nep-soc New Economics Papers
on Social Norms and Social Capital
Issue of 2015‒07‒04
ten papers chosen by
Fabio Sabatini
Università degli Studi di Roma “La Sapienza”

  1. How Social Networks Shape Our Beliefs: A Natural Experiment among Future French Politicians By Yann Algan; Quoc-Anh Do; Nicolò Dalvit; Alexis Le Chapelain; Yves Zenou
  2. Trust, Well-Being and Growth: New Evidence and Policy Implications By Yann Algan; Pierre Cahuc
  3. The Influence of Trust and Knowledge Sharing on Virtual Team Effectiveness By Thomas, Ted
  4. Trust and the Welfare State: the Twin Peaks Curve By Yann Algan; Pierre Cahuc; Marc Sangnier
  5. 'Are human and social capital linked? Evidence from India' By Baris Alpaslan
  6. Two-sided Altruism and Signaling By Garance Genicot
  7. Political Connections and Firm Value: Evidence from the Regression Discontinuity Design of Close Gubernatorial Elections By Quoc-Anh Do; Yen-Teik Lee; Bang Dang Nguyen
  8. Lying in public good games with and without punishment By Bernd Irlenbusch; Janna Ter Meer
  9. Isolated Capital Cities, Accountability and Corruption: Evidence from US States By Filipe R. Campante; Quoc-Anh Do
  10. Capital Cities, Conflict, and Misgovernance: Theory and Evidence By Filipe R. Campante; Quoc-Anh Do; Bernardo Guimaraes

  1. By: Yann Algan (Département d'économie); Quoc-Anh Do (Département d'économie); Nicolò Dalvit (Departement d'Economie de Sciences Po, LIEPP); Alexis Le Chapelain (Département d'économie); Yves Zenou (Research Institute of Industrial Economics)
    Abstract: This paper shows how a public policy shapes convergence of beliefs through newly-formed social networks, with a focus on political opinion. We use a unique natural experiment that randomly assigns students into first-year groups at a French college that forms future top politicians. Pairs of students in the same group are much more likely to become friends. The randomized group membership serves as instrumental variable in a dyadic regression of differences in beliefs on friendship. We find that students’ political opinions converge particularly strongly between friends, reaching 11% of a standard deviation only after 6 months. Convergence is strongest among pairs least likely to become friends without the randomized exposure, or friends whose characteristics are the most different. While there is evidence of homophily in network formation, it does not seem to affect the estimates of convergence, except among very similar friends. The same strategy shows that a longer network distance implies slower convergence.
    Keywords: Political Beliefs; Peers; Social Networks; Convergence; Homophily; Belief Transmission; Learning; Diffusion; Natural Experiment
    JEL: C93 D72 Z13
    Date: 2015–06
  2. By: Yann Algan (Département d'économie); Pierre Cahuc (Department of Economics)
    Abstract: This survey reviews the recent research on trust, institutions, and economic development. It discusses the various measures of trust and documents the substantial heterogeneity of trust across space and time. The conceptual mechanisms that explain the influence of trust on economic performance and the methods employed to identify the causal impact of trust on economic performance are reviewed. We document the mechanisms of interactions between trust and economic development in the realms of finance, innovation, the organization of firms, the labor market, and the product market. The last part reviews recent progress to identify how institutions and policies can affect trust.
