nep-soc New Economics Papers
on Social Norms and Social Capital
Issue of 2015‒05‒22
thirteen papers chosen by
Fabio Sabatini
Università degli Studi di Roma “La Sapienza”

  1. Social Interactions, the Evolution of Trust, and Economic Growth By Dimitrios Varvarigos; Guangyi Xin
  2. Declining trust in growing China: A dilemma between growth and socio-economic damage By Dai, Shuanping; Elsner, Wolfram
  3. The Effect of Income on Trust: the Evidence from 2009 Crisis in Russia By Maxim Ananiev; Sergei Guriev
  4. Social capital as a key driver of productivity growth of the economy: across-countries comparison By Elzbieta Janton-Drozdowska; Maria Majewska
  5. Take a Risk - Social Interaction, Gender Identity, and the Role of Family Ties in Financial Decision-Making By Zetterdahl, Emma
  6. Social Networks, Reputation and Commitment: Evidence from a Savings Monitors Experiment By Emily Breza; Arun G. Chandrasekhar
  7. Co-worker networks and productivity growth in regions By Balázs Lengyel; Rikard H. Eriksson
  8. A Study on Settlement for North Korean Refugee in South Korean Society. By Wonjung Ryu; Jae Yop Kim
  9. Differentiated Social Interactions in the US Schooling Race Gap By Luis J. Hall
  10. Cooperation and Discrimination Within and Across Language Borders: Evidence from Children in a Bilingual City By Angerer, Silvia; Glätzle-Rützler, Daniela; Lergetporer, Philipp; Sutter, Matthias
  11. Clean Money in a Dirty System: Relationship Networks and Land Rezoning in Queensland By Murray, Cameron K.; Frijters, Paul
  12. Nudges, Social Norms and Permanence in Agri-Environmental Schemes By Kuhfuss, L.; Preget, R.; Thoyer, S.; Hanley, N.; Le Coent, P.; Desole, M.
  13. Voluntary Associations, Corporate Rights, and the State: Legal Constraints on the Development of American Civil Society, 1750-1900 By Ruth H. Bloch; Naomi R. Lamoreaux

  1. By: Dimitrios Varvarigos; Guangyi Xin
    Abstract: We present a model where the dynamics of trust and the process of capital accumulation are jointly determined. Trust evolves intergenerationally, as the process of social interactions with people from different backgrounds creates experiences and forms opinions that are bequeathed to the next generation, thus shaping their level of trust. The provision of public goods and services is also a supporting factor towards the formation of trust. A key result is the possibility of social segregation if the level of trust is below a critical threshold. As a result, long-run equilibria are path-dependent. Both the current level of trust and the current stock of capital are important in determining the economy’s long-term prospects.
    Keywords: Trust, Cultural Externalities, Economic Growth
    JEL: O41 Z13
    Date: 2015–05
  2. By: Dai, Shuanping; Elsner, Wolfram
    Abstract: Declining general trust has become a serious social issue in China in recent years. This paper attempts to understand and analyze this social phenomenon from a social interaction perspective. Based on a repeated prisoners´ dilemma game on networks, it finds that the evolution of general trust is dependent on changes of the social interaction structure, and the increases of both social and spatial distance may explain a decrease of the levels of cooperation and general trust. In addition, we find that the traditional Chinese family and clan networks culture has an ambiguous effect on general trust, and simple reactive social "homing behavior" might be critical for China´s future economic development. In order to recover the general trust level, a major strategic option for China, and for fast growing countries in economic transition in general, is to (re-)develop appropriate network structures and properties, as our model indicates.
    Keywords: economic transition,growth and development,migration,trust,games on networks,China
    JEL: B52 C72 D01 D02 D30 E24 O17 O43 O53 P21 Z10
    Date: 2015
  3. By: Maxim Ananiev (UCLA); Sergei Guriev (Département d'économie)
    Abstract: This paper draws on a natural experiment to identify the relationship between income and trust. We use a unique panel dataset on Russia where GDP experienced an 8 percent drop in 2009. The effect of the crisis had been very uneven among Russian regions because of their differences in industrial structure inherited from the Soviet times. We find that the regions that specialize in producing capital goods, as well as those depending on oil and gas, had a more substantial income decline during the crisis. The variation in the industrial structure allows creating an instrument for the change in income. After instrumenting average regional income, we find that the effect of income on generalized social trust (the share of respondents saying that most people can be trusted) is statistically and economically significant. Controlling for conventional determinants of trust, we show that 10 percent decrease in income is associated with 5 percentage point decrease in trust. Given that the average level of trust in Russia is 25%, this magnitude is substantial. We also find that post-crisis economic recovery did not restore pre-crisis trust level. Trust recovered only in those regions where the 2009 decline in trust was small. In the regions with the large decline in trust during the crisis, trust in 2014 was still 10 percentage points below its pre-crisis level.
