nep-soc New Economics Papers
on Social Norms and Social Capital
Issue of 2012‒10‒13
sixteen papers chosen by
Fabio Sabatini
Universita' la Sapienza

  1. Student Networks and Long-Run Educational Outcomes: The Strength of Strong Ties By Patacchini, Eleonora; Rainone, Edoardo; Zenou, Yves
  2. Germs, Social Networks and Growth By Karthik Reddy; Moritz Schularick; Vasiliki Skreta
  3. Startups and Local Social Capital in the Municipalities of Sweden By Hans Westlund; Johan P. Larsson; Amy Olsson
  4. To Belong or to Be Different? Evidence from a Large-Scale Field Experiment in China By Monic Sun; Xiaoquan (Michael) Zhang; Feng Zhu
  5. Cooperation, but no reciprocity: Individual strategies in the repeated Prisoner's Dilemma By Breitmoser, Yves
  6. Social interaction and the spatial concentration of criminality By Thomas de Graaff; Jan Rouwendal; Wim Bernasco; Wouter Steenbeek
  7. Social participation and local development – role of civil/nonprofit organisations By Adrienn Reisinger
  8. Conflicts and social capital and economic development in Latin America By Paula Pavarina
  9. The competitive advantage of a peripheral university town: Human and social capital perspectives from Joensuu, Finland By Teemu Makkonen
  10. Social capital as a measure of innovation for rural clusters: the case of France and US By Ion Lucian Ceapraz
  11. Retaliation and the Role for Punishment in the Evolution of Cooperation By Irenaeus Wolff
  12. Multivariate Choice and Identification of Social Interactions By Cohen-Cole, Ethan; Liu, Xiaodong; Zenou, Yves
  13. Cyberspace reloaded: settlement size and distance in an online social network landscape By Balazs Lengyel; Akos Jakobi
  14. Team building and hidden costs of control By Riener, Gerhard; Wiederhold, Simon
  15. Personality, Group Decision-Making and Leadership By Seda Ertac; Mehmet Y. Gurdal
  16. The Internet, News Consumption, and Political Attitudes By Liang, Che-Yuan; Nordin, Mattias

  1. By: Patacchini, Eleonora; Rainone, Edoardo; Zenou, Yves
    Abstract: The aim of this paper is to investigate and understand the effect of high-school friends on years of schooling. We develop a simple network model where students first choose their friends and then decide how much effort they put in education. The empirical salience of the model is tested using the four waves of the AddHealth data by looking at the impact of school peers nominated in the first two waves in 1994-1995 and in 1995-1996 on the educational outcome of teenagers reported in the fourth wave in 2007-2008 (when adult). We find that there are strong and persistent peer effects in education but peers tend to be influential only when they are strong ties (friends in both wave I and II) and not when they are weak ties (friend in one wave only). We also find that this is not true in the short run since both weak and strong ties tend to influence current grades.
    Keywords: education; long-term effects; peer effects; Social networks
    JEL: C21 I21 Z13
    Date: 2012–09
  2. By: Karthik Reddy; Moritz Schularick; Vasiliki Skreta
    Date: 2012
  3. By: Hans Westlund; Johan P. Larsson; Amy Olsson
    Abstract: This paper contains one of the first empirical attempts to investigate the influence of local Entrepreneurial Social Capital on startup propensity. We use a unique database including not only total startups, but data on startups divided in six branches to study the impact of Entrepreneurial social capital on startups per capita. Analyses are performed on all municipalities as well as by municipality type (urban or rural). Entrepreneurial social capital, measured by local firms’ assessment of local publics’ attitudes to entrepreneurship seem to exert a positive and significant influence on local startup rates in both urban and rural municipalities in Sweden. When startups are being divided in six branch groups, entrepreneurial social capital keeps its significance for all branches in rural areas, while it stays significant for two of the groups in urban areas. Thus, social capital seems to have a broader and more general impact on startup rates in rural areas. Keywords: Entrepreneurship, Startups, Entrepreneurial social capital
    Date: 2012–10
  4. By: Monic Sun (Department of Marketing, Stanford University); Xiaoquan (Michael) Zhang (Department of Information Systems, Business Statistics and Operations Management, Hong Kong University of Science and Technology); Feng Zhu (Department of Management and Organization, University of Southern California)
    Abstract: We examined whether people conform to or diverge from the most popular choice among their friends by conducting a large-scale field experiment on a leading social-networking site in China. Our setting allowed us to minimize confounding effects such as pre-existing taste similarities between a subject and her friends, the need to create a social identity, and the possibility of learning by observing friends’ choices. Surprisingly, we found that subjects were more likely to diverge from the popular choice among their friends as the popularity of that choice increased. The effect was more pronounced when they were reminded that their choices were visible to their friends. These results suggest that even members of a collectivist culture have a dominating need to be different.