    Keywords: Trust; Growth; Economic Development; Institutions; Well-being
    JEL: O11 O43 Z13
    Date: 2014
  3. By: Thomas, Ted
    Abstract: Virtual teams are a growing response to increased de-centralisation and globalization, and the need for organizations to adapt to an ever changing and complex work environment. Their growing prevalence reflects many different factors, including the increased global reach of many organizations, changing workforce demographics, and heightened competitive pressures requiring greater organizational flexibility and responsiveness. This phenomenon has grown rapidly in recent years through advancements and greater access to technologies for communication and collaboration. Organizations however are being challenged with understanding what makes these virtual teams effective and how to measure the achievement of such effectiveness. Combined with the convergence of telephony and data technologies this has enabled voice and video to be delivered ‘on demand’ at a far more affordable price to the end consumer. With the added dynamic of ‘mobile’ becoming such a pervasive technology, this is providing the fuel driving the establishment of greater numbers of virtual teams. We now live in an increasingly “connected world” and with the blurring of work and leisure time, for many, virtual teams have already or are becoming a natural extension of the workplace. Individuals are demanding personal flexibility in the management of their time and space and this is matched by organizations seeking flexibility to scale resources in meeting changing demand. Virtual teams may also be seen as a response to satisfying changing social and organizational aspirations. A range of factors are seen as contributing to the effectiveness of virtual teams and these include technology, trust, sharing of knowledge, empowerment and leadership. This study focuses on trust as a primary factor in achieving virtual team effectiveness, and assesses the significance of trust and the sharing of knowledge amongst team members. Trust determines how people work together, listen to one another, and build effective relationships. When people believe that they are working for trustworthy organizations, they are willing to invest their time and talents in making a difference in an organization. People who feel more connected will invest more of themselves in their work. High trust levels lead to a greater sense of self responsibility, greater interpersonal insight, and more collective action toward achieving common goals. However, with a lack of face-to-face contact, trust based on performance substitutes for trust based on social interaction. Trust is a cornerstone to achieving virtual team effectiveness and from an organizational perspective this highlights the need for regular communication with team members to reinforce the culture and values of the organization. In the age of the knowledge economy, knowledge is seen as a critical resource for competitive advantage. The willingness of team members to share knowledge with others on the team can be attributed to the strength of the trust relationship and this further enhances virtual team effectiveness. The challenges for organizations are to understand what level of trust exists across the team, how this impacts on team effectiveness and to be able to apply interventions when seeking to increase team effectiveness. Active and regular communications programmes, internal marketing campaigns and short surveys are approaches for developing and enhancing the trust relationship. Organizations that are unwilling or unable to use virtual teams may find themselves losing out in an increasingly competitive and rapidly changing global economic and social environment. The technology and communication advances are clear, yet enabling effective participation and team collaboration is a more complex problem.
    Keywords: Virtual team effectiveness, Knowledge sharing, Trust,
    Date: 2014
  4. By: Yann Algan (Département d'économie); Pierre Cahuc (Department of Economics); Marc Sangnier (Aix-Marseille School of Economics)
    Abstract: We show the existence of a twin peaks relation between trust and the size of the welfare state that stems from two opposing forces. Uncivic people support large welfare states because they expect to benefit from them without bearing their costs. But civic individuals support generous benefits and high taxes only when they are surrounded by trustworthy individuals. We provide empirical evidence for these behaviors and this twin peaks relation in the OECD countries.
    Keywords: Welfare State; Trust; Civism; Corruption; Redistribution
    JEL: H1 Z1
    Date: 2014–06
  5. By: Baris Alpaslan
    Abstract: This paper develops a two-period Overlapping Generations (OLG) model of endogenous growth in which a two-way relationship between social capital and human capital is studied. In order to illustrate the impact of public policies, the model is calibrated using the data for a low-income country, India and a sensitivity analysis is reported under di¤erent parameter con...gurations. Based on the numerical analysis, this paper focuses on possible trade-offs in the allocation of government spending between two productive components, that is, social capital-related activities and education. The results of this paper show that a higher share of spending on education promotes growth despite an offsetting cut in social capital-related activities; however, the reverse entails trade-o¤s. In other words, an increase in the share of spending on social capital-related activities through a concomitant cut in education is detrimental to long-run growth.
    Date: 2015
  6. By: Garance Genicot
    Abstract: This paper shows that when donors and recipients care about each other --two-sided altruism -- the presence of asymmetry of information about the donor's income leads very naturally to a signaling game. A donor who cares about the recipient's welfare has incentives to appear richer than he is when the recipient cares about him. Similarly, asymmetry of information regarding the donor's income generates a signaling game in the presence of two-sided altruism. These signaling games put upward pressure on transfers and this pressure increases with the altruism of the recipient.
