nep-soc New Economics Papers
on Social Norms and Social Capital
Issue of 2009‒07‒17
thirteen papers chosen by
Fabio Sabatini
University of Siena

  1. Do Inter-Firm Networks Make Access to Finance Easier? Issues and Empirical Evidence By Domenico Scalera; Alberto Zazzaro
  2. Do institutions matter? Estimating the effect of institutions on economic performance in China By Ying , Fang; Yang , Zhao
  3. Linking Individuals and Societies By Jasso, Guillermina
  4. Culture Clash: The Costs and Benefits of Homogeneity By Eric J. Van den Steen
  5. Moral and Social Constraints to Strategic Default on Mortgages By Guiso, Luigi; Sapienza, Paola; Zingales, Luigi
  6. Religion, Human Capital Investments and the Family in the United States By Lehrer, Evelyn L.
  7. Does Culture Affect Unemployment? Evidence from the Röstigraben By Brügger, Beatrix; Lalive, Rafael; Zweimüller, Josef
  8. Geographic Allocation of OSS Contributions: The Role of Institutions and Culture By Sebastian v. Engelhardt; Andreas Freytag
  9. Social Identity, Competition, and Finance: A Laboratory Experiment By Stefan Bauernschuster; Oliver Falck; Niels Daniel Grosse
  11. Communication, Advice and Beliefs in an Experimental Public Goods Game By Ananish Chaudhuri; Pushkar Maitra; Susan Skeath
  13. ENVIRONMENTAL SURROUNDINGS AND PERSONAL WELL-BEING IN URBAN CHINA By Russell Smyth; Ingrid Nielsen; Qingguo Zhai; Tiemin Liu; Yin Liu; C.Y. Tang; Zhihong Wang; Zuxiang Wang; Juyong Zhang

  1. By: Domenico Scalera (Universit… del Sannio); Alberto Zazzaro (Universit… Politecnica delle Marche, Department of Economics, MoFiR)
    Abstract: Does participation in inter-firm networks make access to credit easier for firms? Is finance a motivation driving the formation of inter-firm networks? During the last twenty years these two questions have been hotly debated by economists both theoretically and empirically. In this paper, we selectively review the literature on inter-firm networking, internal capital markets and access to external credit.
    Date: 2009–07
  2. By: Ying , Fang (BOFIT); Yang , Zhao (BOFIT)
    Abstract: This paper estimates the effect of institutions on economic performance using cross-city data from China. We argue that China's ongoing reforms are part of a long and circuitous historical transition from antiquity to modernity, which started about 150 years ago. Learning from Western countries has been a central aspect of this historical process. The West had a laThis paper estimates the effect of institutions on economic performance using cross-city data from China. We argue that China's ongoing reforms are part of a long and circuitous historical transition from antiquity to modernity, which started about 150 years ago. Learning from Western countries has been a central aspect of this historical process. The West had a large influence on the early stage of this transition, which has persisted to current reforms. This study uses the enrollment in Christian missionary lower primary schools in China in 1919 as an instrument for present institutions. Employing a two-stage least squares method, we find that the effect of institutions on economic performance in China is positive and significant. The results are robust according to various tests including additional controls, such as geographic factors and government policy-related variables.
    Keywords: institutions; christian; geography; policy
    JEL: O11 O53 P16 P51
    Date: 2009–07–06
  3. By: Jasso, Guillermina (New York University)
    Abstract: How do individuals shape societies? How do societies shape individuals? This paper develops a framework for studying the connections between micro and macro phenomena. The framework builds on two ingredients widely used in social science − population and variable. Starting with the simplest case of one population and one variable, we systematically introduce additional variables and additional populations. This approach enables simple and natural introduction and exposition of such operations as pooling, matching, regression, hierarchical and multilevel modeling, calculating summary measures, finding the distribution of a function of random variables, and choosing between two or more distributions. To illustrate the procedures we draw on problems from a variety of topical domains in social science, including an extended illustration focused on residential racial segregation. Three useful features of the framework are: First, similarities in the mathematical structure underlying distinct substantive questions, spanning different levels of aggregation and different substantive domains, become apparent. Second, links between distinct methodological procedures and operations become apparent. Third, the framework has a potential for growth, as new models and operations become incorporated into the framework.
    Keywords: micro-macro link, justice, comparison, status, power, identity, happiness, personal quantitative characteristics, personal qualitative characteristics, deductive theory, probability distributions, lognormal distribution, Pareto distribution
    JEL: C02 C16 D31 D6 D7 D8 J71
    Date: 2009–07
  4. By: Eric J. Van den Steen (Harvard Business School, Strategy Unit)
    Abstract: This paper develops an economic theory of the costs and benefits of corporate culture -- in the sense of shared beliefs and values -- in order to study the effects of 'culture clash' in mergers and acquisitions. I first use a simple analytical framework to show that shared beliefs lead to more delegation, less monitoring, higher utility (or satisfaction), higher execution effort (or motivation), faster coordination, less influence activities, and more communication, but also to less experimentation and less information collection. When two firms that are each internally homogenous but different from each other, merge, the above results translate to specific predictions how the change in homogeneity will affect firm behavior. The paper's predictions can also serve more in general as a test for the theory of culture as homogeneity of beliefs.
