nep-soc New Economics Papers
on Social Norms and Social Capital
Issue of 2008‒11‒25
sixteen papers chosen by
Fabio Sabatini
University of Siena

  1. Happiness, Economic Well-being, Social Capital and the Quality of Institutions By Gabriel Leite Mota; Paulo Trigo Pereira
  2. Life Satisfaction and Quality of Development By John F. Helliwell
  3. New Housing Supply and the Dilution of Social Capital By Hilber, Christian A. L.
  4. Do Social Networks Solve Information Problems for Peer-to-Peer Lending? Evidence from By Seth Freedman; Ginger Zhe Jin;
  5. Social Networks in Determining Migration and Labor Market Outcomes: Evidence from the German Reunification By Helmut Rainer; Thomas Siedler
  6. Economic Aspects of the Microsoft Case: Networks, Interoperability and Competition By Maria J. Gil-Moltó
  7. Recognizing the Links between Power and Trust in Managing Supply Chain Relationships By Belaya, V.; Torok, T.; Hanf, J.
  8. Cultural Differences in the Remittance Behaviour of Households: Evidence from Canadian Micro Data By Don J. DeVoretz; Florin P. Vadean
  9. Non-Profit Organizations in a Bureaucratic Environment By Grout, Paul; Schnedler, Wendelin
  10. Success factors for farming collectives By Pulfer, I.; Mohring, A.; Dobricki, M.; Lips, M.
  11. Market Integration of Household Plots in Ukraine- The Impact of Social Capital By Wolz, A.; Fritzsch, J.; Buchenrieder, G.; Nedoborovskyy, A.
  12. Happiness, habits and high rank: Comparisons in economic and social life By Andrew E. Clark
  13. Power, hierarchy and social preferences By Bosco, Luigi
  14. Feedback; Punishment and Cooperation in Public Good Experiments By Nikos Nikiforakis
  15. Coordination of collective action in the agro-food sector By Vuylsteke, A.; Van Huylenbroeck, G.
  16. Network Effects in a Human Capital Based Economic Growth Model By Teresa V. Martins; Tanya Araújo; Maria A. Santos; Miguel St Aubyn

  1. By: Gabriel Leite Mota; Paulo Trigo Pereira
    Abstract: Since Jeremy Bentham, utilitarians have argued that happiness, not just income or wealth, is the maximand of individual and social welfare. By contrast, Rawls and followers argue that to share a common perception of living in a just society is the “ultimate good” and that individuals have a moral ability to evaluate just institutions. In this paper we argue that just institutions, apart from their intrinsic value, also have an instrumental value, both in economic performance and in happiness. Thus happiness -- or subjective well being -- is analyzed as being a function of economic well-being, the quality of public institutions and social ties. Cross section individual data from citizens in OECD countries show that income, education and the perceived quality of institutions have the highest impact on life satisfaction, followed by social capital. Country analysis shows a non linear but positive influence of per capita GDP on life satisfaction, but also that unemployment and inflation reduce average happiness, the former effect being stronger. Finally, better quality public institutions and having more social capital also bring more happiness. We conclude with some policy implications.
    Keywords: Happiness; Democracy; Social Capital; Quality of Institutions
    JEL: D63 D69 D78 J10 Z13
    Date: 2008–07
  2. By: John F. Helliwell
    Abstract: This paper argues that measures of life satisfaction, now being collected annually by the Gallup World Poll in more than 130 countries, permit a much broader view of the quality and consequences of development than other common measures. While these data show the importance of conventionally measured economic development, they also show the importance of many other elements of life that are also affected, whether deliberately or not, by community, national, and international institutions and policies. In estimating the importance of these other factors, this paper pays special attention to the social context of well-being: the norms, networks and relationships within which lives are lived.
    JEL: D6 I3 J1 O0 O10 P51
    Date: 2008–11
  3. By: Hilber, Christian A. L.
    Abstract: This paper examines the role of local housing supply conditions for social capital investment. Using an instrumental variables approach and data from the Social Capital Community Benchmark Survey, it is documented that the positive link between homeownership and individual social capital investment is largely confined to more built-up neighborhoods (with more inelastic supply of new housing). The empirical findings provide support for the proposition that in these localities house price capitalization provides additional incentives for homeowners to invest in social capital. The findings are also largely consistent with the proposition that built-up neighborhoods provide protection from inflows of newcomers that could upset a mutually beneficial equilibrium involving reciprocal cooperation. However, the results do not appear to be driven by selection based on inherent differences in social aptitudes or by Tiebout sorting.
