nep-soc New Economics Papers
on Social Norms and Social Capital
Issue of 2009‒07‒28
fifteen papers chosen by
Fabio Sabatini
University of Siena

  1. Effects of interactions among social capital, income, and learning from experiences of natural disasters: A case study from Japan By yamamura, eiji
  2. Social Ties and the Job Search of Recent Immigrants By Deepti Goel; Kevin Lang
  3. How Homophily Affects Learning and Diffusion in Networks By Benjamin Golub; Matthew O. Jackson
  4. Are Happier People Better Citizens? By Cahit Guven
  5. Under-connected and Over-connected Networks By Tim Hellmann; Berno Buechel
  6. Religious Participation and Risky Health Behaviors among Adolescents By Jennifer M. Mellor; Beth A. Freeborn
  7. What Do We Expect from Our Friends? By Quoc-Anh Do; Stephen Leider; Markus M. Mobius; Tanya Rosenblat
  8. Contractually Stable Networks By Vincent Vannetelbosch; Jean-François Caulier; Ana Mauleon
  9. Coordination in Evolving Networks with Endogenous Decay By Francesco Feri; Miguel A.Meléndez-Jiménez
  10. Small World Networks with Segregation Patterns and Brokers By Edoardo Gallo
  11. Endogenous Network Dynamics By Frank H. Page; Myrna H. Wooders
  12. Education, Reputation or Network? Evidence from Italy on Migrant Workers Employability By Massimiliano Mazzanti; Susanna Mancinelli; Giovanni Ponti; Nora Piva
  13. Institutions Quality and Growth By Fabien, NGENDAKURIYO
  14. Team Formation in a Network By Markus Kinateder
  15. Does Corporate Social Responsibility Affect the Performance of Firms? By Sergio Vergalli; Laura Poddi

  1. By: yamamura, eiji
    Abstract: This paper explores how and the extent to which social capital has an effect on the damage resulting from natural disasters. It also examines whether the experience of a natural disaster affects individual and collective protection against future disasters. There are three major findings. (1) Social capital reduces the damage caused by natural disasters. (2) The risk of a natural disaster makes people more apt to cooperate and therefore social capital is more effective to prevent disasters. (3) Income is an important factor for reducing damage, but hardly influences it when the scale of a disaster is small.
    Keywords: Social Capital, Learning, Natural disaster
    JEL: H41 Z13 P16
    Date: 2009–07–13
  2. By: Deepti Goel; Kevin Lang
    Abstract: We show that increasing the probability of obtaining a job offer through a network should raise the observed wages of workers in jobs found through formal channels relative to those in jobs found through the network. This prediction holds at all percentiles except the highest and lowest. The largest changes are likely to occur below the median of the offer distribution. We test and confirm these implications using a survey of recent immigrants into Canada. We develop a simple structural model consistent with the theoretical model and show that it can replicate the broad patterns in the data. Our results are consistent with the primary effect of network strength being to increase the arrival rate of offers rather than to alter the distribution from which offers are drawn at least among recent immigrants.
    JEL: J31 J61 J64
    Date: 2009–07
  3. By: Benjamin Golub (Stanford University); Matthew O. Jackson (Stanford University)
    Abstract: We examine how three different communication processes operating through social networks are affected by homophily - the tendency of individuals to associate with others similar to themselves. Homophily has no effect if messages are broadcast or sent via shortest paths; only connection density matters. In contrast, homophily substantially slows learning based on repeated averaging of neighbors' information and Markovian diffusion processes such as the Google random surfer model. Indeed, the latter processes are strongly affected by homophily but completely independent of connection density, provided this density exceeds a low threshold. We obtain these results by establishing new results on the spectra of large random graphs and relating the spectra to homophily. We conclude by checking the theoretical predictions using observed high school friendship networks from the Adolescent Health dataset.
    Keywords: Networks, Learning, Diffusion, Homophily, Friendships, Social Networks, Random Graphs, Mixing Time, Convergence, Speed of Learning, Speed of Convergence
    JEL: D83 D85 I21 J15 Z13
    Date: 2009–05
  4. By: Cahit Guven
    Abstract: This paper presents evidence on causal influence of happiness on social capital and trust using German Socio-Economic Panel. Exploiting the unexplained cross-sectional variation in individual happiness (residuals) in 1984 to eliminate the endogeneity problem, the paper nds that happier people trust others more, and importantly, help create more social capital. Specifically, they have a higher desire to vote, perform more volunteer work, and more frequently participate in public activities. They also have a higher respect for law and order, hold more association memberships, are more attached to their neighborhood, and extend more help to others. Residual happiness appears to be an indicator of optimism, and has an inverse U-shaped relationship with social capital measures. The findings also suggest that the relationship between happiness and social capital strengthened in the world in the last decade.
