nep-soc New Economics Papers
on Social Norms and Social Capital
Issue of 2014‒02‒15
thirteen papers chosen by
Fabio Sabatini
La Sapienza University of Rome

  1. Will Facebook save or destroy social capital? An empirical investigation into the effect of online interactions on trust and networks By Fabio Sabatini; Francesco Sarracino
  2. All in the Family: How Do Social Capital and Material Wellbeing Affect Relational Wellbeing? By Martina Menon; Ravi Pendakur; Federico Perali
  3. Social Capital and Incentives in the Provision of Product Quality by Cooperatives By Deng, Wendong; Hendrikse, George
  4. Do employers trust workers too little? An experimental study of trust in the labour market By Stefano Caria; Paolo Falco
  5. Trust as a Key Variable of Sustainable Development and Public Happiness: A Historical and Theoretical Example Regarding the Creation of Money By Nicola Genovese; Maria Grazia La Spada
  6. Life Satisfaction, Ethnicity and Neighbourhoods: Is There an Effect of Neighbourhood Ethnic Composition on Life Satisfaction? By Lucinda Platt; Gundi Knies; Alita Nandi
  7. Communist party membership and bribe paying in transitional economies By Timothy Hinks; Artjoms Ivlevs
  8. Ambiguity on audits and cooperation in a public goods game By Zhixin Dai; Robin M. Hogarth; Marie Claire Villeval
  9. The Long-Term Effects of Protestant Activities in China By Chen, Yuyu; Wang, Hui; Yan, Se
  10. Coordination in Public Good Provision: How Individual Volunteering is Impacted by the Volunteering of Others By Theodoros M. Diasakos; Florence Neymotin
  11. Transaction Costs, the Opportunity Cost of Time and Inertia in Charitable Giving By Stephen Knowles; Maroš Servátka
  12. The House Money Effect and Negative Reciprocity By Katarína Danková; Maroš Servátka
  13. A note on empathy in games By Grohn, Jan; Huck, Steffen; Valasek, Justin Mattias

  1. By: Fabio Sabatini; Francesco Sarracino
    Abstract: Studies in the social capital literature have documented two stylised facts: first, a decline in measures of social participation has occurred in many OECD countries. Second, and more recently, the success of social networking sites (SNSs) has resulted in a steep rise in online social participation. Our study adds to this body of research by conducting the first empirical assessment of how online networking affects two economically relevant aspects of social capital, i.e. trust and sociability. We find that participation in SNSs such as Facebook and Twitter has a positive effect on face-to-face interactions. However, social trust decreases with online interactions. Several interpretations of these findings are discussed.
    Keywords: Social participation; online networks; Facebook; Internet-mediated communication; social capital; broadband; digital divide
    JEL: C36 D85 O33 Z13
    Date: 2014–01–02
  2. By: Martina Menon (Department of Economics (University of Verona)); Ravi Pendakur (University of Ottawa (Canada)); Federico Perali (Department of Economics (University of Verona))
    Abstract: We use a unique dataset from Italy to investigate the impact of socioeconomic characteristics and social capital on family wellbeing and satisfaction. We assess wellbeing using four dimensions of satisfaction with family life: satisfaction with decision making processes, with relationships with partner and children, and with time spent with children. Social capital is measured through information about membership in organizations, trust, and interactions with others. We find that while socioeconomic characteristics and equivalent income in general do not have an impact on family wellbeing, social capital matters for family life satisfaction.
    Keywords: Subjective wellbeing, Relational satisfaction, Social capital.
    JEL: D19 I31 Z13
    Date: 2014–02
  3. By: Deng, Wendong; Hendrikse, George
    Abstract: This article highlights the interaction between social capital, pooling and quality premiums and their influence on cooperative members’ decisions regarding their product quality. A necessary condition for cooperative equitable principles such as complete pooling is that there exists a high level of social capital in the cooperative. When the level of social capital is high, the social motivation in the cooperative can guarantee high product quality while economic incentives are weak. When the level of social capital declines, an income rights structure with stronger quality incentives must be adopted by the cooperative to maintain the product quality. The cooperative is uniquely efficient when the farmers are risk averse and product quality is uncertain. When the level of social capital in cooperatives is higher than a threshold, which is decreasing in members’ subjective risk toward production uncertainty, cooperatives are able to achieve higher product quality than IOFs.
    Keywords: Quality, Social Capital, Cooperatives, Income Rights Structure, Agribusiness,
    Date: 2014
  4. By: Stefano Caria; Paolo Falco
    Abstract: We conduct a field experiment to investigate employers’ trust in workers. A sample of real entrepreneurs and workers from urban Ghana are respectively assigned to the roles of employers and employees. Employers have the option to hire (trust) an employee, who can in turn choose whether to exert effort (trustworthiness) in a real-effort task. By comparing employers’ expectations to workers’ revealed trustworthiness, we are able to detect potential misperceptions leading to sub-optimal hiring. We further devise two randomized treatments to test for the existence of expectation bias against specific worker categories and estimate the elasticity of employers’ beliefs with respect to new information. We find that employers significantly underestimate workers’ trustworthiness and this reduces their profit. Employees are aware of employers’ sub-optimal trust. Expectations are largely inelastic with respect to news and negative signals have a stronger (downward) effect than positive ones. Our results suggest that raising employers’ expectations would have a strong impact on hiring.
