nep-soc New Economics Papers
on Social Norms and Social Capital
Issue of 2012‒08‒23
fourteen papers chosen by
Fabio Sabatini

  1. The Clan and the City: Sustaining Cooperation in China and Europe By Greif, Avner; Tabellini, Guido
  2. Family Ties and Civic Virtues: Evidence on Wilson's "Moral Sense" By Martin Ljunge
  3. Does Trust Promote Growth? By Roman Horváth
  4. Trust & Insurance Markets By Luigi Guiso
  5. Cycles of Distrust: An Economic Model By Daron Acemoglu; Alexander Wolitzky
  6. Taking, Punishment and Trust By Simon Halliday
  7. Trust and Arena Size. Expectations, Trust, and Institutions Co-Evolving, and Their Critical Population and Group Sizes. By Elsner, Wolfram; Schwardt, Henning
  8. Social Relations and Relational Incentives By Robert Dur; Jan Tichem
  9. Citizen "Trust" as an Explanation of State Education Funding to Local School Districts By James Alm; Robert D. Buschman; David L. Sjoquist
  10. Money is an experience good: competition and trust in the private provision of money By Ramon Marimon; Juan Pablo Nicolini; Pedro Teles
  11. Social- and Self-Image Concerns in Fair-Trade Consumption: Evidence from Experimental Auctions for Chocolate By Sabrina Teyssier; Fabrice Etilé; Pierre Combris
  12. Trust as a consequence of perceived commitment: Implications on organizational learning capability and product innovation By Joaquín García-Cruz; Juan Carlos Real
  13. Suicide and Religion: New Evidence on The Differences Between Protestantism and Catholicism By Benno Torgler; Christoph A. Schaltegger
  14. A question of causality between political corruption, economic freedom and economic growth in Europe By Kuloglu, Ayhan; Lobont, Oana-Ramona; Topcu, Mert

  1. By: Greif, Avner; Tabellini, Guido
    Abstract: Over the last millennium, the clan and the city have been the locus of cooperation in China and Europe respectively. This paper examines - analytically, historically, and empirically - the cultural, social, and institutional co-evolution that led to this bifurcation. We highlight that groups with which individuals identify are basic units of cooperation. Such groups impact institutional development because intra-group moral commitment reduces enforcement cost implying a comparative advantage in pursuing collective actions. Moral groups perpetuate due to positive feedbacks between morality, institutions, and the implied pattern of cooperation.
    Keywords: China; Europe; Institutions; Public goods; Values
    JEL: N00 O10 O50 P51 Z10
    Date: 2012–07
  2. By: Martin Ljunge (University of Copenhagen and SITE)
    Abstract: I establish a positive relationship between family ties and civic virtues, as captured by disapproval of tax and benefit cheating, corruption, and a range of other dimensions of exploiting others for personal gain. I find that family ties are a complement to social capital, using within country evidence from 83 nations and data on second generation immigrants in 29 countries with ancestry in 85 nations. Strong families cultivate universalist values and produce more civic and altruistic individuals. The results provide a constructive role for families in promoting family values that support successful societies with a high state and fiscal capacity.
    Keywords: family ties, civic, family values, cultural transmission, altruism
    JEL: A13 H26 P16 Z13
    Date: 2012–07–25
  3. By: Roman Horváth (Charles University, Prague and IOS, Regensburg)
    Abstract: We examine the effect of generalized trust on long-term economic growth. Unlike in previous studies, we use Bayesian model averaging to deal rigorously with model uncertainty and attendant omitted variable bias. In addition, we address endogeneity and assess whether the effect of trust on growth is causal. Examining more than forty regressors for nearly fifty countries, we show that trust exerts a positive effect on long-term growth and, based on the posterior inclusion probabilities, suggest that trust is an important driver of long-term growth. Our results also show that trust is key for growth in countries with a weak rule of law.