    Keywords: happiness, trust, social capital, optimism.
    JEL: Z13
    Date: 2009–04–14
  5. By: Tim Hellmann (Bielefeld University); Berno Buechel (Bielefeld University)
    Abstract: Since the seminal contribution of Jackson & Wolinsky 1996 [A Strategic Model of Social and Economic Networks, JET 71, 44-74] it has been widely acknowledged that the formation of social networks exhibits a general conflict between individual strategic behavior and collective outcome. What has not been studied systematically are the sources of inefficiency. We approach this omission by analyzing the role of positive and negative externalities of link formation. This yields general results that relate situations of positive externalities with stable networks that cannot be “too dense” in a well-defined sense, while situations with negative externalities tend to induce “too dense” networks.
    Keywords: Networks, Network Formation, Connections, Game Theory, Externalities, Spillovers, Stability, Efficiency
    JEL: D85 C72 L14
    Date: 2009–05
  6. By: Jennifer M. Mellor (Department of Economics, College of William and Mary); Beth A. Freeborn (Department of Economics, College of William and Mary)
    Abstract: Previous studies have shown that adolescent religious participation is negatively associated with risky health behaviors like cigarette smoking, alcohol consumption, and illicit drug use. One explanation for these findings is that religion directly reduces risky behaviors because churches provide youths with moral guidance or with strong social networks that reinforce social norms. An alternative explanation is that both religious participation and risky health behaviors are driven by some common unobserved individual trait. We use data from the National Longitudinal Study of Adolescent Health and implement an instrumental variables approach to identify the effect of religious participation on smoking, binge drinking and marijuana use. Following Gruber (2005), we use a county-level measure of religious market density as an instrument. Religious market density has a strong positive association on adolescent religious participation, but not on secular measures of social capital. Upon accounting for unobserved heterogeneity, we find that religious participation continues to have a negative effect on illicit drug use.
    Keywords: Substance Abuse, Religion, Tobacco, Youth
    JEL: I1 Z12
    Date: 2009–07–20
  7. By: Quoc-Anh Do (School of Economics, Singapore Management University); Stephen Leider (Harvard University); Markus M. Mobius (Harvard University); Tanya Rosenblat (Iowa State University)
    Abstract: We conduct a field experiment in a large real-world social network to examine how subjects expect to be treated by their friends and by strangers who make allocation decisions in modified dictator games. While recipients’ beliefs accurately account for the extent to which friends will choose more generous allocations than strangers (i.e. directed altruism), recipients are not able to anticipate individual differences in the baseline altruism of allocators (measured by giving to an unnamed recipient, which is predictive of generosity towards named recipients). Recipients who are direct friends with the allocator, or even recipients with many common friends, are no more accurate in recognizing intrinsically altruistic allocators. Recipient beliefs are significantly less accurate than the predictions of an econometrician who knows the allocator’s demographic characteristics and social distance, suggesting recipients do not have information on unobservable characteristics of the allocator.
    Keywords: dictator games, beliefs, baseline altruism, directed altruism, social networks
    JEL: C73 C91 D64
    Date: 2009–06
  8. By: Vincent Vannetelbosch (CORE, Université catholique de Louvain); Jean-François Caulier (Universitaires Saint-Louis); Ana Mauleon (FNRS and CEREC, CORE, Université catholique de Louvain)
    Abstract: We develop a theoretical framework that allows us to study which bilateral links and coalition structures are going to emerge at equilibrium. We define the notion of coalitional network to represent a network and a coalition structure, where the network specifies the nature of the relationship each individual has with his coalition members and with individuals outside his coalition. To predict the coalitional networks that are going to emerge at equilibrium we propose the concept of contractual stability which requires that any change made to the coalitional network needs the consent of both the deviating players and their original coalition partners. We show that there always exists a contractually stable coalitional network under the simple majority decision rule and the component-wise egalitarian or majoritarian allocation rules. Moreover, requiring the consent of group members may help to reconcile stability and efficiency.