    Keywords: social capital; trust; business cycle
    JEL: O10 P10
    Date: 2014–12
  4. By: Elzbieta Janton-Drozdowska (Adam Mickiewicz University in Poznan); Maria Majewska (Adam Mickiewicz University in Poznan)
    Abstract: The aim of this work was to show the possible impact of social capital on productivity of the economy. That impact can be measured by such indicators of productivity of the economy as used in our study: the GDP, the total value added of the economy (TVE), and the GNI per total labour force. Thus, this paper was organized as follows: its first part presents the relationship between the development of social capital and productivity growth of the country in the light of the economic development theory. In this context it is pointed out that the significance of social capital as a component of the productivity potential of a given country increases when such country moves to the next stages of economic development. Therefore, social capital becomes a very important driver of the upgrading of national incomes in those countries, in which competitive advantages are based primarily on intellectual capital assets. The other part of the paper describes the methodology and the results of a research conducted on a group of 100 countries in the years 2012-2013 with an aim to illustrate the link between social capital and productivity of the economy as a whole referred to, or indicated, in the first part of the study. The results of the research allowed us to formulate a conclusion that without an appropriate ethical behaviour, not only in business, the productivity growth is hampered because it translates into a lower level of trust and unwillingness to cooperate. In other words, as, among others, W. Bartoszewski stressed, "it is worth to be decent".
    Keywords: welfare, social capital, knowledge economy
    JEL: I31 O11 O15 O3
    Date: 2015–05
  5. By: Zetterdahl, Emma (Department of Economics, Umeå School of Business and Economics)
    Abstract: This thesis consists of an introductory part and four self-contained papers related to individual financial behavior and risk-taking in financial markets. <p> In Paper [I] we estimate within-family and community social interaction effects upon an individual’s stock market entry, participation, and exit decision. Interestingly, community sentiment towards the stock market (based on portfolio outcomes in the community) does not influence individuals’ likelihood to enter, while a positive sentiment increases (decreases) the likelihood of participation (exit). Overall, the results stress the importance of accounting for family social influence and highlight potentially important differences between family and community effects in individuals’ stock market participation. <p> In Paper [II] novel evidence is provided indicating that the influence from family (parents and partners) and peer social interaction on individuals’ stock market participation vary over different types of individuals. Results imply that individuals’ exposure to, and valuation of, stock market related social signals are of importance and thus, contribute to the understanding of the heterogeneous influence of social interaction. Overall, the results are interesting and enhance the understanding of the underlying mechanisms of social interaction on individuals’ financial decision making. <p> In Paper [III] the impact of divorce ­­­on individual financial behavior is empirically examined in a dynamic setting. Evidence that divorcing individuals increase their saving rates before the divorce is presented. This may be seen as a response to the increase in background risk that divorce produces. After the divorce, a negative divorce effect on individual saving rates and risky asset shares are established, which may lead to disparities in wealth accumulation possibilities between married and divorced. Women are, on average, shown to not adjust their precautionary savings to the same extent as men before the divorce. I also provide tentative evidence that women reduce their financial risk-taking more than men after a divorce, which could be a result of inequalities in financial positions or an adjustment towards individual preferences. <p> Paper [IV] provides novel empirical evidence that gender identity is of importance for individuals’ financial risk-taking. Specifically, by use of matching and by dividing male and females into those with “traditional” versus “nontraditional” gender identities, comparison of average risk-taking between groupings indicate that over a third (about 35-40%) of the identified total gender risk differential is explained by differences in gender identities. Results further indicate that risky financial market participation is 19 percentage points higher in groups of women with nontraditional, compared with traditional, gender identities. The results, obtained while conditioning upon a vast number of controls, are robust towards a large number of alternative explanations and indicate that some individuals (mainly women) partly are fostered by society, through identity formation and socially constructed norms, to a relatively lower financial risk-taking.
