nep-soc New Economics Papers
on Social Norms and Social Capital
Issue of 2012‒10‒20
fourteen papers chosen by
Fabio Sabatini
Universita' la Sapienza

  1. Mobilizing Social Capital Through Employee Spinoffs By Marc-Andreas Muendler; James E. Rauch
  2. Middle-Class Entrepreneurship and the Effect of Social Capital By Xavier Ordenana; Elizabeth Arteaga
  4. Trust, Values and False Consensus By Jeffrey Butler; Paola Giuliano; Luigi Guiso
  5. Financing from Family and Friends By Lee, Samuel; Persson, Petra
  6. Do family ties with those left behind intensify or weaken migrants' assimilation? By Stark, Oded; Dorn, Agnieszka
  7. The Friends Factor: How Students’ Social Networks Affect Their Academic Achievement and Well-Being? By Victor Lavy; Edith Sand
  8. Peers' influence on political choices: Evidence from random classroom assignments in college By Camila Campos; Fernanda L L de Leon
  9. Prosocial norms and degree heterogeneity in social networks By Espinosa Alejos, María Paz; Kovarik, Jaromir; Brañas-Garza, Pablo; Cobo-Reyes, Ramón; Jiménez, Natalia; Ponti, Giovanni
  10. Social Cohesion, Social Inequality and Social Participation in India: an Approach from Women’s Perspectives By Protap Mukherjee
  11. Punishment and Cooperation in Stochastic Social Dilemmas By Erte Xiao; Howard Kunreuther
  12. Motivational cherry picking By Regner, Tobias; Riener, Gerhard
  13. Moral cleansing and moral licenses: experimental evidence By Brañas-Garza, Pablo; Bucheli, Marisa; García-Muñoz, Teresa; Espinosa Alejos, María Paz
  14. Income effect and altruism By Subhashish Modak Chowdhury; Joo Young Jeon

  1. By: Marc-Andreas Muendler; James E. Rauch
    Abstract: Many founding teams of new firms form at a common employer. We model team formation and the entry of employee spinoffs by extending the Jovanovic (1979) theory of job matching and employer learning. In our social-capital model employees learn about their colleagues’ characteristics at a faster rate than the employer and recruit suitable colleagues to join the spinoff firm. For spinoff firms, our model predicts that the separation hazard is lower among founding team members than among workers hired from outside at founding, and that this difference shrinks with worker tenure at the firm. For parent firms, our model predicts that a worker’s departure hazard to join a spinoff initially increases with worker tenure at the parent, whereas the separation hazard for conventional quits and layoffs decreases with worker tenure as in Jovanovic (1979). All these predictions are clearly supported in Brazilian data for the period 1995-2001. Calibration of our dynamic model indicates that employee spinoffs raise the share of workers in Brazil’s private sector known to be of high match quality by 3.2 percent.
    JEL: D83 J63 L26
    Date: 2012–10
  2. By: Xavier Ordenana; Elizabeth Arteaga
    Abstract: This paper surveys Ecuadorian entrepreneurs to ascertain the differences between middle-class and upper-class entrepreneurs and identify the variables associated with the “success” of a business. The paper also explores the variables that can determine the probability of upward intergenerational mobility. The paper finds that, although the level of social capital among Ecuadorian entrepreneurs is weak, it positively affects the chances of being a dynamic entrepreneur.
    JEL: L26 M13
    Date: 2012–07
  3. By: Nicola Lacetera (Rotman School of Management, University of Toronto); Mario Macis (Carey Business School, Johns Hopkins University); Angelo Mele (Carey Business School, Johns Hopkins University)
    Abstract: We present preliminary results from a small-scale natural field experiment aimed at exploring online social contagion, with an application to charitable giving. We worked in partnership with Heifer International, a non-profit organization aimed at fighting poverty in developing countries, and HelpAttack!, the developer of a Facebook application that facilitates donations to charities while broadcasting such activities to the donors’ Facebook contacts. We ran a series of marketing campaigns, and randomized the broadcasting of users’ pledges, thereby creating exogenous variation in the information that users’ contacts were receiving. Although our campaigns reached as many as about 13 million Facebook users, 6,000 users clicked on the ad and only 18 pledges were made, without any subsequent pledge from these users’ contacts. We offer potential explanations for this finding on the absence of network effects, and outline our plans for future developments of this on-going project.