    Keywords: trust, trustworthiness, expectations, effort, hiring, microenterprise, learning, discrimination, experiment, African labour markets
    JEL: J23 J71 O15 C9
    Date: 2014
  5. By: Nicola Genovese (Professor of Economics, University of Messina); Maria Grazia La Spada (University of Messina, Department of Economics, SEAM)
    Abstract: This article purports to trace the origin of money on the basis of factors in interpersonal relationships, affecting a sustainable development and public happiness, namely trust, reciprocity and the concept of we-rationality. Both the historical approach and the one based on traditional economic theory have been found inadequate mainly because they did not take into account these factors. The hypothesis expounded in the paper is that these values underlaid the beginning of economic activity. Initially economic activity was carried out within small human groups. In such groups interpersonal relations were not based on individual self-interest. As a matter of fact, there is historical evidence supporting the notion that the first exchanges were gift-giving and were made possible by trust and reciprocity as expounded by Polanyi (1957) and Sudgen (2000) among others. When the exchanges strengthened between elements of various groups all with the same values and moral characteristics the process toward the creation of money started, without any intrinsic value and the presence of any superior authority. In the paper it is also hypothesized that the creation of money is one of the basic factors in the progress of economic and social activity, together with ancient phenomena as language ad writing. Finally, the paper advocates that in future the economic activity be permeated by those moral values on which a sustainable development can be based. This will, in turn, increase the rate of economic and social growth.
    Keywords: Sustainable Development, Public Happiness, Origin of Money, Behaviour Economics, Exchanges Between Primitive Populations
    JEL: Q01 A13 B15 E
  6. By: Lucinda Platt (Department of Social Policy, London School of Economics and Political Science); Gundi Knies (Institute for Social and Economic Research, University of Essex); Alita Nandi (Institute for Social and Economic Research, University of Essex)
    Abstract: Using a rich, nationally representative data set with a large sample of minorities and matched small area characteristics, we explore differences in life satisfaction for ethnic groups living in UK. We test the hypothesis that minorities will be less satisfied, which will in part be explained by less favourable individual and area contexts, but that living in areas with a larger proportion of own ethnic group promotes well-being. We find that satisfaction is lower among minorities, ceteris paribus, but area concentration is associated with higher life satisfaction for certain groups. We discuss the implications of our findings.
    Keywords: Life Satisfaction, Happiness, Ethnic group, Neighbourhood, Subjective well-being, UKHLS
    JEL: I31 J15 R23 O15
    Date: 2014–02
  7. By: Timothy Hinks (University of the West of England, Bristol); Artjoms Ivlevs (University of the West of England, Bristol)
    Abstract: Using data on 30 post-socialist countries this paper provides evidence that individuals with some association with the Communist Party before 1991 are more likely to bribe twenty years after the collapse of socialism and that inherited norms of bribery from Communist Party members explains this finding.
    Keywords: Communist party membership, social norms, institutional, corruption, transition economies
    Date: 2014–01–01
  8. By: Zhixin Dai (Université de Lyon, Lyon, F-69007, France ; CNRS, GATE Lyon St Etienne,F-69130 Ecully, France); Robin M. Hogarth (Department of Economics and Business, Universitat Pompeu Fabra and Barcelona Graduate School of Economics, Ramon Trias Fargas, 25–27, 08005 Barcelona, Spain); Marie Claire Villeval (Université de Lyon, Lyon, F-69007, France ; CNRS, GATE Lyon St Etienne,F-69130 Ecully, France)
    Abstract: We investigate the impact of various audit schemes on the future provision of public goods, when contributing less than the average of the group is sanctioned exogenously and the probability of an audit is unknown. We study how individuals update their beliefs about the probability of being audited, both before and after audits are definitely withdrawn. We find that when individuals have initially experienced systematic audits, they decrease both their beliefs and their contributions almost immediately after audits are withdrawn. In contrast, when audits were initially less frequent and more irregular, they maintain high beliefs about the probability of being audited and continue cooperating long after audits have been withdrawn. Inconsistency in experiencing audits across time clearly increases the difficulty of learning the true audit probabilities. Thus, conducting less frequent and irregular audits with higher fines can increase efficiency dramatically.