    Keywords: uniqueness-seeking, conformity, collectivist culture, field experiment, social network
    JEL: C93 J10
    Date: 2012–06
  5. By: Breitmoser, Yves
    Abstract: A recent advance in our understanding of repeated PDs is the detection of a threshold d* at which laboratory subjects start to cooperate predictively. This threshold is substantially above the classic threshold "existence of Grim equilibrium" and has been characterized axiomatically by Blonski, Ockenfels, and Spagnolo (2011, BOS). In this paper, I derive its behavioral foundations. First, I show that the threshold is equivalent to existence of a "Semi-Grim" equilibrium s_cc>s_cd=s_dc>s_dd. It is cooperative (s_cc>0.5), non-reciprocal (s_cd=s_dc), and robust to imperfect monitoring ("belief-free"). Next, I show that the no-reciprocity condition s_cd=s_dc also follows from robustness to random-utility perturbations (logit equilibrium). Finally, I re-analyze strategies in four recent experiments and find that the majority of subjects indeed plays Semi-Grim when it is an equilibrium strategy, which explains d*'s predictive success.
    Keywords: Repeated Prisoner's Dilemma; experiment; equilibrium selection; cooperative behavior; reciprocity; belief-free equilibria; robustness
    JEL: C92 C73 C72
    Date: 2012–10–04
  6. By: Thomas de Graaff; Jan Rouwendal; Wim Bernasco; Wouter Steenbeek
    Abstract: It has often been observed that there is substantial spatial variation in criminality, i.e. criminality clusters in neighborhoods. Differences in neighborhood characteristics are one possible reason, social interactions another. In this paper we use detailed data on the residential location of criminals to disentangle the effects of individual characteristics, neighborhood characteristics and social interaction on criminality. Our basic model is an individual binomial logit model for the probability of being a criminal which we use to extract neighborhood effects. In a second stage, we model neighborhood effects, where we use as explanatory variables physical and social neighborhood characteristics such as characteristics of the housing stock and the demographic composition. We also include the share of criminals to be able to measure a social interaction effect. Note that this approach takes into account unobserved neighborhood characteristics. Since these may affect the criminality rate we instrument for this variable in a two stage estimation procedure.
    Date: 2012–10
  7. By: Adrienn Reisinger
    Abstract: Settlement or region development is a kind of conscious action, which influences the operation of the region in a way to ensure the required living standard for the population and to be able to ensure a desired future of the given region. State and local government actors play an important role in the development by ensuring the legal framework to the realization of the goals. However key actors of the development are those citizens who can promote the development through their activity. That goals can be only efficiently and successfully realized, when people are attached to the given settlement or region, and when they attend such kind of relations, which can contribute to the realization of the goals. These local relations can be shaped by the civil/nonprofit organizations. So these organisations can have a direct and indirect effect on the development of the settlements and regions. In this way the local development concept connect to the framework of social participation. In the focus of my study are the civil/nonprofit organisations and they role in local development from the approach of social participation. At first I show the conceptual framework of development, civil/nonprofit organisations and social participation. After it I display the role of the civil/nonprofit organisations in the development processes, and then I feature the advantages of the participation and the preconditions of a well-functioning participatory system. I close my study with some recommendations for the future. One of the main results of my study is the determination of the role of the civil/nonprofit organisations in the process of development concerned with social participation. This type of approach is quite new also in the Hungarian literature and also in the international practice. That’s why I hope that my study will contribute to a better future where people will know what they have a dominant role in shaping their future. All in all I think that every actor should participate in local development – besides national and local actors – who are involved by developments so that the country could be democratic both in social and economic sense. Thus more effective decisions can be made and the community integration of people can develop as well.