    Date: 2009–07
  5. By: Guiso, Luigi; Sapienza, Paola; Zingales, Luigi
    Abstract: We use survey data to study American households’ propensity to default when the value of their mortgage exceeds the value of their house even if they can afford to pay their mortgage (strategic default). We find that 26% of the existing defaults are strategic. We also find that no household would default if the equity shortfall is less than 10% of the value of the house. Yet, 17% of households would default, even if they can afford to pay their mortgage, when the equity shortfall reaches 50% of the value of their house. Besides relocation costs, the most important variables in predicting strategic default are moral and social considerations. Ceteris paribus, people who consider it immoral to default are at 77% less likely to declare their intention to do so, while people who know someone who defaulted are 82% more likely to declare their intention to do so. The willingness to default increases nonlinearly with the proportion of foreclosures in the same ZIP code. That moral attitudes toward default do not change with the percentage of foreclosures is likely to derive from a contagion effect that reduces the social stigma associated with default as defaults become more common.
    Keywords: foreclosure; moral constraint; mortgage; social constraint; strategic default
    JEL: D12 G18 G21 G33
    Date: 2009–07
  6. By: Lehrer, Evelyn L. (University of Illinois at Chicago)
    Abstract: This paper critically reviews what is known, based on analyses of micro-level U.S. data, about the role of religion in various interrelated decisions that people make over the life cycle, including investments in secular human capital, cohabitation, marriage, divorce, family size and employment. It also identifies gaps in our knowledge, and suggests agenda items for future research in the field. These include use of statistical models that allow for non-linearities in the effects associated with religious participation; consideration of contextual effects; and analyses that address anomalies found in earlier work regarding patterns of non-marital sex and divorce among conservative Protestants. Further work is also needed to increase our understanding of the role that religious factors are playing as various dimensions of the second demographic transition, along with elements of "American exceptionalism," continue to unfold in the U.S.
    Keywords: religiosity, religion
    JEL: J1 J2
    Date: 2009–07
  7. By: Brügger, Beatrix (University of Lausanne); Lalive, Rafael (University of Lausanne); Zweimüller, Josef (University of Zurich)
    Abstract: This paper studies the role of culture in shaping unemployment outcomes. The empirical analysis is based on local comparisons across a language barrier in Switzerland. This Röstigraben separates cultural groups, but neither labor markets nor political jurisdictions. Local contrasts across the language border identify the role of culture for unemployment. Our findings indicate that differences in culture explain differences in unemployment duration on the order of 20%. Moreover, we find that horizontal transmission of culture is more important than vertical transmission of culture and that culture is about as important as strong changes to the benefit duration.
    Keywords: culture, cultural transmission, unemployment duration, regional unemployment
    JEL: J21 J64 Z10
    Date: 2009–07
  8. By: Sebastian v. Engelhardt (Friedrich-Schiller-University Jena, School of Economics and Business Administration); Andreas Freytag (Friedrich-Schiller-University Jena, School of Economics and Business Administration)
    Abstract: So-called open source software (OSS) is marked by free access to the software and its source code. Copyright-based OSS licenses permit users to use, change, improve and redistribute the software, which is designed and developed in a public, collaborative manner. High quality OSS products like Linux, Apache etc. are developed by thousands of volunteers, who often do not receive direct monetary reward. Thus, OSS seems to be an example of a "private provision of a public good", and some argue that OSS is a "new intellectual property paradigm" for the digital economy. Therefore, OSS has been in the focus of economic research for some years.<BR> However, it is still not known which institutional and cultural factors favor OSS development, although the differences of countries in OSS activities can not be solely explained by GDP, education and internet access. For this reason, we perform a cross-country study analyzing how the number of OSS developers per inhabitants and the level of OSS activity of a country depends on institutional and cultural factors. We make use of data about OSS developers registered at SourceForge, and are able to assign 94% of them to their countries. We then run regressions with several institutional and cultural factors. Our findings are that a culture characterized by individualism/self-determination is in favor of OSS. Also, social capital in terms of interpersonal trust has a positive impact on the number of OSS developers as well as on the OSS activity level. The openness to novelty is relevant only with respect to scientific progress, i.e. an optimistic view of scientific progress is significantly positive. While the attitude towards competition was never significant, less regulated countries have more OSS activists and activity. Furthermore, the protection of intellectual property rights has (if all) a positive impact.<BR> Our study contributes to the understanding of the impact of cultural and institutional factors in general as well as in particular with respect to OSS. Additionally it also improves the understanding of OSS. OSS has similarities to technical science and scientific culture, is a a public good game with the contributions are a means to an end. OSS is a new intellectual property right paradigm and is based on an entrepreneurial spirit.