    Keywords: Ambiguity, audits, sanctions, beliefs, cooperation, public goods, experiment
    JEL: C92 H41 D83
    Date: 2014
  9. By: Chen, Yuyu; Wang, Hui; Yan, Se
    Abstract: Does culture, and in particular religion, exert an independent causal effect on long-term economic growth, or do culture and religion merely reflect the latter? We explore this issue by studying the case of Protestantism in China during the late nineteenth and early twentieth centuries. Combining county-level data on Protestant presence in 1920 and socioeconomic indicators in 2000, we find that the spread of Protestantism has generated significant positive effects in long-term economic growth, educational development, and health care outcomes. To better understand whether the relationship is causal, we exploit the fact that missionaries purposefully undertook disaster relief work to gain the trust of the local people. Thus, we use the frequency of historical disasters as an instrument for Protestant distribution. Our IV results confirm and enhance our OLS results. When we further investigate the transmission channels over the long historical period between 1920 and 2000, we find that although improvements in education and health care outcomes account for a sizable portion of the total effects of missionaries’ past activities on today’s economic outcomes, Protestant activities may have also contributed to long-term economic growth through other channels, such as through transformed social values. If so, then a significant amount of China’s growth since 1978 is the result not just of sudden institutional changes but of human capital and social values acquired over a longer historical period.
    Keywords: Protestantism, Economic Growth, Education, Health Care, China
    JEL: I25 N15 N35 O11 O43 Z12
    Date: 2014–01–29
  10. By: Theodoros M. Diasakos (University of St. Andrews); Florence Neymotin (Nova Southeastern University)
    Abstract: In this analysis, we examine the relationship between an individual's decision to volunteer and the average level of volunteering in the community where the individual resides. Our theoretical model is based on a coordination game , in which volunteering by others is informative regarding the benet from volunteering. We demonstrate that the interaction between this information and one's private information makes it more likely that he or she will volunteer, given a higher level of contributions by his or her peers. We complement this theoretical work with an empirical analysis using Cen- sus 2000 Summary File 3 and Current Population Survey (CPS) 2004-2007 September supplement le data. We control for various individual and community characteristics, and employ robustness checks to verify the results of the baseline analysis. We addi- tionally use an innovative instrumental variables strategy to account for re ection bias and endogeneity caused by selective sorting by individuals into neighborhoods, which allows us to argue for a causal interpretation. The empirical results in the baseline, as well as all robustness analyses, verify the main result of our theoretical model, and we employ a more general structure to further strengthen our results.
    Keywords: stochastic coordination, volunteer work, public goods
    JEL: H4 D8
    Date: 2014–02–07
  11. By: Stephen Knowles; Maroš Servátka (University of Canterbury)
    Abstract: We conduct a laboratory experiment to analyze the effect transactions costs and inertia have on charitable giving. We conjecture that transaction costs will have a greater effect on donations if the solicitation is received when the opportunity cost of time is high. Inertia could become a factor if people intend to give, but postpone making the payment until they have more time, and having postponed making the donation once, keep doing so. We find evidence of a transaction cost effect, with the size of this effect depending on the opportunity cost of time, but no statistically significant inertia effect.
    Keywords: Charitable giving; dictator game; transaction costs; opportunity cost of time; inertia
    JEL: C91 D64
    Date: 2014–01–01
  12. By: Katarína Danková; Maroš Servátka (University of Canterbury)
    Abstract: In the vast majority of experiments documenting the existence of reciprocity subjects are endowed with windfall funds. In some situations such endowments might create a so-called “house money effect”. We identify two reasons why the source of endowment might matter for negative reciprocity: (1) Using earned – as opposed to windfall money – might increase the costs of negative reciprocity due to this money being in a different mental account and thus lead to less retaliation. (2) Decreasing a decision-maker’s endowment consisting of earned money might be considered a stronger violation of property rights and lead to more retaliation. We test our conjectures in an experiment and find that subjects retaliate more in both cases.
    Keywords: Real Effort; Experiment; House money; Reciprocity; Taking Game
    JEL: C71 C91 D03 D64
    Date: 2014–02–07
  13. By: Grohn, Jan; Huck, Steffen; Valasek, Justin Mattias
    Abstract: In this note we shall discuss a concept that - despite its prominence in both Hume (1739) and Smith (1759), its obvious relevance for social behavior, and its not so infrequent use in colloquial language - has never gained a foothold in economic theory: the concept of empathy. Specifically, we illustrate how some insights from the psychological literature on empathy can be incorporated into a standard utility framework, and demonstrate the potential interaction of beliefs and utility through the channel of empathy. -- In diesem Artikel diskutieren wir das Konzept der Empathie. Dieses konnte in der ökonomischen Theorie nie wirklich Fuß fassen, trotz seiner Bedeutung sowohl bei Hume (1739) als auch Smith (1759), seiner offensichtlichen Relevanz für soziales Verhalten und seines durchaus verbreiteten Gebrauchs in der Umgangssprache. Insbesondere zeigen wir, wie einige Erkenntnisse aus der psychologischen Literatur über Empathie in ein Standardkonzept von 'Nutzen' integriert werden können und demonstrieren die potenzielle Interaktion von Erwartungen und Nutzen über den Weg der Empathie.
    Keywords: Empathy,Belief Formation,Preferences
    JEL: D03 D83
    Date: 2014

This nep-soc issue is ©2014 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.