    Keywords: Online networks, diffusion, pro-social behavior, network effects
    JEL: C93 D64 O33 M31
    Date: 2012–09
  4. By: Jeffrey Butler; Paola Giuliano; Luigi Guiso
    Abstract: Trust beliefs are heterogeneous across individuals and, at the same time, persistent across generations. We investigate one mechanism yielding these dual patterns: false consensus. In the context of a trust game experiment, we show that individuals extrapolate from their own type when forming trust beliefs about the same pool of potential partners - i.e., more (less) trustworthy individuals form more optimistic (pessimistic) trust beliefs - and that this tendency continues to color trust beliefs after several rounds of game-play. Moreover, we show that ones own type/trustworthiness can be traced back to the values parents transmit to their children during their upbringing. In a second closely-related experiment, we show the economic impact of mis-calibrated trust beliefs stemming from false consensus. Miscalibrated beliefs lower participants experimental trust game earnings by about 20 percent on average.
    JEL: A1 A12 D01 Z1
    Date: 2012–10
  5. By: Lee, Samuel (Stern School of Business); Persson, Petra (Research Institute of Industrial Economics (IFN))
    Abstract: The constraint on informal finance is commonly taken to be high costs and limited supply. But the majority of informal investors – family and friends – is often willing to supply funds at negative returns, and yet many borrowers tap family and friends only as a last resort. We explain this paradox with a theory based on altruistic ties between the entrepreneur and his family and friends, and propose an alternative explanation of the limits of informal finance: Altruistic ties reduce agency problems in financing. But such ties also increase the entrepreneur’s aversion to failure. This makes financing from family and friends unattractive, and undermines the entrepreneur’s willingness to take risks. Altruistic ties thus constrain growth even though they relax financing constraints. We relate this insight to the limited success of group-based microfinance in generating entrepreneurial growth. Our theory underscores the value of impersonal transactions, and implies that even counterparties with social ties benefit from formal contracts and third-party intermediation. This sheds light on social-formal financial institutions, such as community funds, crowd funding, and social lending intermediaries.
    Keywords: Informal finance; Family loans; Social ties; Altruism; Peer-to-peer lending; Small business;
    JEL: D19 D64 G21 G32 O16 O17
    Date: 2012–10–11
  6. By: Stark, Oded; Dorn, Agnieszka
    Abstract: Strong ties with the home country and with the host country can coexist. An altruistic migrant who sends remittances to his family back home assimilates more the more altruistic he is, and also more than a non-remitting migrant. --
    Keywords: Assimilation of migrants,Acculturation identity,Links with the home country,Altruism,Remittances
    JEL: D01 D13 D64 F22 F24
    Date: 2012
  7. By: Victor Lavy; Edith Sand
    Abstract: In this paper, we estimate the influence of social relationships on educational attainment and social outcomes of students in school. More specifically, we investigate how losing different types of social relationships during the transition from elementary to middle school affect students' academic progress and general well-being. We use social relationships identified by the students themselves in elementary school, as part of a unique aspect of the Tel Aviv school application process which allows sixth-grade students to designate their middle schools of choice and to list up to eight friends with whom they wish to attend that school. The lists create natural “friendship hierarchies” that we exploit in our analysis. We designate the three categories of requited and unrequited friendships that stem from these lists as follows: (1) reciprocal friends (students who list one another); and for those whose friendship requests did not match: (2) followers (those who listed fellow students as friends but were not listed as friends by these same fellow students) and (3) non-reciprocal friends (parallel to followers). Following students from elementary to middle school enables us to overcome potential selection bias by using pupil fixed-effect methodology. Our results suggest that the presence of reciprocal friends and followers in class has a positive and significant effect on test scores in English, math, and Hebrew. However, the number of friends in the social network beyond the first circle of reciprocal friends has no effect at all on students. In addition, the presence of non-reciprocal friends in class has a negative effect on a student’s learning outcomes. We find that these effects have interesting patterns of heterogeneity by gender, ability, and age of students. In addition, we find that these various types of friendships have positive effects on other measures of well-being, including social and overall happiness in school, time allocated for homework, and whether one exhibits violent behavior.
    JEL: D8 J0
    Date: 2012–10
  8. By: Camila Campos (Insper); Fernanda L L de Leon (University of East Anglia)
    Abstract: Social networks are believed to a§ect individuals’ political views; however, quantifying this e§ect and understanding the channels behind this influence are empirically challenging. This study investigates peer e§ects on political behavior, using a self-collected survey among freshmen from the largest university in Brazil. The identification relies on the random assignment of freshmen to classrooms. We found that a relevant peer influence occurs through classmates’ political involve- ment, increasing students’ political participation, knowledge and moving their ideologies toward the center. Other mechanisms of influence, such as social pres- sure to adopt certain views or reinforcement of one’s own preferences, were not observed in the data.
    Date: 2012–10–07
  9. By: Espinosa Alejos, María Paz; Kovarik, Jaromir; Brañas-Garza, Pablo; Cobo-Reyes, Ramón; Jiménez, Natalia; Ponti, Giovanni
    Abstract: We provide empirical evidence to support the claims that social diversity promotes prosocial behavior. We elicit a real-life social network and its members’ adherence to a social norm, namely inequity aversion. The data reveal a positive relationship between subjects’ prosociality and several measures of centrality. This result is in line with the theoretical literature that relates the evolution of social norms to the structure of social interactions and argues that central individuals are crucial for the emergence of prosocial behavior.