    Keywords: Open Source, Culture, Institutions, Social Capital, Trust, Regulation, Entrepreneurial Spirit, Individualism, Intellectual Property Rights
    JEL: B52 L17 L86 O34 Z13 Z19
    Date: 2009–07–08
  9. By: Stefan Bauernschuster (University of Jena, Graduate College "The Economics of Innovative Change"; Max Planck Institute for Economics); Oliver Falck (Ifo Institute for Economic Research, Munich); Niels Daniel Grosse (University of Jena, Graduate College "The Economics of Innovative Change")
    Abstract: There is extensive literature, both theoretical and empirical, on the effects of social identity on a wide range of economic and non-economic outcomes. However, there is only scarce knowledge about how social identity is affected by policies or market structure. We address the question how competition among suppliers of finance interacts with trust and trustworthiness in a laboratory one-shot trust game. In order to disentangle pure effects of competition and effects of competition that concern social identity, we apply a 2 x 2 treatment design. We induce social identity by letting subjects play coordination games with clear focal points, which leads to higher investments and trustworthiness in the trust game. Our results show that competition has no significant effects on trust and trustworthiness of individuals in a strangers' framework. However, in a framework with competition of in-group and out-group investors we see that competition leads to crowding out of social identity by reducing trustworthiness. We suggest that once competition comes into play, trustees see in-group trustors' investments as the outcomes of a competitive bidding process rather than voluntary trust, which crowds out reciprocity.
    Keywords: Trust Game, Social Identity, Competition
    JEL: C92 G11 Z13 L14
    Date: 2009–07–08
  10. By: Timothy N Cason; Vai-Lam Mui
    Abstract: This paper presents a laboratory collective resistance (CR) game to study how different forms of repeated interactions, with and without communication, can help coordinate subordinates’ collective resistance to a “divide-and-conquer†transgression against their personal interests. In the one-shot CR game, a first–mover (the “leaderâ€) decides whether to transgress against two responders. Successful transgression increases the payoff of the leader at the expense of the victim(s) of transgression. The two responders then simultaneously decide whether to challenge the leader. The subordinates face a coordination problem in that their challenge against the leader’s transgression will only succeed if both of them incur the cost to do so. The outcome without transgression can occur in equilibrium with standard money-maximizing preferences with repeated interactions, but this outcome is not an equilibrium with standard preferences when adding non-binding subordinate “cheap talk†communication in the one-shot game. Nevertheless, we find that communication (in the one-shot game) is at least as effective as repetition (with no communication) in reducing the transgression rate. Moreover, communication is better than repetition in coordinating resistance, because it makes it easier for subordinates to identify others who have social preferences and are willing to incur the cost to punish a violation of social norms.
    Keywords: Communication, Cheap Talk, Collective Resistance, Divide-and-Conquer, Laboratory Experiment, Repeated Games, Social Preferences
    JEL: C92 D74
    Date: 2009–06
  11. By: Ananish Chaudhuri; Pushkar Maitra; Susan Skeath
    Abstract: We study the efficacy of horizontal versus vertical social learning processes in a public goods game. In one treatment, subjects about to play the game can make nonbinding common knowledge announcements about their intentions while, in another, subjects do not communicate directly with group members but receive common knowledge advice from the previous generation of players. A third treatment has subjects play with neither communication nor advice. We find that groups that engage in peer communication achieve much lower levels of contribution to the public good than do groups that receive advice. We attribute this finding in part to the fact that some subjects in the communication treatment opted to make no announcement during the communication phase of play.
    Keywords: Voluntary contributions mechanism, Advice, Communication, Beliefs, Experiments.
    JEL: C92 C33 C34
    Date: 2009–06
  12. By: Dyuti Banerjee; Anupama Sethi
    Abstract: In this paper we consider different forms of intra-group transfers and the resulting type of group formation. We introduce the concept of partial joint liability and revenue sharing and show that this form of intra-group transfer may result in heterogeneous group formation. Its uniqueness is established by the fact that other transfer schemes always result in homogenous group formation.
    Keywords: Heterogeneous group formation, partial joint liability and revenue sharing
    JEL: O12 O16
    Date: 2009–06
  13. By: Russell Smyth; Ingrid Nielsen; Qingguo Zhai; Tiemin Liu; Yin Liu; C.Y. Tang; Zhihong Wang; Zuxiang Wang; Juyong Zhang
    Abstract: We examine the relationship between atmospheric pollution, water pollution, traffic congestion, access to parkland and personal well-being using a survey administered across six Chinese cities in 2007. In contrast to existing studies of the determinants of well-being by economists, which have typically employed single item indicators to measure well-being, we use the Personal Well-Being Index (PWI). We also employ the Job Satisfaction Survey (JSS) to measure job satisfaction, which is one of the variables for which we control when examining the relationship between environmental surroundings and personal well-being. Previous research by psychologists has shown the PWI and JSS to have good psychometric properties in western and Chinese samples. A robust finding is that in cities with higher levels of atmospheric pollution and traffic congestion, respondents report lower levels of personal well-being ceteris paribus. We find that a one standard deviation increase in suspended particles or sulphur dioxide emissions is roughly equivalent to a 12-13 percent reduction in average monthly income in the six cities. This result suggests that the personal well-being of China’s urban population can be enhanced if China were to pursue a more balanced growth path which curtailed atmospheric pollution.
    Keywords: China, Environment, Pollution, Personal Well-Being.
    JEL: A13 D60
    Date: 2009–06

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