    Keywords: Networks, Coalition Structures, Contractual Stability, Allocation Rules
    JEL: A14 C70
    Date: 2009–06
  9. By: Francesco Feri; Miguel A.Meléndez-Jiménez
    Abstract: This paper studies an evolutionary model of network formation with endogenous decay, in which agents benefit both from direct and indirect connections. In addition to forming (costly) links, agents choose actions for a coordination game that determines the level of decay of each link. We address the issues of coordination (long-run equilibrium selection) and network formation by means of stochastic stability techniques. We find that both the link cost and the trade-off between efficiency and risk-dominance play a crucial role in the long-run behavior of the system.
    Keywords: Coordination, Networks, Risk dominance, stochastic stability
    JEL: C72 C73 D83 D85
    Date: 2009–07
  10. By: Edoardo Gallo (University of Oxford)
    Abstract: Many social networks have the following properties: (i) a short average distance between any two individuals; (ii) a high clustering coefficient; (iii) segregation patterns; the presence of (iv) brokers and (v) hubs. (i) and (ii) define a small world network. This paper develops a strategic network formation model where agents have heterogeneous knowledge of the network: cognizant agents know the whole network, while ignorant ones are less knowledgeable. For a broad range of parameters, all pairwise Nash (PN) networks have properties (i)-(iv). There are some PN networks with one hub. Cognizant agents have higher betweenness centrality: they are the brokers who connect different parts of the network. Ignorant agents cause the emergence of segregation patterns. The results are robust to varying the number of cognizant agents and to increasing the knowledge level of ignorant ones. An application shows the relevance of the results to assessing the welfare impact of an increase in network knowledge due to, e.g., improved access to social networking tools.
    Keywords: Network, Cognitive Network, Small World, Broker, Segregation
    JEL: C72 D85
    Date: 2009–05
  11. By: Frank H. Page (Indiana University); Myrna H. Wooders
    Abstract: In all social and economic interactions, individuals or coalitions choose not only with whom to interact but how to interact, and over time both the structure (the “with whom”) and the strategy (“the how”) of interactions change. Our objectives here are to model the structure and strategy of interactions prevailing at any point in time as a directed network and to address the following open question in the theory of social and economic network formation: given the rules of network and coalition formation, the preferences of individuals over networks, the strategic behavior of coalitions in forming networks, and the trembles of nature, what network and coalitional dynamics are likely to emerge and persist. Our main contributions are (i) to formulate the problem of network and coalition formation as a dynamic, stochastic game, (ii) to show that this game possesses a stationary correlated equilibrium (in network and coalition formation strategies), (iii) to show that, together with the trembles of nature, this stationary correlated equilibrium determines an equilibrium Markov process of network and coalition formation, and (iv) to show that this endogenous process possesses a finite, nonempty set of ergodic measures, and generates a finite, disjoint collection of nonempty subsets of networks and coalitions, each constituting a basin of attraction. We also extend to the setting of endogenous Markov dynamics the notions of pairwise stability (Jackson-Wolinsky, 1996), strong stability (Jacksonvan den Nouweland, 2005), and Nash stability (Bala-Goyal, 2000), and we show that in order for any network-coalition pair to persist and be stable (pairwise, strong, or Nash) it is necessary and sufficient that the pair reside in one of finitely many basins of attraction. The results we obtain here for endogenous network dynamics and stochastic basins of attraction are the dynamic analogs of our earlier results on endogenous network formation and strategic basins of attraction in static, abstract games of network formation (Page and Wooders, 2008), and build on the seminal contributions of Jackson and Watts (2002), Konishi and Ray (2003), and Dutta, Ghosal, and Ray (2005).