    Date: 2012–10
  8. By: Paula Pavarina
    Abstract: Conflicts and social capital and economic development in Latin America Keywords: social capital, economic development, conflict, cooperation. JEL CLASSIFICATION: O17; 043; O57. Abstract This study aims to discuss the economical behavior of Latin America, considering the importance of the attributes directly related to social capital (interpersonal trust, which leads to association and civic commitment, resulting in what Putnam calls 'civic community') pari passu governance, ie the formal attributes related to the behavior of economic agents in the presence of the state, which make up a 'backdrop' for the establishment of social, political and economic relations. Together, these two dimensions can enable to explain the economical behavior of conflict or cooperation in different countries. This is because the rational decision of cooperating or not is related to two factors: (1) the expected behavior of other agents ('I cooperate if and just if I hope the others will cooperate with me') and (2) the existence of standards, patterns or rules that prevent or hinder opportunism (otherwise the cooperative behavior would seem a 'fool’s choice'). The key question when added together the two dimensions is predictability. In other words, understanding the formal and informal 'rules of the game' and the reluctance in facing the penalties imposed in cases of wrongful conduct. The expected behavior of other agents depends on the trust relationships that are established between them. The more 'general trust' is (replacing the purely interpersonal attributes), it is expected more cooperation. The 'generalized trust' occurs when one recognizes itself in the other or when others are part of 'my group'. Hence the importance of activities that brings together a large and different number of people and groups, named 'bridging' associations, which allow the inter-relationship between 'different' individuals. The more social capital is reflected in the amount of cross-cutting relationships; bigger will be the advantages of economic environment. The lack of confidence or associative participation leads to a 'social isolationism' that is characteristic of places and countries where economic or social fragmentation can be find. This situation can lead to positive results that are appropriated by some groups in private but not by all the collectivity. Conflict occurs when different interests collide: either because they are isolated benefits or privately appropriated ones, gathered in the expense of others groups; or because the benefits are not extended to everybody because of the context of institutional weakness. Using quantitative analysis this paper analyses correlations between social capital and growth in Latin America as well as between GDP per capita and institutional conditions (political and civil liberties, property rights, stability of political power, judicial independence and the rule of law).
    Date: 2012–10
  9. By: Teemu Makkonen
    Abstract: The positive impacts of social and human capital on individual, firm and geographical level are well known. Accordingly, the literature on social capital has advocated the impacts of social networks, norms and trust in securing individual and mutual benefits. Already, the early literature on human capital was concentrated on the economic advantage of individuals, that is, on the impact of education on wage levels. Recent economic studies underline the importance of human capital in creating firm-level innovations and fostering regional economic development. The role of universities has been highlighted in this discussion. However, it seems that this educated human capital is geographically concentrated on the largest urban regions. Whether, this imposes difficulties for firms located in more peripheral regions is discussed here with a case study from a small university town of Joensuu situated in peripheral Eastern Finland. The proposition presented here is that the negative impacts of locational factors, in the periphery, and having a small labour pool will be partially compensated with close social ties and worker immobility. First, the question is approached through official statistics showing that the mobility of educated workforce is smaller in more rural and peripheral regions compared to that of the capital and other densely-populated regions of Finland. Second, the tentative picture drawn from the statistics is deepened with data from semi-structured thematic interviews conducted in Joensuu. The main stakeholders interviewed were chosen, according to the framework of regional innovation systems, from both public and private organizations (n = 15). The results confirm that although a peripheral location of firms does impose limitations to the availability of human capital at hand, the negative impact is compensated with low outmigration of educated workers due to existing well-knit social ties. Furthermore, employee loyalty to their employers is high in Joensuu, that is, the thinner possibilities for other employment renders the educated workforce in Joensuu relatively immobile even in intraregional scale. Although, worker immobility can be seen as a drawback for a region it can also be considered as a regional asset for firms that have decided to locate their activities in Joensuu, as it saves the firms from the mandatory allocation of resources to the training and introductory procedures of new employees. Accordingly, a local university both attracts and supplies educated workers in the region for the benefit of local enterprises and is an important partner in cooperation for local firms.