    Keywords: social diversity, social norms, prosocial behavior
    Date: 2012
  10. By: Protap Mukherjee (Ph.D. Scholar, Centre for the Study of Regional Development, School of Social Sciences, Jawaharlal Nehru University, New Delhi – 110 067, India. Contact Mobile +91 99684 81519)
    Abstract: The concept of social cohesion has received great political and research attention at the national and supranational levels in developed countries. At the national level, Canadian Government and at the supranational level, the OECD, the World Bank and European Commission are dealing with the issues of social cohesion (Berger-Schmitt, 2002). The OECD and the World Bank, both have considered the importance of social cohesion factors in economic development and growth (Ritzen, 2000). Chan (2006) rightly said that social cohesion comes from policy makers and social policy analysts. Although the concept of social cohesion is associated with developmental process, there are regrettably existences of many concepts of social cohesion (Stanley, 2001). According to Jensen (1998), ‘social cohesion is that there is no single way of even defining it. Jensen identified five dimensions of social cohesion: 1) belonging vs. isolation, 2) inclusion vs. exclusion, 3) participation vs. non-involvement, 4) recognition vs. rejection and 5) legitimacy vs. illegitimacy. McCracken (1998) conceptualized social cohesion as characteristics of a society dealing with the connections and relations between individuals, groups, and territorial units. According to the Department of Canadian Heritage (2001) defined ‘a cohesive and inclusive society depends on respects for all ethnic groups and fullest participation of all citizens in civic life’. Berger-Schmitt (2000) has adopted a means-end approach in conceptualizing social cohesion, effectively defining the concept in terms of the conditions – more social capital combined with less inequality and exclusion – more social capital combing with less inequality and exclusion. Duhaime (2004) have also provided a very detailed framework for measuring social cohesion – presence of social capital, demographic stability, social inclusion, economic inclusion, community quality of life and individual quality of life. Beauvis and Jenson (2002) have also identified five different possible conceptions of social cohesion: 1) social cohesion as common values and a civic culture, 2) social cohesion as social order and social control; 3) social cohesion as social solidarity and reduction in wealth disparities; 4) social cohesion as social networks and social capital; and 5) social cohesion as place attachment and identity. Lockwood’s (1999) definition of the social cohesion based on a state of strong primary networks at communal level (Gough and Olofsson, 1999). According to Boyle and Hoyle (2001), social cohesion has two perspectives: objective and perceived. The former refers to some objective attribute of the group as a whole, and this involves some composite measures based on each member’s self reported closeness to other members in the group. Perceived cohesion, on the other hand, is a function of each member’s perception of his own standing in the group. Chan (2006) defined social cohesion in a very different way. According to them, social cohesion ‘is a state of affairs concerning both vertical and the horizontal interactions among members of society as characterized by a set of attitudes and norms that includes trust, sense of belongingness and the willingness to participate and help as well as their behavioural manifestations’. Recently Club de Madrid (2007) prefers to use the term shared societies over social cohesion. According to their definition “a ‘Shared Society’ is a socially cohesive society. It is stable, safe. It is where all those living there feel at home. It respects everyone’s dignity and human rights while providing every individual with equal opportunity. It is tolerant. It respects diversity. A Shared Society is constructed and nurtured through strong political leadership.” But whatever the definitions of social cohesion exist, it has been found that having a high degree of social cohesion contributes measurably to economic growth and investment, to good governance, health and social security (Stanley, 2003, Maxwell, 1996). There are no empirical studies have been found on social cohesion in India. Though there is an utmost need to consider social cohesion in policy making. India, the second most populous country in the world, consists of 29 states and seven Union Territories. This is the home for people speaking more than 200 different languages, 22 among these have been selected as scheduled languages in India. This country is abode for more than 600 scheduled tribes and Scheduled Castes and ST together comprise more than 24% of India's population. On the other hand, while India is being considered as one of the fastest growing economy in the world, majority of population does not uniformly share the benefits of development that the top decile of the population enjoys due to the presence of widespread inequality in education, income, health, power and overall development. Contemporary literatures show that there is presence of significant religious and caste differentials in all developmental process in India. India’s huge ethnic, religious and cultural diversity and widespread economic and social inequality result into political and social unrest in some parts of India. It has been observed that political and social turmoil are associated with certain groups of people who are found to be less socially cohesive and victims of social inequality. Literatures also reveal that the levels of social participation are also less among people belong to certain castes and religions. Overall development in India could not be achieved without overall development for all groups of people irrespective of their religions, castes and genders. Social cohesion in India could not be achieved without overall development for all groups of people irrespective of regions, religions, castes and genders. According to United Nations (2004), women are equally important as men in the process of development. As our assimilation process into the society have been started in childhood with mother’s advice, care and belief, the role of women in social cohesion and development of a country can easily be inferred. Unfortunately, in India, women are discriminated in all fields. Poor health, less education, low autonomy, minimum buying capacity, wide discrimination make them more vulnerable groups in India. Women’s overall development is linked with country’s overall development which in turn is important predicting factor for different levels of social cohesion. With this hypothesis, in this paper, social cohesion has been defined and measured from women’s perspective; attempt has been taken to study its levels and patterns by different social groups and regions, and to examine influence of social cohesion on development (social inequality and participation). In this paper, with these perspectives, an attempt has been made to study the linkages among social cohesion, social inequality and social participation among women in India.
