nep-soc New Economics Papers
on Social Norms and Social Capital
Issue of 2012‒05‒29
eleven papers chosen by
Fabio Sabatini

  1. Out of Sight, Out of Mind: The Value of Political Connections in Social Networks By Quoc-Anh Do; Yen-Teik Lee; Bang Dang Nguyen; Kieu-Trang Nguyen
  2. Networks, Trust, and Trade: The Microeconomics of China–North Korea Integration By Marcus Noland; Stephan Haggard
  3. Does Economic Freedom Foster Tolerance? By Berggren , Niclas; Nilsson, Therese
  4. Policy-induced Social Interactions and Schooling Decisions By Matteo Bobba; Jérémie Gignoux
  5. Subjective trust, perceived risk and exchange performance in buyer-supplier relationships By Emanuela Delbufalo
  6. Civil Society, Public Action and Accountability in Africa By Walton, Michael; Devarajan, Shantayanan; Khemani, Stuti
  7. The Contribution of Douglass North to New Institutional Economics By Claude Ménard; Shirley Mary M.
  8. Governmental Transfers and Altruistic Private Transfers By Amihai Glazer; Hiroki Kondo
  9. Death tolls from natural disasters: Influence of interactions among fiscal decentralization, institutions and economic development By Eiji Yamamura
  10. Long-Term Care, Altruism and Socialization By Grégory Ponthière
  11. Family Ties, Inheritance Rights, and Successful Poverty Alleviation: Evidence from Ghana By Edward Kutsoati; Randall Morck

  1. By: Quoc-Anh Do (School of Economics, Singapore Management University); Yen-Teik Lee (Department of Finance, Lee Kong Chian School of Business, Singapore Management University); Bang Dang Nguyen (Finance and Accounting Group, Judge Business School, University of Cambridge); Kieu-Trang Nguyen (SPEA, Indiana University)
    Abstract: This paper investigates the impact of social-network based political connections on firm value. We focus on the networks of university classmates and alumni among directors of U.S. public firms and congressmen. Comparing firms connected to elected versus defeated politicians in the Regression Discontinuity Design of close elections from 2000 to 2008, we provide evidence that political connections enhance firm value. However, the value of political connections varies in a more complex way than expected. While connections to powerful members of the Senate generate strong positive impact on firm value, connections to newly elected congressmen are less valuable to firms than connections to state-level politicians defeated in those elections. As a result, a director’s connection to an elected congressman causes a Weighted Average Treatment Effect on Cumulative Abnormal Returns of -2.65% surrounding the election date. Our results are robust and consistent through various specifications, parametric and nonparametric, with different outcome measures and social network definitions, and across many subsamples. Overall, our study identifies the value of political connections through social networks, uncovers its variation across different politicians’ backgrounds, and stresses the importance of state-level political connections.
    Keywords: Corruption; Accountability; Population Concentration; Capital Cities; US State Politics; Media; Turnout; Campaign Contributions; Public Good Provision
    JEL: D72 D73 L82 R12 R50
    Date: 2012–05
  2. By: Marcus Noland (Peterson Institute for International Economics); Stephan Haggard (University of California, San Diego Graduate School of International Relations and Pacific Studies)
    Abstract: A central hope of engagement with North Korea is that increased cross-border exchange will encourage the strengthening of institutions, and eventually, a moderation of the country’s foreign policy. An unprecedented survey of Chinese enterprises operating in North Korea reveals that trade is largely dominated by state entities on the North Korean side, although the authors cannot rule out de facto privatization of exchange. Little trust is evident beyond the relationships among Chinese and North Korean state-owned enterprises. Formal networks and dispute settlement mechanisms are weak and do not appear to have consequences for relational contracting. Rather, firms rely on personal ties for identifying counterparties and resolving disputes. The weakness of formal institutions implies that the growth in exchange does not conform with the expectations of the engagement model and may prove self-limiting. The results also cast doubt that integration between China and North Korea, at least as it is currently proceeding, will foster reform and opening.
