minimum wage legislation and the beliefs about the scope of cooperation in the labor market.
    Keywords: social capital, quality of labor relations, trade unions, minimum wage
    JEL: J30 J50 K00
    Date: 2008–09
  8. By: De Stobbeleir, K.; Buyens, D. (Vlerick Leuven Gent Management School)
    Abstract: This study examines the intra-personal and interpersonal mechanisms through which empowering leaders impact their followers’ selection of feedback sources. Drawing on goal theories and the group-norms literature, we developed and tested an individual and multilevel model of feedback-seeking behavior. Using a sample of 991 employees, working in 185 teams, we found that empowering leaders indirectly influenced their followers’ selection of feedback sources by encouraging autonomous goal pursuit and cooperative group norms.
    Date: 2008–09–11
  9. By: Leonardo Becchetti (Faculty of Economics, University of Rome "Tor Vergata"); Luisa Corrado (Faculty of Economics, University of Rome "Tor Vergata"); Fiammetta Rossetti (Faculty of Economics, University of Rome "Tor Vergata")
    Abstract: We investigate the relationship between money and happiness across the waves of the British Household Panel Study by using a latent class approach which accounts for slope heterogeneity, omitted variable bias and departures from normality assumptions. Our findings reveal the presence of a vast majority of "Easterlin-type" individuals with positive but very weak relationship between changes in income and changes in happiness and a small minority (2 percent) of "frustrated achievers" with negative relationship. Such share is much below descriptive evidence on frustrated achievement (17.5 percent). The probability of belonging to such group is shown to be positively related with divorced status and negatively related to education and relative (personal to reference group) income. Our interpretation of these results is that the standard concave money-happiness relationship provides a partial and incomplete picture of the complex nexus between happiness and income as it does not take into account two important phenomena: the role of peers and of reference group income and that of the dynamics between realisations and expectations.
    Keywords: income-life satisfaction relationship, heterogeneous effects, frustrated achievement, mixture models
    JEL: C14 C23 I30
    Date: 2008–09–09
  10. By: Piet Keizer
    Abstract: When trying to understand what is meant by the concept of institution we must analyse the context in which institutions are assumed to play their role. In a typical economic analysis institutions are rules that serve the interests of economic-rational actors, and must enhance the efficiency of their actions. In a typical sociological analysis institutions are rules that serve the interests of social actors, and must enhance the formation of stable systems of hierarchically ranked groups. In the real world human behaviour also has a psychic aspect. In a typical psychological analysis institutions must promote the integration of different parts of a personality. This article assumes that in real life humans are driven by a composite of three categories of forces, namely the economic, the social and the psychic motive. Real life institutions have the function to mould these drives in such a way that economic, social and psychic goals can be reached more effectively. As a matter of illustration of this moulding process a short sketch of the emergence of the Dutch welfare state is given.
    Keywords: economic, sociological, psychological, institution, welfare state
    JEL: A12 B15 B41 B52
    Date: 2008–08

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