    Date: 2012–03
  11. By: Erte Xiao; Howard Kunreuther
    Abstract: Previous findings on punishment have focused on environments in which the outcomes are known with certainty. In this paper, we conduct experiments to investigate how punishment affects cooperation in a two-person stochastic prisoner’s dilemma environment where each person can decide whether or not to cooperate, and the outcomes of alternative strategies are specified probabilistically under a transparent information condition. In particular, we study two types of punishment mechanisms: 1) an unrestricted punishment mechanism: both persons can punish; and 2) a restricted punishment mechanism: only cooperators can punish non-cooperators. We show that the restricted punishment mechanism is more effective in promoting cooperative behavior than the unrestricted one in a deterministic social dilemma. More importantly, the restricted type is less effective in an environment where the outcomes are stochastic than when they are known with certainty. Our data suggest that one explanation is that non-cooperative behavior is less likely to be punished when there is outcome uncertainty. Our findings provide useful information for designing efficient incentive mechanisms to induce cooperation in a stochastic social dilemma environment.
    JEL: C72 C73 C91 D02 D03
    Date: 2012–10
  12. By: Regner, Tobias; Riener, Gerhard
    Abstract: We construct a simple three person trust game with one trustor and two trustees. The trustor has the possibility to either trust both trustees or none, while the trustees make their decisions either sequentially or simultaneously, depending on the treatment. When trustees play sequentially, follower trustees who are informed about the leader's choice are significantly more selfish than in the simultaneous move treatment, independent of the leader's choice. Leaders do not behave significantly different than in the baseline treatment. Follower trustees cherry pick the motivation that materially serves them best. When the leader trustee plays selfish, they tend to conform. When the leader makes a pro-social choice, followers seem to perceive the duty as already fulfilled by the leader. While guilt works well as a motivational force in a dyadic situation, it gets alleviated easily when the situation allows a shifting of responsibility. --
    Keywords: Team production,Trust,Choice architecture,Guilt aversion,Conformity,False consensus effect,Lab experiment,Cherry picking
    JEL: D03 D71 C79 C92
    Date: 2012
  13. By: Brañas-Garza, Pablo; Bucheli, Marisa; García-Muñoz, Teresa; Espinosa Alejos, María Paz
    Abstract: Research on moral cleansing and moral self-licensing has introduced dynamic considerations in the theory of moral behavior. Past bad actions trigger negative feelings that make people more likely to engage in future moral behavior to offset them. Symmetrically, past good deeds favor a positive self-perception that creates licensing effects, leading people to engage in behavior that is less likely to be moral. In short, a deviation from a “normal state of being†is balanced with a subsequent action that compensates the prior behavior. We model the decision of an individual trying to reach the optimal level of moral self-worth over time and show that under certain conditions the optimal sequence of actions follows a regular pattern which combines good and bad actions. We conduct an economic experiment where subjects play a sequence of giving decisions (dictator games) to explore this phenomenon. We find that donation in the previous period affects present decisions and the sign is negative: participants’ behavior in every round is negatively correlated to what they did in the past. Hence donations over time seem to be the result of a regular pattern of self-regulation: moral licensing (being selfish after altruist) and cleansing (altruistic after selfish).
    Keywords: moral self-licensing, moral cleansing, experiments, moral behaviour
    Date: 2012
  14. By: Subhashish Modak Chowdhury (University of East Anglia); Joo Young Jeon (University of East Anglia)
    Abstract: We investigate the consequences of a pure income effect on the altruistic behavior of donors. Inequity aversion theories predict either no effect or a decrease in giving, whereas warm-glow theory predicts an increase in giving with an increase in the common income of donor and receiver. Theoretical predictions being contradictory, we run a dictator game in which we vary the common show-up fee of both the dictator and the recipient, but keep an extra amount to be shared the same. The prediction of the warm-glow theory is supported.
    Keywords: dictator game, altruism, income effect, inequity aversion, warm-glow
    JEL: C91 D03 D64
    Date: 2012–10–01

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