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on Social Norms and Social Capital |
| By: | Calvó-Armengol, Antoni (Universitat Autònoma de Barcelona); Patacchini, Eleonora (University of Rome La Sapienza); Zenou, Yves (Stockholm University) |
| Abstract: | This paper studies whether structural properties of friendship networks affect individual outcomes in education. We first develop a model that shows that, at the Nash equilibrium, the outcome of each individual embedded in a network is proportional to her Katz-Bonacich centrality measure. This measure takes into account both direct and indirect friends of each individual but puts less weight to her distant friends. We then bring the model to the data by using a very detailed dataset of adolescent friendship networks. We show that, after controlling for observable individual characteristics and unobservable network specific factors, the individual's position in a network (as measured by her Katz-Bonacich centrality) is a key determinant of her level of activity. A standard deviation increase in the Katz-Bonacich centrality increases the pupil school performance by more than 7 percent of one standard deviation. |
| Keywords: | centrality measure, peer influence, network structure, school performance |
| JEL: | A14 C31 C72 I21 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3859&r=soc |
| By: | Francesco Guala; Luigi Mittone |
| Abstract: | Although it is now recognized that norms play an important role in many economic decisions, compliance with conventions is generally considered to be driven by rational self-interest only. We report instead experimental data showing that (1) ‘external’ norms of fairness sustain social conventions that have emerged from repeated play of simple coordination games; and (2) with repetition such conventions acquire an ‘intrinsic’ normative power of their own. This creates pressure towards conformity, and patterns of regular behaviour that are far stronger and more stable than those that would be generated by mere self-interest and rationality. |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:trn:utwpce:0810&r=soc |
| By: | Rick Harbaugh (Department of Business Economics and Public Policy, Indiana University Kelley School of Business); Ted To (Bureau of Labor Statisics) |
| Abstract: | When can you cheat some people without damaging your reputation among others? In a trust game between a firm and a series of individuals from two groups of different sizes, the firm has more incentive to cheat minority individuals because trade with the minority is less frequent and the long-term benefits of a reputation for fairness toward the minority are correspondingly smaller. If the majority is sufficiently large it gains nothing from a solidarity strategy of punishing opportunism against the minority, so the firm can continue doing business with the majority even if it cheats the minority. When some firms have a preference-based bias against the minority, the interaction with reputation effects gives all firms a stronger incentive to cheat the minority, and discrimination is the unique equilibrium for firms of intermediate patience. |
| Keywords: | discrimination, trust, social capital, opportunism, reputation spillover |
| JEL: | J71 J24 D63 L14 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:iuk:wpaper:2008-07&r=soc |
| By: | Krupka, Erin L. (IZA); Weber, Roberto A. (Carnegie Mellon University) |
| Abstract: | We explore the influence of social norms on behavior. To do so, we introduce a method for identifying norms, based on the property that social norms reflect social consensus regarding the appropriateness of different possible behaviors. We demonstrate that the norms we elicit, along with a simple model combining concern for norm-compliance with utility for money, predict changes in behavior across several variants of the dictator game in which behavior changes substantially following the introduction of minor contextual variations. Our findings indicate that people care not just about monetary payoffs but also care about the social appropriateness of any action they take. Our work also suggests that a social norm is not always a single action that should or should not be taken, but rather a profile of varying degrees of social appropriateness for different available actions. |
| Keywords: | norms, matching games, dictator games |
| JEL: | C91 C72 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3860&r=soc |
| By: | Zhao Chen; Shiqing Jiang; Ming Lu; Hiroshi Sato |
| Abstract: | In this paper, we use the “2002 Chinese Household Income Project Survey” (CHIPS2002) data to examine how heterogeneous social interactions affect the peer effect in the rural–urban migration decision in China. We find that the peer effect, measured by the village migration ratio, significantly increases the individual probability of outward migration. We also find that the magnitude of the peer effect is nonlinear, depending on the strength and type of social interactions with other villagers. Interactions in information sharing can increase the magnitude of the peer effect, while interactions in mutual help in labor activities, such as help in housing construction, nursing and farm work in busy seasons, will impede the positive role of the peer effect. Being aware of the simultaneity bias caused by the two-way causality between social interaction strengths and migration, we utilize “historical family political identity in land reform” as an instrumental variable for social interactions. However, the hypothesis that probit and instrumental-variable probit results are not significantly different is not rejected. The existence of a nonlinear peer effect has rich policy implications. For policy makers to encourage rural–urban migration, it is feasible to increase education investment in rural areas or increase information sharing among rural residents. However, only an increase in the constant term in the regression, i.e. a “big push” in improving institutions for migration, can help rural Chinese residents escape the low equilibrium in migration. |
| Keywords: | labor migration, urbanization, peer effect, social integration, social multiplier |
| JEL: | J61 O15 R23 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:lic:licosd:22408&r=soc |
| By: | Dohmen Thomas; Falk Armin; Huffman David; Sunde Uwe (ROA rm) |