    Keywords: trust, relational contracting, economic integration, institutions, China, North Korea
    JEL: P33 P25 L14 F15
    Date: 2012–05
  3. By: Berggren , Niclas (The Research Institute of Industrial Economics (IFN)); Nilsson, Therese (Department of Economics, Lund University)
    Abstract: Tolerance has the potential to affect both economic growth and wellbeing. It is therefore important to discern its determinants. We add to the literature by investigating whether the degree to which economic institutions and policies are market-oriented is related to different measures of tolerance. Regression analysis of up to 65 countries reveals that economic freedom is positively related to tolerance towards homosexuals, especially in the longer run, while tolerance towards people of a different race and a willingness to teach kids tolerance are not strongly affected by how free markets are. Stable monetary policy and outcomes is the area of economic freedom most consistently associated with greater tolerance, but the quality of the legal system seems to matter as well. We furthermore find indications of a causal relationship and of social trust playing a role as a mechanism in the relationship between economic freedom and tolerance and as an important catalyst: the more trust in society, the more positive the effect of economic freedom on tolerance.
    Keywords: Markets; Economic freedom; Tolerance; Government; Institutions; Regulation
    JEL: P10 P48 Z13
    Date: 2012–05–11
  4. By: Matteo Bobba (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole des Ponts ParisTech - Ecole Normale Supérieure de Paris - ENS Paris - INRA, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris); Jérémie Gignoux (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole des Ponts ParisTech - Ecole Normale Supérieure de Paris - ENS Paris - INRA, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris)
    Abstract: This paper considers a conditional cash transfer program targeting poor households in small rural villages and studies the effects of the geographic proximity between villages on individual enrollment decisions. Exploiting variations in the treatment status across contiguous villages generated by the randomized evaluation design, the paper finds that the additional effect stemming from the local density of neighboring recipients amounts to roughly one third of the direct effect of program receipt. Importantly, these spatial externalities are concentrated among children from beneficiary households. This suggests that the intervention has enhanced educational aspirations by triggering social interactions among the targeted population.
    Keywords: Spatial externalities ; Social interactions ; Peer effects ; Conditional cash transfers
    Date: 2011–11
  5. By: Emanuela Delbufalo
    Abstract: This article offers some theoretical and empirical contributions to the literature on relational exchange by examining the nature of subjective trust and perceived risk in buyer-supplier relationships. The relational view represents the theoretical framework for the research. The study explores the theoretical proposition that subjective trust and perceived risk in buyer-supplier relationships impact on exchange performance through the mediating effects of four sources of relational rents: asset specificity; knowledge-sharing routines; resource-capabilities complementarity, and effective governance. The theoretical model also considers the context influence in qualifying trust-risk interaction. The analysis of data from a sample of buyer-supplier relationships in the fashion industry by using a structural equation model provides support for the hypotheses. The results indicate that subjective trust and perceived risk are related constructs and play different roles in affecting exchange performance. The findings also highlight the critical role played by knowledge-sharing routine and resource-capabilities complementarity as full mediators in the relationships of subjective trust with exchange performance.
    Keywords: subjective trust; perceived risk; relational view; exchange performance.
    Date: 2012
  6. By: Walton, Michael; Devarajan, Shantayanan; Khemani, Stuti
    Abstract: This paper examines the potential role of civil society action in increasing state accountability for development in Sub-Saharan Africa. It further develops the analytical framework of the World Development Report 2004 on accountability relationships, to emphasize the underlying political economy drivers of accountability and implications for how civil society is constituted and functions. It argues on this basis that the most important domain for improving accountability is through the political relations between citizens, civil society, and state leadership. The evidence broadly suggests that when higher-level political leadership provides sufficient or appropriate powers for citizen participation in holding within-state agencies or frontline providers accountable, there is frequently positive impact on outcomes. However, the big question remaining for such types of interventions is how to improve the incentives of higher-level leadership to pursue appropriate policy design and implementation. The paper argues that there is substantial scope for greater efforts in this domain, including through the support of external aid agencies. Such efforts and support should, however, build on existing political and civil society structures (rather than transplanting "best practice†initiatives from elsewhere), and be structured for careful monitoring and assessment of impact.
    Date: 2011
  7. By: Claude Ménard (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon Sorbonne); Shirley Mary M. (RCI - Ronald Coase Institute - Ronald Coase Institute)
    Abstract: Douglass North, along with Ronald Coase and Oliver Williamson, transformed the early intuitions of new institutional economics into powerful conceptual and analytical tools that spawned a robust base of empirical research. NIE arose in response to questions not well explained by standard neoclassical models, such as make or buy and why rich or poor? Today NIE is a success story by many measures: four Nobel laureates in under 20 years, increasing penetration of mainstream journals, and significant impact on major policy debates from anti-trust law to development aid. This paper provides a succinct overview of North's evolving ideas about institutions and explains how North's work shaped the emerging field of new institutional economics and had a potent impact on economics and the social sciences more broadly. North provides a powerful example of how persistent and well placed confidence and hard work can productively transform the status quo. North's influence continues strong and his enthusiasm for exploring new frontiers and cooperating across artificial academic boundaries has never waned.
