nep-soc New Economics Papers
on Social Norms and Social Capital
Issue of 2013‒10‒18
thirteen papers chosen by
Fabio Sabatini
Universita' la Sapienza

  1. A cross-country analysis of the relationship between income inequality and social capital By Heijke J.A.M.; Ioakimidis M.
  2. Measuring the Monetary Value of Social Relations: a Hedonic Approach By Emilio Colombo; Luca Stanca
  3. The Social Egoist By Boschini, Anne; Muren, Astri; Persson, Mats
  4. Workers' propensity to cooperate with colleagues and the general population: a comparison based on a field experiment By Giacomo Degli Antoni
  5. Limitations to Signaling Trust with All or Nothing Investments By Eric Schniter; Roman M. Sheremeta; Timothy W. Shields
  6. Water Cooler Ostracism: Social Exclusion as a Punishment Mechanism By David Johnson; Brent Davis
  7. Estimating the benefits of linking ties in a deeply divided society: considering the relationship between domestic workers and their employers in South Africa By Ronelle Burger; Marisa Coetzee; Carina van der Watt
  8. Preferences, Homophily, and Social Learning By Ilan Lobel; Evan Sadler
  9. Social Relationships in Later Life: The Role of Childhood Circumstances By Sarah Gibney; Mark E. McGovern; Erika Sabbath
  10. Cooperation in Small Groups: The Effect of Group Size By Daniele Nosenzo; Simone Quercia; Martin Sefton
  11. Optimal Contracting with Altruism and Reciprocity By Matteo Bassi; Marco Pagnozzi; Salvatore Piccolo
  12. Participatory Accountability and Collective Action: Experimental Evidence from Albania By Abigail Barr; Truman Packard; Danila Serra
  13. Reciprocity as the foundation of Financial Economics By Timothy C. Johnson

  1. By: Heijke J.A.M.; Ioakimidis M. (ROA)
    Abstract: This study investigated whether earnings inequality is associated with social capital as measured by active membership in organizations and interpersonal trust. Pearson product-moment correlation analysis showed that greater earnings inequality was associated with lower values on both measures of social capital in 14 European countries. While causality in either direction cannot be inferred from this result, it does suggest the possibility that earnings inequality negatively affects social capital. To test this idea further, we also tentatively examined whether other societal indicators related to earnings inequality are associated with social capital. These alternative indicatorsthe countrys percentage of urban residents, percentage of residents with tertiary education, and government spending as a percentage of GDPdid not show stronger relationships with social capital than did earnings inequality. Further analysis of the data by excluding specific groups of countries indicated little association between earnings inequality and measures of social capital. These results suggested that country-specific economic or cultural values play a large role in how earnings inequality and social capital are related.
    Keywords: Wage Level and Structure; Wage Differentials; Economic Sociology; Economic Anthropology; Social and Economic Stratification;
    JEL: J31 Z13
    Date: 2013
  2. By: Emilio Colombo; Luca Stanca
    Abstract: This paper presents an application of the hedonic approach to measure the monetary price of social relations. We use individual-level data for housing and labor markets in 103 Italian cities to estimate the price of relational amenities and construct monetary indexes of quality of relational life. We focus on time spent with friends, active participation in associations and frequency of going out for leisure activities, while controlling for standard amenities such as weather, environment, services, and socio-demographic characteristics. We find that individuals are willing to pay a positive and significant monetary price to live in cities where people spend more time with their friends. A one standard deviation increase in the share of those who meet their friends most frequently is worth an extra \euro 1,150 per year in terms of higher housing costs and foregone wages.
    Keywords: social relations, social capital, hedonic prices, quality of life, well-being
    JEL: A13 C4 D6 I31 R2 Z13
    Date: 2013–10
  3. By: Boschini, Anne (Dept. of Economics, Stockholm University); Muren, Astri (Dept. of Economics, Stockholm University); Persson, Mats (Institute for International Economic Studies, Stockholm University)
    Abstract: People cooperate more in one-shot interactions than can be explained by standard textbook preferences. We discuss a set of non-standard preferences that can accommodate such behavior. They are social, in the sense of incorporating the payoffs of other persons; they are also norm-based, in the sense of taking into account the behavior of other persons. We show theoretically that, with such preferences, a Nash equilibrium with a strictly positive cooperation rate can exist. We use experimental data on within-subject decisions to show that such preferences are empirically plausible. The data show that, in addition to the well-known types (egoist, altruist, reciprocator), there is an important group: the social egoist. Such individuals care for people who have cooperated, but ignore people who have broken the implicit cooperation norm in society. The social egoists, who turn out to be different from “conditional cooperators”, account for one third of the observations in our experiment.