    Keywords: House price capitalization; social capital; homeownership; land and housing supply; reciprocal cooperation.
    JEL: D71 R21 R31
    Date: 2007–08–02
  4. By: Seth Freedman (Department of Economics, University of Maryland); Ginger Zhe Jin (Department of Economics, University of Maryland);
    Abstract: This paper studies peer-to-peer (p2p) lending on the Internet., the first p2p lending website in the US, matches individual lenders and borrowers for unsecured consumer loans. Using transaction data from June 1, 2006 to July 31, 2008, we examine what information problems exist on Prosper and whether social networks help alleviate the information problems. As we expect, data identifies three information problems on First, Prosper lenders face extra adverse selection because they observe categories of credit grades rather than the actual credit scores. This selection is partially offset when Prosper posts more detailed credit information on the website. Second, many Prosper lenders have made mistakes in loan selection but they learn vigorously over time. Third, as Stiglitz and Weiss (1981) predict, a higher interest rate can imply lower rate of return because higher interest attracts lower quality borrowers. Micro-finance theories argue that social networks may identify good risks either because friends and colleagues observe the intrinsic type of borrowers ex ante or because the monitoring within social networks provides a stronger incentive to pay off loans ex post. We find evidence both for and against this argument. For example, loans with friend endorsements and friend bids have fewer missed payments and yield significantly higher rates of return than other loans. On the other hand, the estimated returns of group loans are significantly lower than those of non-group loans. That being said, the return gap between group and non-group loans is closing over time. This convergence is partially due to lender learning and partially due to Prosper eliminating group leader rewards which motivated leaders to fund lower quality loans in order to earn the rewards.
    Keywords: peer-to-peer lending, e-commerce, adverse selection, information asymmetry, social networks.
    JEL: D45 D53 D8 D81
    Date: 2008–11–14
  5. By: Helmut Rainer; Thomas Siedler
    Abstract: This paper empirically examines social network explanations for migration decisions in the context of the German reunification. Using longitudinal data from the German Socio-Economic Panel, we first show that the presence of family and friends in West Germany is an important predictor for the migration hazard rate of East Germans. We then explore whether pre-migration networks have a discernible impact on the economic and social assimilation of East German immigrants in West Germany. We find that East German immigrants are more likely to be employed, and to hold higher-paying jobs, when socially connected to the West prior to emigrating. East Germans immigrants with pre-migration networks also appear to be more integrated into their Western host communities than movers without preexisting social ties.
    Keywords: mergers and acquisitions, abnormal returns, value-ambiguity, unlisted firms, method of payment.
    JEL: C23 J61
    Date: 2008–11
  6. By: Maria J. Gil-Moltó
    Abstract: In this paper, we discuss the main economic aspects of the European Microsoft case; in particular, Microsoft’s refusal to supply the necessary information to make the competitors’ work group server systems interoperable with Windows Operating System. The case can be seen as an example of competition between networks. We review the relevant economics literature with the objective of understanding the motivations behind Microsoft’s strategies.
    Keywords: Networks; Complementarities; Foreclosure; Interoperability; Antitrust
    JEL: L4 O3 L1
    Date: 2008–11
  7. By: Belaya, V.; Torok, T.; Hanf, J.
    Abstract: In order to manage supply chain relationships effectively both aspects - the need to align the actions in order to coordinate the network and the alignment of interests of cooperating actors €Ӡare important. Therefore, the coexistence of both cooperative and competitive constructs should be recognized, where power coexists alongside with trust. Many scientific works have been written on power and trust as constructs of business-to-business relationships separately. However, most of the existing relationship marketing literature studies power and trust in relation to conflict or satisfaction, and the link between power and trust in the supply chain context appears to be largely ignored as a research topic. Some scientists assert that power negates cooperation and call power to be the antithesis of trust. Others argue that most social relationships are based on a mixture of both power and trust, that power and trust by no means exclude each other but occur in combination and that they should both be seen as alternative mechanisms for coordinating supply chain relationships. In order to understand the links between these two constructs one needs to be specific on their nature and origin. Based on the literature review we present ideas on how power and trust in supply chain relationships are related.