| Abstract: | This paper complements the experimental literature that has shown theimportance of reciprocity for behaviour in stylized labour markets or otherdecision settings. We use individual measures of reciprocal inclinations in alarge, representative survey, and relate reciprocity to real world labour marketbehaviour and life outcomes. We find that reciprocity matters, and we find thatthe way in which it matters is very much in line with the experimental evidence.In particular, positive reciprocity is associated with receiving higher wages andworking harder. Negatively reciprocal inclinations tend to reduce effort. Firmsdo not pay lower wages to individuals with strong negatively reciprocalinclinations. Instead, negative reciprocity increases the likelihood of beingunemployed. Looking at broader measures of success, in terms of number ofclose friends, and subjective well-being, we find that positively reciprocalinclination are associated with greater happiness and ability to sustain friendshiprelations, with the opposite being true for negative reciprocity. |
| Keywords: | education, training and the labour market; |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:umaror:2008007&r=soc |
| By: | Shiqing Jiang; Ming Lu; Hiroshi Sato |
| Abstract: | This paper studies the impact of income inequality on the subjective well-being of different social groups in urban China. We classify urban social groups according to their hukou status: rural migrants, “born” urban residents, and “acquired” urban residents who once changed their hukou identity from rural to urban. We focus on how the horizontal inequality—income disparity between migrants and urban residents—affects individual happiness. The main results are as follows. First, migrants suffer from unhappiness when the horizontal inequality increases, but urban residents show a much smaller aversion to the horizontal inequality. Second, migrants will not be happier if their relative incomes within their migrant group increase, while urban residents do become happier when their incomes increase within their group’s income distribution. Third, “acquired” urban residents have traits of both migrants and “born” urban residents. They have an aversion to the horizontal inequality like migrants, and they also favor higher relative income among urban residents. Fourth, “born” urban residents have lower happiness scores when they are old. People who are Communist Party members strongly dislike the horizontal inequality. Our findings suggest that migrants, “acquired” urban residents, elderly people and Party members from “born” urban residents are the potential proponents of social integration policies in urban China. |
| Keywords: | Horizontal inequality, Happiness, Hukou identity, Migration, Social integration; horizontal inequality, happiness, Houku identity, migration, social integration |
| JEL: | I31 O15 R23 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:lic:licosd:22308&r=soc |
| By: | Gray, Wesley |
| Abstract: | Evidence suggests that arbitragers exchange investment ideas. We analyze why and under what circumstances sharing occurs. Our model suggests that sharing ideas will lead to the following: more efficient asset prices, larger arbitrager profits, and correlated arbitrager returns. We predict that arbitragers will exchange ideas in markets where arbitragers are capital constrained, noise trader influence is high, and arbitrage investors are more loss averse. We also predict that arbitrage networks can lead to crowded trades, which can create systematic risk in extreme market circumstances. |
| Keywords: | arbitrage; hedge funds; market efficiency; information exchange; social networks; loss aversion; crowded trades |
| JEL: | G14 G12 G11 G10 |
| Date: | 2008–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:11918&r=soc |
| By: | Jarno Hoekman (Urban & Regional research centre Utrecht (URU), Utrecht University - The Netherlands); Koen Frenken (Urban & Regional research centre Utrecht (URU), Utrecht University - The Netherlands); Frank van Oort (Netherlands Institute for Spatial Research (RPB)- The Netherlands) |
| Abstract: | The geography of innovation traditionally concentrates on localised knowledge spillovers, yet neglects collaboration networks as a means to access knowledge outside the region. Using publication and patent data for 1316 regions in the EU27 plus Norway and Switzerland, we find that both localised knowledge spillovers and the knowledge spillovers stemming from collaboration affect the innovative performance of regions. The results provide support for EU policies aimed at creating European collaboration networks. |
| Keywords: | Knowledge Production Function, Spillovers, Collaboration, Networks, European Research Area, Publication, Patent, Public Good |
| JEL: | C21 O30 O33 O52 R11 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:cri:cespri:wp222&r=soc |
| By: | Franck Tétard; Nicola Villa; Joanna Carlsson; Erkki Patokorpi; Milena Casagranda (DISA, Faculty of Economics, Trento University); Sara Tomasini |
| Abstract: | When young people drop out of school they are in great danger of being marginalized in society. Immigrants are another group of people who for several reasons often find it difficult to become integrated into their new home country. In both cases some less formal way of learning might help these groups avoid social exclusion. Well thoughtout development and application of new advanced technologies would be likely to level the way for continued education, communication and democratic participation in society. The term e-inclusion refers to these electronic means and how they could be applied to hindering social exclusion. This study compares the situation of school drop-outs and immigrants in Finland and Italy in the light of statistical data. It paves the way for a European research and development project whose aim is to study problems of e-inclusion in Finland and Italy empirically as well as develop technological and pedagogical solutions to them. |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:trt:disawp:0810&r=soc |
| By: | Buurman, Margaretha (Erasmus University Rotterdam); Dur, Robert (Erasmus University Rotterdam) |
| Abstract: | Many street-level bureaucrats (such as caseworkers) have the dual task of helping some clients, while sanctioning others. We develop a model of such a street-level bureaucracy and study the implications of its personnel policy on the self-selection and allocation decisions of agents who differ in altruism towards clients. When bureaucrats are paid flat wages, they do not sanction, and the most altruistic types sort into bureaucracy. Pay-for-performance induces some bureaucrats to sanction, but necessitates an increase in expected wage compensation, which can result in sorting from both the top and bottom of the altruism distribution. We also show how client composition affects sorting and why street-level bureaucrats often experience an overload of clients. |
| Keywords: | street-level bureaucracy, sorting, altruism, personnel policy, pay-for-performance |
| JEL: | J3 J4 L3 M5 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3847&r=soc |