    Date: 2012–10
  10. By: Ion Lucian Ceapraz
    Abstract: The paper emphasizes the role of social capital in some particular rural clusters like the French “Poles d’Excellence Rurale†(PER) and the U.S. Rural Knowledge Clusters (RKC). The recent revival of the literature on social capital considers this resource as highly valuable when considering the development of rural clusters. The purpose of our paper is to investigate the various mechanisms of social capital that can release the economic development of these areas. Through bilateral comparisons we are interested in how differences and similarities in social structures between the PER and the RKC may affect rural growth and competitiveness. There is a growing literature on the correlation between social capital variables and important economic outcomes (Glaeser et al., 2002). We do not intend to investigate how is created the social capital in the rural areas but to underline the ongoing effects of social capital that made these PER and RKC such a successful story. In our opinion, their performance and outcomes are highly dependent on the type of social capital which is expected to contribute to the cooperation and innovation (Staber, 2007) of these rural clusters. According to Staber (2007) some recent OECD papers outline that “there is no one model of social capital and no one type of impact on cluster performance†(OECD, 2002). An increased interest from political institutions in developing specific tools in starting and maintaining the role of social capital as an important resource is unveiled in recent years in these rural areas. The development of this resource at the individual and community levels is the ultimate goal of sustainable rural development (Dwyer, Findeis, 2008). The tools employed by public and private institutions in Europe and US differ substantially regarding the role of institutions but are commonly similar to the output of rural growth. One important aspect affecting the type of social capital in these rural areas concerns the increasing importance of urbanization and the proximity of rural and urban areas. In this aspect as our paper reveals the French rural areas seem quite different concerning their “rurality†compared with the US counterparts. JEL-Classification: R10, R11, R12 Key words: “Poles d’Excellence Ruraleâ€, U.S. Rural Kowledge Clusters, Social Capital, Innovation.
    Date: 2012–10
  11. By: Irenaeus Wolff
    Abstract: Models of evolutionary game theory have shown that punishment may be an adaptive behaviour in environments characterised by a social-dilemma situation. Experimental evidence closely corresponds to this nding but questions the cooperation-enhancing eect of punishment if players are allowed to retaliate against their punishers. This study provides a theoretical explanation for the existence of retaliating behaviour in the context of repeated social dilemmas and analyses the role punishment can play in the evolution of cooperation under these conditions. We show a punishing strategy can pave the way for a partially-cooperative equilibrium of conditional cooperators and defecting types and, under positive mutation rates, foster the cooperation level in this equilibrium by prompting reluctant cooperators to cooperate. However, when rare mutations occur, it cannot sustain cooperation by itself as punishment costs favour the spread of non-punishing cooperators.
    Keywords: Public goods, Prisoner's Dilemma, Strong reciprocity, Counterpunishment
    Date: 2012
  12. By: Cohen-Cole, Ethan; Liu, Xiaodong; Zenou, Yves
    Abstract: In this paper, we investigate the impact of peers on own outcomes where all agents embedded in a network choose more than one activity. We develop a simple network model that illustrates these issues. We differentiate between the ‘seemingly unrelated’ simultaneous equations model where people are influenced only by others within the same activity, the ‘triangular’ simultaneous equations model, where there is some asymmetry in the peers’ cross effects, and the ‘square’ simultaneous equations model, where all possible cross-choice effects are taken into account. We develop the conditions under which each model is identified, showing that the general ‘square’ simultaneous equations model with both simultaneity effect and cross-choice peer effect cannot be identified without any exclusion restrictions. We then study the impact of peer effects on education and screen activities and show that the estimated within- and cross-choice peer effects both have non-trivial impacts on adolescent behavior. We find, in particular, that, keeping peers’ grades and screen activities fixed, watching more TV could be beneficial to a student’s grade.