    Keywords: Endogenous Network Dynamics, Dynamic Stochastic Games of Network Formation, Equilibrium Markov Process of Network Formation, Basins of Attraction, Harris Decomposition, Ergodic Probability Measures, Dynamic Path Dominance Core, Dynamic Pairwise Stability
    JEL: A14 C71 C72
    Date: 2009–05
  12. By: Massimiliano Mazzanti (University of Ferrara); Susanna Mancinelli (University of Ferrara); Giovanni Ponti (University of Ferrara); Nora Piva (University of Ferrara)
    Abstract: The strong adverse selection that immigrants face in hosting labour markets may induce them to adopt some behaviours or signals to modify employers’ beliefs. Relevant mechanisms for reaching this purpose are personal reputation; exploiting ethnic networks deeply-rooted in the hosting country; and high educational levels used as an indirect signal of productivity. On this last point, the immigrant status needs a stronger signal compared to that necessary for a local worker, and this may lead the immigrant to accept job qualifications which are lower than those achievable through the embodied educational level. This could explain the over education problem that characterizes many countries, Italy included. The aim of the paper is to investigate whether the above mentioned mechanisms are adopted by immigrants in Italy, a crucial country for EU immigration flows, and if they are useful in increasing immigrants’ likelihood of employment. The empirical analysis has been conducted using the dataset from a national Labour Force Survey which provides information on 6,860 documented immigrants. We estimate a logit model for immigrants’ likelihood of being employed, focusing on the above mentioned mechanisms: reputation, ethnic networks and educational level. Moreover we concentrate on the interaction effects of the mechanisms and investigate whether one of them wins on the others. Results show that each of the three mechanisms is statistically and economically significant and exerts positive influence: all factors contribute to increasing the immigrant’s probability of being employed. Anyway, a high level of education increases the probability of being employed more than the belonging to ethnic networks deeply-rooted in Italy. The specific embodied capital of workers matter relatively more. This is relevant for labour public policies in this specific realm since the human capital lever is a possible direct target of various public policies and private human capital investments.
    Keywords: Educational Qualifications, Migrant Networks, Immigrant Employability, Reputation, Segmented Labour Markets
    JEL: D82 J24 I2 F22
    Date: 2009–06
  13. By: Fabien, NGENDAKURIYO (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))
    Abstract: We analyze the dynamic interaction between civil society organizations and Government in a representative developing economy. Government favors corruption and so fails to build e±cient institutions. On its side, civil society exerts pressure on Government to constrain it to halt corruption. We distinguish between an authoritarian Government and an unrestrictive one: the latter does not repress society's protests while the former implements punishment mechanisms. We demonstrate analytically the existence of a unique stable equilibrium by solving a linear quadratic di¨erential game for three Regimes respectively the optimal control problem, noncooperative and cooperative games. Numerical assessment indicates that civil monitoring always increases as corruption increases, but civil monitoring is low and institutions improve much faster under cooperation. Furthermore, total factor Productivity e¨ects always dominate the detrimental e¨ect of civil monitoring on growth in the ørst regime, under some restrictions in the second and never in the third. In response to a change in the government's aversion to rent variations in the presence of authoritarian government, total factor productivity e¨ects always dominate under both the noncooperative and cooperative scenario.
    Date: 2009–06
  14. By: Markus Kinateder (Universidad de Navarra)
    Abstract: Two project leaders (or entrepreneurs) in a network, which captures social relations, recruit players in a strategic, competitive and time-limited process. Each team has an optimal size depending on the project’s quality. This is a random variable with a commonly known distribution. Only the corresponding project leader observes its realization. Any decision is only observed by the involved agents. The set of pure strategy Sequential Equilibria is characterized by giving an algorithm that selects one equilibrium at a time. An agent’s expected payoff is related to his position in the network, though no centrality measure in the literature captures this relation. A social planner frequently would achieve a higher welfare.
    Keywords: Dynamic Competitive Group Formation, Imperfect Information
    JEL: C72 C73 D85
    Date: 2009–05
  15. By: Sergio Vergalli (University of Brescia); Laura Poddi (University of Ferrara)
    Abstract: Over the last two decades in OECD countries increasingly more firms are certifying as Socially Responsible (CSR is the acronym for Corporate Social Responsibility). This kind of certification is assigned by private companies that guarantee that a certain firm’s behaviour is environmentally and sociologically correct. Some papers (including Preston and O’Bannon, 1997; Waddock and Graves, 1997; McWilliams and Sieger, 2001; Ullman, 1985) tried to establish if there exists a link between Social Responsibility certification and the performance of firms. Their results were ambiguous and did not show any common connection. This ambiguity depends mainly on the static nature of their analyses and on the problem of whether performance is affected more by certification costs or by increasing sales due to an effect on reputation. Our work would like to discover whether certain performance indicators are affected by a firm’s social responsible behaviour and their certifications by looking at panel data. The novelty of our analysis is due to its dynamic aspect and from a CSR index that intersects two of the three main international indices (Domini 400 Social Index, Dow Jones Sustainability World Index, FTSE4Good Index), to be objective and obtain a representative sample. The main results seem to support the idea that CSR firms which are more virtuous, have better long run performance. They have some initial costs but obtain higher sales and profits due to several causes reputation effect, a reduction of long run costs and increased social responsible demand.
    Keywords: Corporate Social Responsibility, Growth
    JEL: M14 C23 O10
    Date: 2009–07

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