    Keywords: Asset allocation; Behavioral finance; Divorce; Financial literacy; Financial risk-taking; Gender identity; Household finance; Panel data; Asset allocation; Behavioral finance; Divorce; Financial literacy; Financial risk-taking; Gender identity; Household finance; Panel data; Propensity score matching; Risky asset share; Risk aversion; Saving behavior; Stock market participation; Social interaction; Trust
    JEL: D01 D03 D14 D14 D83 G02 G11 J12 J16
    Date: 2015–05–13
  6. By: Emily Breza; Arun G. Chandrasekhar
    Abstract: We conduct a field experiment with 1,300 participants in India to measure whether individuals save more when information about their savings is regularly shared with another member of their village (a “monitor”). We focus on whether the monitor's effectiveness depends on her social network position, as central monitors may be better able to disseminate information, and more proximate monitors may be more likely to pass information to individuals who interact with the saver most frequently. In 30 villages, we randomly assign monitors to a subset of savers. An average monitor increases total savings by 35%. Increasing the monitor’s network centrality by one standard deviation increases savings by 14%, and increasing proximity from social distance three to two increases savings by 16%. Supporting the information-based mechanism, 63% of monitors report telling others about the saver’s progress. Further, over a year later, villagers are more likely to know if the saver exceeded her goal and to think that the saver is responsible if the saver was randomly assigned to a more central monitor. We also provide evidence that the increase in savings persists over a year after the intervention’s end, and that monitored savers can better respond to shocks. In the remaining 30 villages, savers choose their own monitors. We find that savers choose monitors who are both proximate and central in the network. Finally, we find evidence of spillovers from monitored savers onto their non-monitored friends, suggesting another channel through which social networks influence savings decisions.
    JEL: D14 D83 L14 O16 Z13
    Date: 2015–05
  7. By: Balázs Lengyel; Rikard H. Eriksson
    Abstract: This paper provides a new empirical perspective for analysing the role of social networks for regional economic growth by constructing large-scale networks from employee-employee co-occurrences in plants in the entire Swedish economy 1990-2008. We calculate the probability of employee-employee ties at plant level based on homophily-biased random network assumptions and trace the most probable relations of every employee over the full period. We argue that these personal acquaintances are important for local learning opportunities and consequently for regional growth. Indeed, the paper provides the first systematic evidence for a central claim in economic geography: social network density has positive effect on regional growth defined as productivity growth. Interestingly, the most robust effect of density on growth was found in a segment of the co-worker network in which plants have never been linked by labour mobility previously.
    Keywords: social network, random network with homophily bias, probability of tie, labour mobility, regional productivity growth, panel regression
    JEL: D85 J24 J61 R11 R23
    Date: 2015–05
  8. By: Wonjung Ryu (Yonsei University); Jae Yop Kim (Yonsei University)
    Abstract: Purpose This study attempts to examine the effects of social maladjustment and social loneliness on suicidal behavior among North Korean refugee women in South Korea, and to verify the effects of social welfare programs designed to prevent suicidal behavior among these population. Methods The self-reported survey questionnaires were performed among 156 North Korean refugee women. Frequency analysis and multiple regression analysis were used to identify the effects of social maladjustment and loneliness on suicidal behavior and the effectiveness of social welfare program. Results Results showed that 45.5% of women had suicidal attempts in the past year. After controlling for marital status, level of depression, age, and duration of stay in South Korea, social maladjustment were not associated with suicidal behavior. However, social maladjustment and suicidal behavior had statistically significant relationship via social loneliness as a full mediator variable. Conclusion Failure in social maladjustment is a significant risk factor of suicidal attempt through social loneliness as a mediator. Thus, the study suggests for developing appropriate social network programs and family support program in order to integrate them into Korean society.
    Keywords: North Korean Refugee Woman, Suicidal Behavior, Social Maladjustment, Social Loneliness
    JEL: I39 Z00 I38
  9. By: Luis J. Hall (Universidad de Costa Rica)
    Abstract: The main purpose of this paper is to study how the observed differences in educational achievement of whites and nonwhites teenagers in the US can be explained within a context of social interactions with differentiated agents, where individuals differ in how they value their interactions with individuals of their same type and individuals from the opposite type. We write a model where teenagers are allowed to interact with other teenagers and their degree of social interaction is differentiated inasmuch as whether they interact with their own group or other groups. Following an approach of differences in conditional variances, the conditions for the identification of the coefficient of differences in social interactions are established. Our estimation using the US census data on teenagers sustains the conclusion that there exist differences in the interaction coefficient between individuals of different types. Individuals will value more their interaction with individuals from their own types as opposed to individuals in the opposite type.