    Keywords: identification; peer effects; Social networks
    JEL: C21 C3 I21 Z13
    Date: 2012–09
  13. By: Balazs Lengyel; Akos Jakobi
    Abstract: This initial paper of our interest on geography of online social network is based on a literature in which geographers reformulated major concepts and hypotheses in the ‘90ies due to revolutionary development of internet (Cairncross, 1997). Cyberspace quickly became central issue in understanding human behaviour in the virtual world and cyber world has been always claimed to strongly twitted with physical world (Hayes, 1997). Parallel shift in economic geography research moved the focus of interest from distance to proximity, which is essential in our understanding for new knowledge creation and innovation in cities while the importance of distance is decreasing (Boschma, 2005). Economic geographers also claim that innovation and knowledge creation remained local in the era of internet because the need of face-to-face interactions (Feldman, 2002); internet-based communication seems to stimulate local offline communication (Storper and Venables, 2004). Social network sites are major fields of online communication and “enable users to articulate and make visible their social networks” (boyd and Ellison, 2007). Online social network (OSN) are large-scale networks and claimed to be supplemental forms of communication between people who have known each other primarily in real life (Ellison et al, 2006, 2007). We believe that studying these networks will give new insights to local learning and social capital issues by providing excellent data on online local learning and also proxies of offline local learning. According to recent findings on large scale OSNs (Facebook and Twitter), geographical location of users and their friends turns to be a determining factor for the structure of the network (Backstrom et al, 2011, Takhteyev et al, 2012, Ugander et al, 2011). However, more traditional geographical aspects are also needed to analyse spatial distribution of OSN activity. Our research questions address both the effects of distance and settlement size on population shares involved in online communities such as online social networks. Preliminary findings on iWiW, a leading online social network in Hungary with more than 4 million users, suggest that share of users is higher in bigger settlements and positively associated with geographical proximity of Budapest. On the other hand, the average number of friendship ties is independent from settlement size and is higher in peripheral regions of the country. In sum, settlement size and distance may play decisive role in shaping geographies of OSN. Keywords: online social network, geography, settlements, size effect, distance JEL codes: L86, R10, O18, O33
    Date: 2012–10
  14. By: Riener, Gerhard; Wiederhold, Simon
    Abstract: This paper investigates the interaction of intrinsic and extrinsic incentives. We propose a simple principal-agent model with control that incorporates the existence of social groups resulting from common experiences in the past. Our laboratory experiment shows that agents with previous common experiences with their principals (CE agents) perform better than agents without such experiences (NCE agents). However, as soon as actual control exceeds their expectation, CE agents decrease their performance substantially, which has no equivalent for NCE agents. This pronounced decrease in effort when control is perceived as excessive represents a novel channel through which hidden costs of control materialize. Our results have important implications for firms' strategies to motivate employees. --
    Keywords: Employee motivation,Principal-agent theory,Experiments
    JEL: C92 M54 D03 J22
    Date: 2012
  15. By: Seda Ertac (Department of Economics, Koç University); Mehmet Y. Gurdal (Department of Economics, TOBB-ETU)
    Abstract: This paper explores the effect of personality traits on: (1) the willingness to make risk-taking decisions on behalf of a group, (2) the nature of "choice shifts", i.e. the difference between the amount of risk taken in the group context and individually. Openness and agreeableness emerge as significant determinants of the willingness to lead: non-leader women and non-leader men score lower on openness and higher in agreeableness compared to both leader men and leader women. Neuroticism explains the within-gender variance in individual risk-taking among women, who are on average more risk-averse than men. Subjects in general behave more cautiously when they are making risky decisions on behalf of a group. Among men, a higher agreeableness score implies higher caution in group decisions, while conscientiousness leads to less caution. In contrast, among women, a higher conscientiousness score implies higher caution in the group context, suggesting that the two genders might interpret the social norms in group decision-making differently.
    Keywords: Personality, leadership, gender, group decision-making, risk, choice shifts, experiments.
    JEL: C91 C92 D81 J16
    Date: 2012–10
  16. By: Liang, Che-Yuan (Department of Economics); Nordin, Mattias (Department of Economics)
    Abstract: We investigate the effects of the rise of the Internet as an additional mass medium on news consumption patterns and political attitudes. We use Swedish survey data from 2002 to 2007, the period during which online news media emerged. We find that broadband access is associated with online media consumption which, to some extent, crowds out offline consumption. Furthermore, these altered news consumption patterns have no or small effects on political attitudes
    Keywords: news; the Internet; political attitudes
    JEL: D72 D83
    Date: 2012–07–17

This nep-soc issue is ©2012 by Fabio Sabatini. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.