    Keywords: New Institutional Economics, institutions, transaction costs, development and growth
    Date: 2011–06
  8. By: Amihai Glazer (Department of Economics, University of California-Irvine); Hiroki Kondo (Department of Economics, Sophia University)
    Abstract: An altruistic agent who may aid a person with a low income may induce that person to exert little effort to increase his income. Such behavior generates a Good Samaritan Dilemma, in which welfare is lower than when no one is altruistic. Governmental transfers, which restrict reallocation from a person who saves much to one who saves little, reduce the effect, and can lead to an outcome which is Pareto-superior to the outcome under a Nash equilibrium with no government taxation and transfers.
    Keywords: Social security; Moral hazard; Savings; Altruism
    JEL: D13 D64 D91
    Date: 2012–05
  9. By: Eiji Yamamura
    Abstract: Previous research shows that decentralization plays a key role in the reduction of damage caused by natural disasters. The effect of decentralization will differ according a country’s level of economic development. To investigate this matter further, this paper attempts to investigate how quality of institution influences the effectiveness of decentralization. This paper uses cross-country data from 1990 to 2000 to examine how decentralization, institution, and economic development influence the number of deaths caused by natural disasters. The major findings are that decentralization reduces deaths and its effect is strengthened in countries with lower level of public sector corruption and better functioning legal systems. Furthermore, the interaction between decentralization and high quality institutions has a greater contribution to the reduction of deaths in more developed countries. This implies that decentralization makes a greater contribution to mitigating damage in countries with higher quality institutions. However, when essential technology does not exist, decentralization and quality of institution play only a minor role in the mitigation of damage in the event of a natural disaster.
    Keywords: Natural disaster, law and order, corruption, economic development.
    JEL: D73 K10 O1 Q54
    Date: 2012–05–08
  10. By: Grégory Ponthière (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole des Ponts ParisTech - Ecole Normale Supérieure de Paris - ENS Paris - INRA, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris)
    Abstract: The public provision of long-term care (LTC) can replace family-provided LTC when adults are not sufficiently altruistic towards their elderly parents. But State intervention can also modify the transmission of values and reduce the long-run prevalence of family altruism in the population. That evolutionary effect questions the desirability of the LTC public provision. To characterize the optimal LTC policy, we develop a three-period OLG model where the population is divided into altruistic and non-altruistic agents, and where the transmission of (non) altruism takes place through a socialization process à la Bisin and Verdier (2001). The optimal short-run and long-run LTC policies are shown to differ, to an extent varying with the particular socialization mechanism at work.
    Keywords: long-term care ; altruism ; socialization ; optimal policy ; crowding out effect
    Date: 2011–09
  11. By: Edward Kutsoati; Randall Morck
    Abstract: Ghanaian custom views children as members of either their mother’s or father’s lineage (extended family), but not both. Patrilineal custom charges a man’s lineage with caring for his widow and children, while matrilineal custom places this burden on the widows’ lineage – her father, brothers, and uncles. Deeming custom inadequate, and to promote the nuclear family, Ghana enacted the Intestate Succession (PNDC) Law 111, 1985 and 1998 Children’s Act 560 to force men to provide for their widows and children, as in Western cultures. Our survey shows that, although most people die intestate and many profess to know Law 111, it is rarely implemented. Knowledge of the law correlates with couples accumulating assets jointly and with inter-vivos husband to wife transfers, controlling for education. These effects are least evident for widows of matrilineal lineage men, suggesting a persistence of traditional norms. Widows with closer ties with their own or their spouse’s lineage report greater financial support, as do those very few who benefit from legal wills or access Law 111 and, importantly, widows of matrilineal lineage. Some evidence also supports Act 560 benefiting nuclear families, especially if the decedent’s lineage is matrilineal. Overall, our study confirms African traditional institutions’ persistent importance, and the limited effects of formal law.
    JEL: G18 G23 H55 K36 O17 O55 Z1
    Date: 2012–05

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