    Date: 2014–11
  10. By: Angerer, Silvia (IHS Carinthia); Glätzle-Rützler, Daniela (University of Innsbruck); Lergetporer, Philipp (Ifo Institute for Economic Research); Sutter, Matthias (University of Cologne)
    Abstract: We present experimental evidence from a bilingual city in Northern Italy on whether the language spoken by a partner in a prisoner's dilemma game affects behavior and leads to discrimination. Running a framed field experiment with 828 six- to eleven-year old primary school children in the city of Meran, we find that cooperation generally increases with age, but that the gap between cooperation among in-group members and cooperation towards children speaking another language is considerable and increasing with age. This gap is due to both, in-group favoritism and language group discrimination.
    Keywords: cooperation, discrimination, language, children, experiment
    JEL: C91 C93 D03
    Date: 2015–05
  11. By: Murray, Cameron K. (University of Queensland); Frijters, Paul (University of Queensland)
    Abstract: We use a unique regulatory event that occurred in Queensland, Australia, from 2007- 2012, to examine the predictive power of landowner relationship networks and lobbying behaviour on successfully gaining value-enhancing rezoning. A State authority, the Urban Land Development Authority (ULDA), took planning control away from local councils in selected areas in order to increase the speed and scale of development in those areas, in the process increasing land values. Using micro-level relationship data from multiple sources, we compare the relationship-network characteristics of landowners of comparable sites inside and outside the ULDA areas, finding that 'connected' landowners owned 75% of land inside the rezoned areas, and only 12% outside, capturing $410 million in land value gains out of the total $710 million from rezoning. The marginal gains to all landowners of becoming connected in our sample were $190 million. We also find that engaging a professional lobbyist is a substitute for having one's own connections. Scaling up from our sample of six rezoned areas to the hundreds of rezoning decisions across Queensland and Australia in the last few decades, suggests that many billions of dollars of economic rent are being regularly transferred from the general population to connected land owners through political rezoning decisions.
    Keywords: networks, social capital, rezoning, corruption, lobbying
    JEL: D72 D73 R52 R58
    Date: 2015–04
  12. By: Kuhfuss, L.; Preget, R.; Thoyer, S.; Hanley, N.; Le Coent, P.; Desole, M.
    Abstract: Agri-environmental schemes (AES), implemented to address a wide range of environmental issues, suffer from what has been referred to as the “end of the contract problem”, in the sense that many of the land management practices adopted under the scheme cannot be expected to persist in the absence of payments. A first objective of this paper is therefore to investigate farmers’ actual land management intentions at the end of AES contracts. The second objective is to investigate the effect of social norms, and framing of these norms, on the likely permanence of land management practices adopted under AES. That is, we are interested in whether a “nudge” in the form of a social norm can help solve the end of contract problem. Our results are based on the stated intentions of 395 farmers participating in the French AES scheme MAEt. They show that almost half of the farmers of our sample are willing to maintain the practices adopted during the AES even in the absence of payments after the contract ends, and that information about what other farmers intend to do – the social norm - can greatly influence farmers’ decisions. However, the framing of this information has no significant effect on stated intentions.
    Keywords: Agri-environmental schemes, Permanence, Framing, Social norm, Agribusiness, Environmental Economics and Policy, Q18, Q28, D03,
  13. By: Ruth H. Bloch; Naomi R. Lamoreaux
    Abstract: The freedom of citizens to form voluntary associations has long been viewed as an essential ingredient of modern civil society. Our chapter revises the standard Tocquevillian account of associational freedom in the early United States by accentuating the role of state courts and legislatures in the creation and regulation of nineteenth-century American nonprofit corporations. Corporate status gave associations valuable rights that went beyond the basic right of individuals to associate. Government officials selectively used their power to grant and enforce corporate charters to reward politically favored groups while denying equivalent rights to groups they viewed as politically or socially disruptive.
    JEL: N11
    Date: 2015–05

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