nep-soc New Economics Papers
on Social Norms and Social Capital
Issue of 2015‒05‒30
nine papers chosen by
Fabio Sabatini
Università degli Studi di Roma “La Sapienza”

  1. Regional Economic Development, Social Capital and Governance: A Comparative Institutional Analysis France - Sweden By Karlsson, Charlie; Rouchy, Philippe
  2. The educational roots of trust By Francesca Borgonovi; Tracey Burns
  3. Cultural Norms, the Persistence of Tax Evasion, and Economic Growth By Dimitrios Varvarigos
  4. Social Interactions, Mechanisms, and Equilibrium: Evidence from a Model of Study Time and Academic Achievement By Tim Conley; Nirav Mehta; Ralph Stinebrickner; Todd Stinebrickner
  5. Social preferences, culture and corruption By Jiang, T.
  6. Wage Dynamics and Peer Referrals By Vincent Boucher; Marion Goussé
  7. The network at work: Diffusion of banana cultivation in Tanzania By Anna Folke Larsen
  8. Does It Matter Where You Came From? Ancestry Composition and Economic Performance of U.S. Counties, 1850-2010 By Fulford, Scott L.; Petkov, Ivan; Schiantarelli, Fabio
  9. Peer Effects in Endogenous Networks By Timo Hiller; Timo Hiller