    Keywords: trust, economic growth, Bayesian model averaging
    JEL: O43 O10 Z13
    Date: 2012–07
  4. By: Luigi Guiso (EIEF)
    Abstract: Trust is a key determinants of any financial transaction. Exchanges in insurance markets are a particular type of financial transaction where a current payment – the premium – is exchanged for a promise of a future, contingent payment – the indemnity due when the casualty occurs. We argue that trust is key in fostering these type of exchanges. Trust enters two ways: because it affects the willingness of the company to supply insurance when the insured can cheat by claiming indemnities that are not due. Because it discourages people from purchasing insurance if they do not trust the company's promise of readily paying the indemnity when due. We prove theoretically and empirically the relevance of trust in insurance exchanges and discuss policies to foster it.
    Date: 2012
  5. By: Daron Acemoglu; Alexander Wolitzky
    Abstract: We propose a model of cycles of distrust and conflict. Overlapping generations of agents from two groups sequentially play coordination games under incomplete information about whether the other side consists of “extremists” who will never take the good/trusting action. Good actions may be mistakenly perceived as bad/distrusting actions. We also assume that there is limited information about the history of past actions, so that an agent is unable to ascertain exactly when and how a sequence of bad actions originated. Assuming that both sides are not extremists, spirals of distrust and conflict get started as a result of a misperception, and continue because the other side interprets the bad action as evidence that it is facing extremists. However, such spirals contain the seeds of their own dissolution: after a while, Bayesian agents correctly conclude that the probability of a spiral having started by mistake is sufficiently high, and bad actions are no longer interpreted as evidence of extremism. At this point, one party experiments with a good action, and the cycle restarts. We show how this mechanism can be useful in interpreting cycles of ethnic conflict and international war, and how it also emerges in models of political participation, dynamic inter-group trade, and communication - leading to cycles of political polarization, breakdown of trade, and breakdown of communication.
    JEL: D72 D74
    Date: 2012–07
  6. By: Simon Halliday
    Abstract: Is a trusting person more or less likely to steal? Is a trusting person more or less likely to punish someone who steals? A great deal of research has examined how trust and social capital correlate with altruistic, reciprocal and punishing behaviours, but less research has been dedicated to understanding the roles of trust and social capital in peoples' choices between a strictly antisocial behaviour - like stealing - and generosity, or in a third party's choice to punish taking behaviour. Using a series of dictator games with third-party punishment and an option for a dictator to take, we show that trust plays a strong role in dictator behaviour and third-party behaviour. For dictators, trust correlates with the probability that the dictator refrains from self-interested behaviour and it correlates with the amount the dictator offers to their partner. For third parties, trust correlates with a third party's choice to punish self-interested behaviour and it correlates with the amount a third party spends on punishment. Social capital does not produce any such robust results.
    Keywords: Social Norms, Punishment, Reciprocity, Social Preferences, Trust, Social Capital.
    JEL: C72 C91
    Date: 2012–08
  7. By: Elsner, Wolfram; Schwardt, Henning
    Abstract: We develop a formal approach to the emergence of institutionalized trust in the context of the evolution of cooperation, with a particular focus on the relevance of the size dimension of this process. While trust in general has been widely investigated, as has the size dimension of structural emergence, both have rarely been analyzed together in an integrated approach to the co-evolution of institutions, trust, and the size of their populations and carrier groups. This then also helps explaining general(ized) trust. In a game-theoretic set-up, we determine critical levels of expectations as a factor facilitating the emergence of institutionalized cooperation in an arena, or population. Critical levels of expectations (to meet a cooperative agent) and arena size turn out to be interdependent. A carrier group, or platform, emerges under further conditions. It encompasses only a part of the larger population, indicating a maximum critical mass of cooperators (a meso-size) that can be sustained in a population, under an additional set of agency capabilities, particularly partner selection. Once cooperation has been established as the prevalent behavioral pattern in a number of platforms, its habituation as an institution may lead to a contingent perception of trustworthiness of agents. Habituated cooperation, its generalization, spillover or transfer across platforms, in combination with the perceived trustworthiness of others may lead to an increasing general trust level in the larger population. The approach chosen thus allows identifying critical factors of general trust among strangers in a larger population even in one-shot interactions. The significant differences observed in actual general-trust levels among countries, highly correlated with their macro performances, can be explained from the countries’ different (and mainly ‘inner’) size conditions in the deep structures of their interaction arenas and resulting platforms (rather than just total population size), contributing to the persistent varieties of capitalism.