    JEL: D64 F24 O15 O16
    Date: 2015–06
  7. By: Quoc-Anh Do (Département d'économie); Yen-Teik Lee (Singapore Management University); Bang Dang Nguyen (University of Cambridge)
    Abstract: Using the regression discontinuity design of close gubernatorial elections in the U.S., we identify a significant and positive impact of the social networks of corporate directors and politicians on firm value. Firms connected to elected governors increase their value by 3.89%. Political connections are more valuable for firms connected to winning challengers, for smaller and financially dependent firms, in more corrupt states, in states of connected firms’ headquarters and operations, and in closer, smaller, and active networks. Post-election, firms connected to the winner receive significantly more state procurement contracts and invest more than do firms connected to the loser.
    Keywords: Close Gubernatorial Election; Corruption; Firm Value; Political Connection; Procurement; Regression Discontinuity Design; Social Nteworks
    JEL: D72 D73 G28 G30 G34 G38 H57
    Date: 2015–04
  8. By: Bernd Irlenbusch (University of Cologne); Janna Ter Meer (University of Cologne)
    Abstract: We experimentally study a frequently observed public good setting where accurate contribution feedback is not available and group members can send non-verifiable cheap talk messages about their contributions. As feedback, subjects receive only announced contributions or the announced or actual contribution with 50% probability. In this setting, we explore both information transmission and reception as well as the effectiveness of costly peer punishment. Overall, we find that cooperation breaks down in all announcement treatments except when actual contribution feedback is provided some of the time and punishment is available. We identify various constraints to full cooperation relative to the standard public good game. First, subjects make errors in adjusting their beliefs for the announcements of others and, on average, adjust their beliefs downward for a given announcement. Second, we find that significantly more punishment is assigned to high contributors compared to the standard public good game. Furthermore, punishment for low contributors appears to have a smaller disciplining effect. When actual contribution information is provided some of the time we find that these constraints are less severe compared to the setting where only announcements are available.
    Keywords: public goods, punishment, lying, credibility, communication
    JEL: C92 D03 H41 D02
    Date: 2015–05–21
  9. By: Filipe R. Campante (Harvard University); Quoc-Anh Do (Département d'économie)
    Abstract: We show that isolated capital cities are robustly associated with greater levels of corruption across US states, in line with the view that this isolation reduces accountability. We then provide direct evidence that the spatial distribution of population relative to the capital affects different accountability mechanisms: newspapers cover state politics more when readers are closer to the capital, voters who live far from the capital are less knowledgeable and interested in state politics, and they turn out less in state elections. We also find that isolated capitals are associated with more money in state-level campaigns, and worse public good provision.
    Keywords: Isolated Capital Cities; Corruption; Accountability; US states
    JEL: D72 D73 H41 H83 K42
    Date: 2014–08
  10. By: Filipe R. Campante (Harvard University); Quoc-Anh Do (Département d'économie); Bernardo Guimaraes (Sao Paulo School of Economics)
    Abstract: Motivated by a novel stylized fact - countries with isolated capital cities display worse quality of governance - we provide a framework of endogenous institutional choice based on the idea that elites are constrained by the threat of rebellion, and that this threat is rendered less effective by distance from the seat of political power. In established democracies, the threat of insurgencies is not a binding constraint, and the model predicts no correlation between isolated capitals and misgovernance. In contrast, a correlation emerges in equilibrium in the case of autocracies. Causality runs both ways: broader power sharing (associated with better governance) means that any rents have to be shared more broadly, hence the elite has less of an incentive to protect its position by isolating the capital city; conversely, a more isolated capital city allows the elite to appropriate a larger share of output, so the costs of better governance for the elite, in terms of rents that would have to be shared, are larger. We show evidence that this pattern holds true robustly in the data. We also show that isolated capitals are associated with less power sharing, a larger income premium enjoyed by capital city inhabitants, and lower levels of military spending by ruling elites, as predicted by the theory.
    Keywords: Capital Cities; Governance; Institutions; Conflict; Civil War; Revolutions; Insurgencies; Population Concentration; Democracy; Power Sharing; Inefficient Institutions
    JEL: D02 D74 O18 R12
    Date: 2014–09

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