    Keywords: Power, Trust, Supply Chain Relationships., Agribusiness,
    Date: 2008
  8. By: Don J. DeVoretz; Florin P. Vadean
    Abstract: This paper analyses the effect of cultural differences amongst ethnic groups on the remittance behaviour of native and immigrant households in Canada. In contrast to the New Economic of Labour Migration (NELM) literature that examines remittance motivation in the framework of extended family agreements, we embed remittances in a formal demand system, suggesting that they represent expenditures on social relations with relatives and/or friends and contribute to membership in social/religious organizations respectively. The results indicate strong ethnic group cultural differences in the remittance behaviour of recent Asian immigrant households and highlight the importance of differentiating with respect to cultural background when analysing the determinants of remittances.
    Keywords: International Migration; Household Behaviour; Remittances
    JEL: C31 D12 F22 F24
    Date: 2008–11
  9. By: Grout, Paul (University of Bristol, Department of Economics); Schnedler, Wendelin (Department of Economics, University of Heidelberg)
    Abstract: How does the environment of an organization infuence whether workers voluntarily provide effort? We study the power relationship between a non-profit unit (e.g. university department, NGO, health trust), where workers care about the result of their work, and a bu- reaucrat, who supplies some input to the non-profit unit, but has opportunity costs in doing so (e.g. Dean of faculty, corrupt representative, government agency). We find that marginal changes in the balance of power eventually have dramatic effects on donated labor. We also identify when strengthening the non-profit unit decreases and when it increases donated labor.
    Date: 2008–09–01
  10. By: Pulfer, I.; Mohring, A.; Dobricki, M.; Lips, M.
    Abstract: As the most intensive form of partnership in agriculture, farming collectives (FCs) place high demands on their participants. Based on a census of Swiss farming collectives, three success indicators are formed. The first and second describe interpersonal and economic success respectively, whilst the third encompasses overall success. Factors influencing success are determined by means of multiple regressions. Five predictor variables (compatibility with co-operation partner, trust, information quality, attitude of social environment, and relationship/kinship circle of the cooperation partner) accounted for 44 per cent of the variance in interpersonal success. Economic success was far more difficult to explain (R2 = 0.11). Even so, the influence of €ܳoft€ݠfactors, even on the economic success of a farming collective, is striking. Above all, trust and the human and structural compatibility of the cooperation partners play an important role for all three types of success. The co-operation agreement, agricultural consultation, the number of participating people on the farm, and the investments made may be ranked as less important than previously assumed.
    Keywords: farming collective, economic satisfaction, interpersonal conflicts, Agribusiness,
    Date: 2008
  11. By: Wolz, A.; Fritzsch, J.; Buchenrieder, G.; Nedoborovskyy, A.
    Abstract: Following the two rounds of land reform in Ukraine since independence, household plot farmers emerged as the major suppliers to agricultural production. But they form a very heterogeneous group. Not all of them are equally successful, economically, and integrated to markets. In general, a varying adoption of production factors is identified as being of influence. In this paper, we argue that social capital is an additional factor contributing to higher agricultural incomes. We tested our thesis using primary evidence from a survey in Ukraine among 255 household plot farmers in 2006. Based on 24 social capital indicators we deduced four separate index variables linking the social capital dimension of form, i.e. structural and cognitive, with the social capital dimension of relationship, i.e. bonding and bridging. By adopting multiple regression analysis we show that social capital of its bridging structural type is indeed a significant factor determining the level of agricultural income. However, the findings also underline the multidimensional side of social capital. Both bonding and cognitive social capital have no impact on agricultural income. We conclude that social capital can be identified as a significant production factor but its underlying indicators do not seem to point to the same direction and have to be analysed in their specific contexts.