  1. By: Karlsson, Charlie (Centre of Excellence for Science and Innovation Studies (CESIS), Jönköping International Business School & Blekinge Institute of Technology); Rouchy, Philippe (Blekinge Institute of Technology)
    Abstract: The purpose of this paper is to consider how social capital enhance or hamper regional economic development due to governance systems. To answer this question, we take a comparative institutional perspective between France and Sweden based on OECD regional outlook indicators. It comprises 1- a comparison of both countries regional and municipal governances; 2- a definition of social capital as a social utility function of region or localities, i.e. their “social atmosphere”. 3- A comparison of the participation rate in interest groups in both countries indicating a propensity to collaborate with institutions. The result of the paper shows a differential intensity of participation to interest groups between France and Sweden and an effect of local political institutions on countries’ “social atmosphere”. In conclusion, we show differential values between France and Sweden in terms of political ethics supporting the formation of social capital. We suggest policy implication to increase entrepreneurial solution in civil society.
    Keywords: Comparative Institutional Analysis; Regional Development; Social Capital; Governance; Interest Groups; Public Choice; Cooperation
    JEL: A14 B25 D70 O17 P48 R11 R58
    Date: 2015–05–21
  2. By: Francesca Borgonovi; Tracey Burns
    Abstract: Trust is important for social and economic well-being, for enhancing social cohesion and strengthening resilience, and for maintaining security and order in our societies. Trust is the foundation upon which social capital is built and it also is intimately related to human capital. This work examines the association between education and levels of interpersonal trust, using data from the OECD’s Survey of Adult Skills (PIAAC). Our analysis demonstrated that education strengthens the cognitive and analytical capacities needed to develop, maintain, and (perhaps) restore trust in both close relationships as well as in anonymous others. It does so both directly, through building and reinforcing literacy and numeracy in individuals, and indirectly, through facilitating habits and reinforcing behaviours such as reading and writing at home and at work. Education and trust are thus fundamentally intertwined and dependent on each other. While all countries across the OECD have been striving to improve their education systems in terms of student achievement levels, this analysis suggests that there are also concrete elements that could be usefully addressed in order to reinforce and strengthen trust.<BR>La confiance est un élément important du bien-être social et économique, qui permet de renforcer la cohésion sociale et la résilience tout en maintenant la sécurité et l’ordre dans nos sociétés. La confiance est le fondement sur lequel repose le capital social et elle est également liée intimement au capital humain. Ces travaux ont pour objectif d’examiner le rapport entre l’éducation et les niveaux de confiance interpersonnelle, grâce aux données de l’étude de l’OCDE intitulée Programme pour l'évaluation internationale des adultes (PIAAC). Notre analyse a démontré que l’éducation renforçait les capacités cognitives et analytiques nécessaires au développement, au maintien et (éventuellement) à la restauration de la confiance, à la fois dans les relations avec les proches et dans les relations avec le reste du monde. Elle le fait directement, en inculquant et en renforçant l’apprentissage en lecture, écriture et calcul de chacun et aussi indirectement, en facilitant l’accès et en incitant à la lecture et à l’écriture aussi bien à la maison que sur le lieu de travail. De ce fait, éducation et confiance sont intimement liés et interdépendantes. S’il est vrai que tous les pays de l’OCDE se sont efforcés d’améliorer leurs systèmes éducatifs en termes de niveaux de réussite des élèves, cette analyse montre qu’il existe aussi des éléments concrets qui peuvent être efficacement utilisés pour asseoir et renforcer la confiance.
    Date: 2015–05–21
  3. By: Dimitrios Varvarigos
    Abstract: I study the effects of tax evasion on economic growth by focusing on the cultural aspects of tax compliance and their effect on the extensive margin of tax evasion. A cultural norm that determines the contemptibility of tax dodging practices links the past incidence of tax evasion with the tax payers’ current incentives to conceal sources of income. This dynamic complementarity may lead to multiple equilibria in the evolution of tax evasion. Due to the latter’s effect on capital accumulation, this multiplicity may lead economies in divergent development paths, as long as they differ in the initial magnitude of tax evasion. This happens even though economies may be, on the outset, identical in terms of capital stock and structural characteristics, including those that govern tax enforcement.
    Keywords: Tax evasion; Economic Growth; Cultural Norms
    JEL: H26 O41 Z1
    Date: 2015–05
  4. By: Tim Conley (University of Western Ontario); Nirav Mehta (University of Western Ontario); Ralph Stinebrickner (Berea College); Todd Stinebrickner (University of Western Ontario)
    Abstract: We develop and estimate an equilibrium model of study time choices of students on a social network. We examine how network structure interacts with student characteristics to affect academic achievement. Due to data limitations, few papers examine the mechanisms through which peer effects operate. The model is designed to exploit unique data collected in the Berea Panel Study. Study time data allow us to quantify an intuitive mechanism for social interactions: the cost of own study time may depend on friend study time. Social network data allow study time choices and resulting academic achievement to be embedded in an equilibrium framework. We find friend study time strongly affects own study time, and, therefore, student achievement. Not taking into account equilibrium behavior would drastically understate the effect of peers. Sorting on friend characteristics appears important in explaining variation across students in study time and achievement, and determines the aggregate achievement level.
    Keywords: Social Networks; Peer Effects; Homophily; Time-use
    Date: 2015
  5. By: Jiang, T. (Tilburg University, School of Economics and Management)
    Abstract: Neoclassical economics more or less postulates that agents tend to maximize their own narrow self-interests and will hence break the law if the gains outweigh the costs of potential punishment. In this thesis, I argue that more understandings of corruption can be obtained incorporating insights from behavioral economics such as the postulates of social preferences. To understand why, and in what context, an individual decides to be corrupt, and in what context, it is helpful to recognize that economic agents care about not only their own narrow-interests, but also others’ payoff consequences as well as their moral image. I argue that the characteristics of other regarding preferences (synonymously as social preferences in Economics, and social value<br/>orientation in Psychology) are relevant factors of decision-making in general, and corrupt decision making is no exception. More effective policies can be designed if we gain more realistic behavioral insights.<br/>
    Date: 2015
  6. By: Vincent Boucher; Marion Goussé
    Abstract: We present a flexible model of wage dynamics where information about job openings is transmitted through social networks. The model is based on Calvó-Armengol & Jackson (2004, 2007) and extends their results outside the stationary distribution, and under observed and unobserved heterogeneity. We present an empirical application using the British Household Panel Survey by exploiting direct information about individual’s social networks. We find that the distribution of job offers is positively affected by the employment status of an individual’s friends, and that this relationship is stronger for women.
    Keywords: Labour Market, Peer Referrals, Social Networks
    JEL: C33 J31
    Date: 2015
  7. By: Anna Folke Larsen (Department of Economics, University of Copenhagen)
    Abstract: This paper investigates the role of networks for diffusion of improved banana cultivation introduced by an agricultural project in Tanzania. In the existing literature on networks and technology adoption, network effects are interpreted as learning. I show that a farmer's network can affect the adoption of a new crop not only through social learning, but also by providing necessary inputs for adoption. I set up a simple model for adoption and derive similar model implications for the provision of either inputs or information through the network. Empirically, I find that a farmer is 37 percentage points more likely to adopt banana cultivation if there is at least one project participant growing bananas in the farmer's network. I use three falsication tests to support causal interpretation of the network effect on adoption. Provision of inputs (banana seedlings) through networks is found to play an important role for the network effects found.
    Keywords: Technology adoption, networks, agriculture, Tanzania, Africa
    JEL: D83 O13 O33 Q12 Q16
    Date: 2015–05–25
  8. By: Fulford, Scott L. (Boston College); Petkov, Ivan (Boston College); Schiantarelli, Fabio (Boston College)
    Abstract: The United States provides a unique laboratory for understanding how the cultural, institutional, and human capital endowments of immigrant groups shape economic outcomes. In this paper, we use census micro-sample information to reconstruct the country-of-ancestry distribution for US counties from 1850 to 2010. We also develop a county-level measure of GDP per capita over the same period. Using this novel panel data set, we investigate whether changes in the ancestry composition of a county matter for local economic development and the channels through which the cultural, institutional, and educational legacy of the country of origin affects economic outcomes in the US. Our results show that the evolution of the country-of-origin composition of a county matters. Moreover, the culture, institutions, and human capital that the immigrant groups brought with them and pass on to their children are positively associated with local development in the US. Among these factors, measures of culture that capture attitudes towards cooperation play the most important and robust role. Finally, our results suggest that while fractionalization of ancestry groups is positively related with county GDP, fractionalization in attributes such as trust, is negatively related to local economic performance.
    Keywords: immigration, ethnicity, ancestry, economic development, culture, institutions, human capital
    JEL: J15 N31 N32 O10 Z10
    Date: 2015–05
  9. By: Timo Hiller; Timo Hiller
    Abstract: This paper presents a simple model of strategic network formation with local complementarities in effort levels and positive local externalities for a general class of payoff functions. Results are obtained for one-sided and two-sided link creation. In both cases (pairwise) Nash equilibrium networks are nested split graphs, which are a strict subset of core-periphery networks. The relevance of the convexity of the value function (gross payoffs as a function of neighbours' effort levels when best responding) in obtaining nested split graphs is highlighted. Under additional assumptions on payoffs, we show that the only efficient networks are the complete and the empty network. Furthermore, there exists a range of linking cost such that any (pairwise) Nash equilibrium is inefficient and for a strict subset of this range any (pairwise) Nash equilibrium network structure is different from the efficient network. These findings are relevant for a wide range of social and economic phenomena, such as educational attainment, criminal activity, labor market participation, and R&D expenditures of firms.
    Keywords: Strategic network formation, peer effects, strategic complements, positive externalities.
    JEL: D62 D85
    Date: 2013–09

This nep-soc issue is ©2015 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.