    Keywords: social norms; prisoner’s dilemma; hawk-dove game; egoism; altruism; reciprocity; conditional cooperation
    JEL: C91 D03 D64
    Date: 2013–10–10
  4. By: Giacomo Degli Antoni (University of Parma, Department of Law)
    Abstract: Experimental evidence shows that people tend to be more cooperative with persons belonging to their own group than with others. Strangely enough, this literature largely fails to consider a type of group pervasive in modern societies: colleagues belonging to the same productive organization. This is particularly curious if one considers the importance of cooperation among colleagues for the economic performance of organizations. This paper carries out an original experimental analysis which compares the level of cooperation of social cooperative workers when they are paired with colleagues and with people from the general population. In contrast with the literature on in-group favoritism, we find that workers trust their colleagues less and cooperate less with them than they do with people from the general public, even though, in absolute terms, the level of cooperation is quite high also among colleagues. By analyzing first- and second-order beliefs, we show that the difference in cooperation is partly mediated by expectations concerning the counterpart's behavior, since workers expect their colleagues to be less cooperative than members of the general public. However, the analysis reveals that also other motivations count, such as other-regarding preferences and warm glow.
    Keywords: social cooperatives, field experiment, social dilemmas, in-group favoritism, trust, beliefs
    JEL: C72 C93 L31 P13 Z13
    Date: 2013–10
  5. By: Eric Schniter (Economic Science Institute, Chapman University); Roman M. Sheremeta (Department of Economics, Weatherhead School of Management, Case Western Reserve University and the Economic Science Institute); Timothy W. Shields (Argyros School of Business and Economics, Chapman University)
    Abstract: Many economic interactions are characterized by “all or nothing” action spaces that may limit a demonstrable index of trust and, therefore, the propensity to reciprocate. In two experimental trust games, the action space governing investments was manipulated to examine the effects on investments and reciprocity. In the continuous game the investor could invest any amount between $0 and $10, while in the binary game the investor could invest either $0 or $10. In both games, the trustee received the tripled investment and then could return any amount back to the investor. Investors invested significantly more in the binary game than in the continuous game. However, higher investments in the binary game did not lead to more reciprocity. To the contrary, conditional on investment of $10, on average trustees returned significantly less in the binary game than in the continuous game.
    Keywords: trust game, signaling, demonstrable index of trust, reciprocity, experiments
    JEL: C72 C91
    Date: 2013
  6. By: David Johnson (University of Calgary); Brent Davis
    Abstract: Within social situations free-riding individuals can be informally punished through social ostracism; ostracized group members are removed from the social aspect of the group but are still formally members. In this study we examine the effectiveness of non-monetary social ostracism as a punishment for low contributions to a public account. Social ostracism may occur in the workplace where workers produce a public good amongst their inputs. Since these workers are all of the same rank, no worker has the ability to punish free riding behavior. Yet, the group as a whole has the ability to punish free-riding group members through various social mechanisms (e.g. name calling, ostracism, etc). We find social ostracism helps maintain cooperation but only after prior experience with a VCM without possible social punishment.
    Keywords: Public good, Exclusion, Ostracism, Cooperation
    JEL: C92 H41 D23
    Date: 2013–10–12
  7. By: Ronelle Burger (Departement Ekonomie, Universiteit van Stellenbosch); Marisa Coetzee (Departement Ekonomie, Universiteit van Stellenbosch); Carina van der Watt (Departement Ekonomie, Universiteit van Stellenbosch)
    Abstract: In South Africa social exclusion remains a problem due to the multiple and overlapping divisions in post-apartheid society and the lack of linking ties bridging the worlds of those who have plenty and those without. To quantify the potential benefit of such linking ties for socio-economic mobility, we examine the relationship between domestic workers and their employers – a case where we find frequent, proximate and intimate contact between individuals from these two different worlds. We construct a well matched comparison group for domestic workers via propensity score matching using a pooled version of seven General Household Surveys. The households of domestic workers appear to have lower unemployment duration and better quality jobs, a higher likelihood of owning assets and a lower prevalence of child and adult hunger. These differences provide evidence that the linking ties of domestic workers with their more affluent employers increase well-being in a way that is consistent with social network theory.
    Keywords: Social capital, social networks, domestic workers, inequality, South Africa
    JEL: Z13 Z10 D63
    Date: 2013
  8. By: Ilan Lobel (New York University Stern School of Business); Evan Sadler (New York University Stern School of Business)
    Abstract: We study a model of social learning in networks where agents have heterogeneous preferences, and neighbors tend to have similar preferences---a phenomenon known as homophily. Using this model, we resolve a puzzle in the literature: theoretical models predict that preference diversity helps learning, and homophily slows learning, while empirical work suggests the opposite. We find that the density of network connections determines the impact of preference diversity and homophily on learning. When connections are sparse, diverse preferences are harmful to learning, and homophily may lead to substantial improvements. In a dense network, preference diversity is beneficial. The conflicting findings in prior work result from a focus on networks with different densities; theory has focused on dense networks, while empirical papers have studied sparse networks. Our results suggest that in complex networks containing both sparse and dense components, diverse preferences and homophily play complementary, beneficial roles.