    Keywords: cooperation; group size; habituation; trust
    JEL: B52 D83 C73
    Date: 2012
  8. By: Robert Dur (Erasmus University Rotterdam, CESifo, and IZA); Jan Tichem (Erasmus University Rotterdam)
    Abstract: This paper studies how social relationships between managers and employees affect relational incentive contracts. To this end we develop a simple dynamic principal-agent model where both players may have feelings of altruism or spite toward each other. The contract may contain two types of incentives for the agent to work hard: a bonus and a threat of dismissal. We find that good social relationships undermine the credibility of a threat of dismissal but strengthen the credibility of a bonus. Among others, these two mechanisms imply that better social relationships sometimes lead to higher bonuses, while worse social relationships may increase productivity and players' utility in equilibrium.
    Keywords: Altruism; spite; social relations; incentives; relational contracts; efficiency wages; subjective performance evaluation; Nash bargaining
    JEL: D23 J33 M52 M55
    Date: 2012–05–16
  9. By: James Alm (Department of Economics, Tulane University); Robert D. Buschman (Fiscal Research Center, Andrew Young School of Policy Studies, Georgia State University); David L. Sjoquist (Economics Department, Georgia State University)
    Abstract: Many previous studies have examined the level of state grants to local K-12 school districts. However, these studies have not considered the role of citizen "trust" in state versus local governments as a factor. We hypothesize that the role of the state in funding education reflects citizen "trust" in the relative capabilities of governments. We measure "trust" directly via public opinion polls that capture citizen attitudes about the appropriate responsibilities of state versus local governments; we also measure "trust" indirectly, by the role of state government as revealed by its relative importance in overall service provision (net of K-12 spending). We find that the state share of K-12 education spending tends to be higher when there is greater citizen trust in state versus local governments.
    Keywords: property tax, state and local finance, fiscal federalism, education, public opinion, intergovernmental transfers
    JEL: H71 H75 H77
    Date: 2012–07
  10. By: Ramon Marimon; Juan Pablo Nicolini; Pedro Teles
    Abstract: The interplay between competition and trust as efficiency-enhancing mechanisms in the private provision of money is studied. With commitment, trust is automatically achieved and competition ensures efficiency. Without commitment, competition plays no role. Trust does play a role but requires a bound on efficiency. Stationary inflation must be non-negative and, therefore, the Friedman rule cannot be achieved. The quality of money can be observed only after its purchasing capacity is realized. In this sense, money is an experience good.
    Keywords: Inflation (Finance)
    Date: 2012
  11. By: Sabrina Teyssier (ALISS - Alimentation et sciences sociales - INRA : UR1303); Fabrice Etilé (ALISS - Alimentation et sciences sociales - INRA : UR1303, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, 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); Pierre Combris (ALISS - Alimentation et sciences sociales - INRA : UR1303)
    Abstract: Can social interactions be used to encourage the consumption of fair-trade products? Social interactions may alter purchase behavior by triggering either self-image concerns (when one sees others' decisions without being seen) or social-image concerns (when everybody sees everyone else). A laboratory experiment is designed to identify separately these concerns, using real auctions for normal and fair-trade chocolate, controlling for taste and packaging differences. The analysis of the willingness-to-pay (WTP) for both types of chocolate reveals that both social- and self-image matter: subjects pay a higher premium for fair-trade chocolate when their decisions are made public. This premium is sensitive to information received about the premia paid by other subjects, even when decisions are private. The higher premium in public auctions results from a lower WTP for normal chocolate, rather than a higher WTP for fair-trade chocolate. Subjects are also much more sensitive to information about others' choices that relaxes the moral or social norm constraining their own choice. We thus conclude that social interactions cannot be used to nudge consumers into fair-trade consumption, at least for ordinary products such as chocolate.
