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on Social Norms and Social Capital |
| By: | Jeffrey Butler; Paola Giuliano; Luigi Guiso |
| Abstract: | A vast literature has investigated the relationship between trust and aggregate economic performance. We investigate the relationship between individual trust and individual economic performance. We find that individual income is hump-shaped in a measure of intensity of trust beliefs available in the European Social Survey. We show that heterogeneity of trust beliefs in the population, coupled with the tendency of individuals to extrapolate beliefs about others from their own level of trustworthiness, could generate the non-monotonic relationship between trust and income. Highly trustworthy individuals think others are like them and tend to form beliefs that are too optimistic, causing them to assume too much social risk, to be cheated more often and ultimately perform less well than those who happen to have a trustworthiness level close to the mean of the population. On the other hand, the low-trustworthiness types form beliefs that are too conservative and thereby avoid being cheated, but give up profitable opportunities too often and, consequently, underperform. Our estimates imply that the cost of either excessive or too little trust is comparable to the income lost by foregoing college. Furthermore, we find that people who trust more are cheated more often by banks as well as when purchasing goods second hand, when relying on the services of a plumber or a mechanic and when buying food. We complement the survey evidence with experimental evidence showing that own trustworthiness and expectations of others' trustworthiness in a trust game are strongly correlated and that performance in the game is hump-shaped. |
| JEL: | A1 A12 D01 O15 Z1 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:15344&r=soc |
| By: | Ponzo, Michela; Scoppa, Vincenzo |
| Abstract: | A large body of literature considers the advantages of using informal networks to match workers to jobs. However, family ties may interfere with a genuine process of worker selection, favoring people with connections over more talented workers. We offer a simple model of favoritism to explain these risks and show firms’ trade-off in using informal channels. We then investigate empirically the determinants and consequences of using informal networks in Italy by using the Bank of Italy Survey. We find that informal networks tend to be used by low educated individuals, in small firms, in low productivity jobs and in less developed regions. Finally, we show that informal networks have a negative impact on wages, controlling for individual and firm characteristics. |
| Keywords: | Informal Networks; Favoritism; Nepotism; Earnings functions; Survey of Household Income and Wealth (SHIW) |
| JEL: | D73 M51 J24 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:17281&r=soc |
| By: | Yann Bramoulle; Brian Rogers |
| Abstract: | Homophily, the tendency of linked agents to have similar characteristics, is an im- portant feature of social networks. We present a new model of network formation that allows the linking process to depend on individuals types and study the impact of such a bias on the network structure. Our main results fall into three categories: (i) we compare the distributions of intra- and inter-group links in terms of stochastic dominance, (ii) we show how, at the group level, homophily depends on the groups size and the details of the formation process, and (iii) we understand precisely the determinants of local homophily at the individual level. Especially, we ¯nd that popular individuals have more diverse networks. Our results are supported empirically in the AddHealth data looking at networks of social connections between boys and girls. |
| Keywords: | social networks, homophily, AddHealth, diversity, degree distributions |
| JEL: | A14 D85 I21 |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:nwu:cmsems:1475&r=soc |
| By: | Jellal, Mohamed |
| Abstract: | Using the principal-agent- supervisor paradigm, this paper examines the occurrence of collusion in a setting where the principal has no information about the supervisor and the agent does not necessarily know the supervisor’s preferences. We formally prove the occurrence of collusion is more likely when the agent has information about the supervisor. This result suggests that corruption, which is likely to emerge in long term reciprocal relationships between public officials and potential bribery, may be reduced by the means of staff rotation. Evidence from an experimental study supports this proposition |
| Keywords: | Principal Agent Supervisor paradigm; Social Capital ;Social Preferences;Bureaucracy;Corruption , Staff Rotation |
| JEL: | D73 Z13 D82 |
| Date: | 2009–09–08 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:17179&r=soc |
| By: | Hoff, Karla; Kshetramade, Mayuresh; Fehr, Ernst |
| Abstract: | Well-functioning groups enforce social norms that restrain opportunism, but the social structure of a society may encourage or inhibit norm enforcement. This paper studies how the exogenous assignment to different positions in an extreme social hierarchy - the caste system - affects individuals'willingness to punish violations of a cooperation norm. Although the analysis controls for individual wealth, education, and political participation, low-caste individuals exhibit a much lower willingness to punish norm violations that hurt members of their own caste, suggesting a cultural difference across caste status in the concern for members of one’s own community. The lower willingness to punish may inhibit the low caste’s ability to sustain collective action and so may contribute to its economic vulnerability. |
| Keywords: | Gender and Social Development,Corruption&Anitcorruption Law,Anthropology,Access to Finance,Social Inclusion&Institutions |
| Date: | 2009–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5040&r=soc |
| By: | Robin Cubitt (University of Nottingham); Michalis Drouvelis (University of York); Simon Gaechter (University of Nottingham); Ruslan Kabalin (University of Nottingham) |
| Abstract: | In the last thirty years economists and other social scientists investigated people’s normative views on principles of distributive justice. Here we study people’s normative views in social dilemmas, which underlie many situations of economic and social significance. Using insights from moral philosophy and psychology we provide an analysis of the morality of free riding. We use experimental survey methods to investigate people’s moral judgments empirically. We vary others’ contributions, the framing (“give-some” vs. “take-some”) and whether contributions are simultaneous or sequential. We find that moral judgments depend strongly on others’ behaviour; and that failing to give is condemned more strongly than withdrawing all support. |
| Keywords: | moral judgments, framing effects, public goods experiments, free riding |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:cdx:dpaper:2009-15&r=soc |
| By: | John Knight; Ramani Gunatilaka |
| Abstract: | The paper uses an appropriate survey from rural China to answer the question: Is happiness infectious, i.e. does the happiness of an individual depend positively on the happiness of their reference group? The evidence is consistent with this hypothesis, but the challenge is to solve the ‘reflection problem’, i.e. is the apparent effect of neighbours’ happiness on own happiness a causal one or merely a reflection? A ‘quasi-panel’ approach is adopted, treating villages as groups and individuals as multiple observations within each group, and using an error components 2SLS estimator. The results suggest that a major part of the relationship is indeed causal: Adam Smith’s insight was correct! The normative and policy implications are briefly considered. |
| Keywords: | Happiness, Social interaction, Relative deprivation, China |
| JEL: | D01 D60 D64 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:wpaper:446&r=soc |