    Keywords: Social Networks, Learning, Homophily
    Date: 2013–09
  9. By: Sarah Gibney (University College Dublin); Mark E. McGovern (Harvard Center for Population and Development Studies); Erika Sabbath (Harvard Center for Population and Development Studies)
    Abstract: Social relationships predict health and emotional wellbeing across the life course. However, it is not known whether gradients in social engagement, social network size or quality in later life mirror socio-economic and health gradients in childhood. This study investigates the long-term impact of childhood circumstances on social relationships. Data are from the Survey of Health, Aging and Retirement in Europe; a panel survey of people aged 50+. Current social network attributes (size, satisfaction and emotional closeness) and retrospective life history data on childhood health, cognition, SES, and parental characteristics are utilized. Regression analysis indicates that childhood circumstances predict social network attributes in later life. Emotional closeness partly mediates the relationship between childhood circumstances and social network satisfaction. A strong but differential association between aspects of childhood circumstance and social network attributes was evident. Therefore we critique the index measurement approach which conflates diverse pathways linking childhood and late-life outcomes.
    Keywords: Social relationships, Ageing, Europe, Childhood conditions, Life course
    JEL: J14 I10 Z13
    Date: 2013–10–10
  10. By: Daniele Nosenzo (School of Economics, University of Nottingham); Simone Quercia (School of Economics, University of Nottingham); Martin Sefton (School of Economics, University of Nottingham)
    Abstract: We study the effect of group size on cooperation in voluntary contribution mechanism games. As in previous experiments, we study four- and eight-person groups in high and low marginal per capita return (MPCR) conditions. We find a positive effect of group size in the low MPCR condition, as in previous experiments. However, in the high MPCR condition we observe a negative group size effect. We extend the design to investigate two- and three-person groups in the high MPCR condition, and find that cooperation is highest of all in two-person groups. The findings in the high MPCR condition are consistent with those from n-person prisoner’s dilemma and oligopoly experiments that suggest it is more difficult to sustain cooperation in larger groups. The findings from the low MPCR condition suggest that this effect can be overridden. In particular, when cooperation is low other factors, such as considerations of the social benefits of contributing (which increase with group size), may dominate any negative group size effect.
    Keywords: voluntary contribution mechanism, cooperation, group size
    Date: 2013–05
  11. By: Matteo Bassi (Università di Napoli Federico II and CSEF); Marco Pagnozzi (Università di Napoli Federico II and CSEF); Salvatore Piccolo (Università Cattolica delSacro Cuore di Milano and CSEF)
    Abstract: Motivated by the recent experimental evidence on altruistic behavior, we study a simple principal-agent model where each player cares about other players’ utility, and may reciprocate their attitude towards him. We show that, relative to the selfish benchmark, efficiency improves when players are altruistic. Nevertheless, in contrast to what may be expected, an increase in the degree of the agent’s altruism as well as a more reciprocal behavior by players has ambiguous effects on efficiency. We also consider the effects of the presence of spiteful players and discuss how monetary transfers between players depend on their degrees of altruism and spitefulness.
    Keywords: Adverse selection, altruism, reciprocity, optimal contracting
    JEL: D64 D86
    Date: 2013–10–10
  12. By: Abigail Barr (School of Economics, University of Nottingham); Truman Packard (World Bank); Danila Serra (School of Economics, Florida State University)
    Abstract: It has been argued that accountability is a public good that only citizens can provide. Governments can put institutions in place that allow citizens to hold public servants to account, but citizens must participate in those institutions if accountability is to be achieved. Thus, citizens face a social dilemma – participate in holding public servants to account at a cost in terms of time and effort or free ride, i.e. do not participate, while benefiting from the efforts of those who do. If this characterization of accountability is valid, we would expect more cooperatively inclined citizens to participate in accountability institutions, while the less cooperatively inclined do not. We test the validity of this characterization by investigating the correlation between individual behavior in a simple public goods game and their participation in local and national accountability institutions in Albania. We study a nationally representative sample of 1800 adults with children in primary school. We find significant correlations between cooperativeness and participation in school accountability institutions and national elections, both at the individual level and the district level. These correlations are robust to the introduction of many controls in the analysis and, in the case of national elections, to the use of official election turn-out statistics in place of self-reported turn-out.
    Keywords: accountability; participation; elections; collective action; public good game
    Date: 2013–08
  13. By: Timothy C. Johnson
    Abstract: This paper argues that the fundamental principle of contemporary financial economics is balanced reciprocity, not the principle of utility maximisation that is important in economics more generally. The argument is developed by analysing the mathematical Fundamental Theory of Asset Pricing with reference to the emergence of mathematical probability in the seventeenth century in the context of the ethical assessment of commercial contracts. This analysis is undertaken within a framework of Pragmatic philosophy and Virtue Ethics. The purpose of the paper is to mitigate future financial crises by reorienting financial economics to emphasise the objectives of market stability and social cohesion rather than individual utility maximisation.
    Date: 2013–10

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