    Keywords: Fair-trade ; Image Motivations ; Willingness-to-pay ; Experiment ; Chocolate
    Date: 2012–08
  12. By: Joaquín García-Cruz (Department of Business Organization and Marketing, Pablo de Olavide University, Seville, Spain); Juan Carlos Real (Department of Business Organization and Marketing, Pablo de Olavide University, Seville, Spain)
    Abstract: This paper aims at explaining the role performed by organizational commitment, trust and organizational learning capability (OLC) regarding product innovation and, more specifically, testing double mediation from a manager perspective. On the one hand, we test the mediator role performed by supervisors’ trust between the employees commitment perceived by managers and organizational learning capability. On the other, we test the mediator role performed by organizational learning capability between the trust provided by supervisors and product innovation. Our findings thus indicate that, although some commitment was perceived and both supervisors’ trust and OLC show significant relationships, trust does not mediate between these variables. Also, we conclude that trust is related to product innovation through organizational learning capability, which verifies its full mediator role. We conclude that, first, OLC is the mechanism by which the trust perceived by employees has an impact on innovation, and second, the manager decides to trust those employees that display commitment..
    Keywords: North-South, growth model, innovation assimilation
    Date: 2012–04
  13. By: Benno Torgler; Christoph A. Schaltegger
    Abstract: In this study of the persistent social phenomenon of suicide, we find that even though theological and social differences between Catholicism and Protestantism have decreased, Catholics are still less likely than Protestants to commit or accept suicide. This difference remains even after we control for such confounding factors as social and religious network s. Although religious networks do mitigate suicides among Protestants, the influence of church attendance is more dominant among Catholics. The methodological strength of our paper is that it uses two data sets: a 20-year panel for Switzerland and a cross-sectional analysis of alternative religious concepts like religious commitment and religiosity in 414 European regions. We find that these alternative concepts strongly reduce acceptance of suicide .
    Keywords: Suicide; Religion; Protestantism; Catholicism
    JEL: Z12 I20 J24
    Date: 2012–08
  14. By: Kuloglu, Ayhan; Lobont, Oana-Ramona; Topcu, Mert
    Abstract: Economic, cultural, social, psychological, political, administrative and religious effects of corruption are manifested by functional, political and moral degradation of local public authorities, which is a result of the expansion of political corruption, by reducing the transparent and accountable political power or by social tensions and increasing impoverishment of the population. In the executive activity, corruption has an effect on the reduced quality of public administration, the existence of an informal decision-making system and close links between organized crime, corrupt officials and politicians. Thus, outwardly effects of corruption, even in international relations, is manifested by the conduct of incompetent, irresponsible, provocative and subjective – conventional behavior of persons in positions of responsibility which, in dealing with foreign partners, primarily promotes personal and corporate interests against national interests, which, inevitably undermines the country's image and credibility as a partner in international relations. This paper tries to show a more accurate picture of the extent of corruption in Europe, through individual analysis of indicators measuring corruption and by quantifying the relation between corruption and political, administrative and economic determinants factors, through a regressive “pool data” model. For a fine approximation of the decision-making mechanism, in accordance with the policies they generate, there is a necessity the knowledge and understanding of how the political elements are transformed into real elements to measure their incidence. This paper adds to the empirical literature on the relationship between corruption and economic growth by incorporating the impact of economic freedom.
    Keywords: Political corruption; economic freedom; economic growth
    JEL: F4 E6
    Date: 2012

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