    Keywords: production factors, social capital, Ukraine, Labor and Human Capital,
    Date: 2008
  12. By: Andrew E. Clark
    Abstract: The role of money in producing sustained subjective well-being seems to be seriously compromised by social comparisons and habituation. But does that necessarily mean that we would be better off doing something else instead? This paper suggests that the phenomena of comparison and habituation are actually found in a variety of economic and social activities, rendering conclusions regarding well-being policy less straightforward.
    Date: 2008
  13. By: Bosco, Luigi
    Abstract: I ran an experiment in order to evaluate the relationship, if any, between power, or the search for power, and the degree of altruism. In particular I experimentally tested whether an organization structured in a strictly hierarchical way was able to reduce the degree of altruism of a group of experimental subjects. The subjects were divided into groups and played a series of dictator and ultimatum games with the members of other groups; for each experimental euro that they earned, the experimenter assigned half of it to the group. Two different settings were analyzed according to how this group surplus was distributed among group members. In the control setting (treatment A) the group surplus was distributed equally among group members, while in the power setting (treatment B) there was a ranking of the earnings in the group, and the subject who earned the higher sum was given the power to decide the distribution scheme of the group different from her own. It was found that the introduction of a hierarchical structure generated a significant decrease in the rate of altruism, measured in terms of the allocation given to the receiver in the dictator game. In this case the tournament among group members for leadership and the competition for power was a very strong means to induce behaviour more in line with the classical assumption of economics. A remarkable gender effect emerges, suggesting that women seem less attracted and trapped by competition for power.
    Keywords: Altruism; Dictator game; Ultimatum game; Hierarchy
    JEL: C92 D64 C91
    Date: 2008–09
  14. By: Nikos Nikiforakis
    Abstract: A number of studies have shown that peer punishment can sustain cooperation in public good games. This paper shows that the format used to give subjects feedback is critical for the e¢ cacy of punishment. Providing subjects with infor- mation about the earnings of their peers leads to lower contributions and earnings compared to a treatment in which subjects receive information about the contri- butions of their peers even though the feedback format does not a¤ect incentives. The data suggest that this is because the feedback format acts as a coordination device, which in?uences the contribution standards that groups establish
    Keywords: feedback format; peer punishment; public good game; altruistic pun-ishment; cooperation
    JEL: C92 D70 H41
    Date: 2008
  15. By: Vuylsteke, A.; Van Huylenbroeck, G.
    Abstract: Collaboration between stakeholders in the agro-food sector is nowadays a common phenomenon. Despite the huge diversity observed, this paper argues that collective action always results in the establishment of a collective organization (whether formally organized or not), which is characterized by the presence of a coordination centre. This organism represents all partners united in the collective and performs tasks by order of the individual members and the group. From a theoretical point of view, all collective organizations qualify as hybrid organizations, which can be studied through the lens of Transaction Costs Economics. Hybrids governance structures are a large set of arrangements that are situated between markets and hierarchies. When organizing transactions, hybrids do not purely rely on the price mechanism or authority, but rather on an interplay of four coordination mechanisms. These coordination mechanisms are the central element of this paper and we hypothesize that their degree of formalization is positively correlated with the complexity of the tasks faced by the coordination centre. To test this hypothesis, a survey was designed and information was gathered on some general and organizational characteristics of 65 collective initiatives in the Flemish agro-food sector. Information on the coordination mechanism could thereby be directly gathered, but the complexity of the tasks was approximated by the collective organization€ٳ objectives, the characteristics of the specifications in force and the entry rules for members. The analysis proves that there is indeed a positive relationship between the degree of formalization of the coordination mechanisms on the hand and the complexity of coordination centre€ٳ tasks. Information devices occurs in combination with informal cooperation in small groups, contracts are adopted by groups of 5 to 14 members to realize medium complex objectives and formal coordination (extern regulation and new governance bodies) is finally linked to quality differentiation, which requires considerable efforts in the definition and enforcement of product and/or process specifications.
    Keywords: Collective action, coordination mechanisms, hybrid governance structures, Agribusiness,
    Date: 2008
  16. By: Teresa V. Martins; Tanya Araújo; Maria A. Santos; Miguel St Aubyn
    Date: 2008–09

This nep-soc issue is ©2008 by Fabio Sabatini. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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