nep-soc New Economics Papers
on Social Norms and Social Capital
Issue of 2015‒08‒30
eleven papers chosen by
Fabio Sabatini
Università degli Studi di Roma “La Sapienza”

  1. The Economic Costs of Mass Surveillance: Insights from Stasi Spying in East Germany By Lichter, Andreas; Loeffler, Max; Siegloch, Sebastian
  2. The interaction of grassroots communities and local authorities in Russia By Shagalov, Igor
  3. Microfinance Performance and Informal Institutions: A Cross-country Analysis By Luminita Postelnicu; Niels Hermes
  4. Social capital and viable territorial development in Kabylian communityThe central role of the regional identity By Cécile Perret
  5. That's Just - Not Fair: Gender Differences in Notions of Justice By Nicole Becker; Kirsten Häger; Jan Heufer
  6. Trust in the Judicial System: Evidence from Brazil By Rodrigo De-Losso; Joelson Oliveira Sampaio, Luciana Grosso Cunha
  7. Saving Face and Group Identity By Tor Eriksson; Lei Mao; Marie Claire Villeval
  8. Testing Models of Social Learning on Networks: Evidence from a Lab Experiment in the Field By Arun G. Chandrasekhar; Horacio Larreguy; Juan Pablo Xandri
  9. The Coevolution of Beliefs and Networks By Jasmina Arifovic; B. Curtis Eaton; Graeme Walker
  10. Bonacich Measures as Equilibria in Network Models By Hannu Salonen
  11. Social Cohesion and Economic Growth: Small States vs Large States By BRITO, JOÃO ANTONIO

  1. By: Lichter, Andreas (IZA); Loeffler, Max (ZEW Mannheim); Siegloch, Sebastian (University of Mannheim)
    Abstract: Based on official records from the former East German Ministry for State Security, we quantify the long-term costs of state surveillance on social capital and economic performance. Using county-level variation in the spy density in the 1980s, we exploit discontinuities at state borders to show that higher levels of Stasi surveillance led to lower levels of social capital as measured by interpersonal and institutional trust in post-reunification Germany. We estimate the economic costs of spying by applying a second identification strategy that accounts for county fixed effects. We find that a higher spy density caused lower self-employment rates, fewer patents per capita, higher unemployment rates and larger population losses throughout the 1990s and 2000s. Overall, our results suggest that the social and economic costs of state surveillance are large and persistent.
    JEL: H11 N34 N44 P26
    Date: 2015–07
  2. By: Shagalov, Igor
    Abstract: Taking into consideration the underdevelopment of the Russian civil community it is of essential interest to touch upon local communities (known as TOS). Local governments and TOS communities could provide similar services and as such cooperate or compete with each other. Community initiatives could supplant poorly performing government services, or governments could outsource to communities some of its functions. Based on empirical Russian data, collected in the city of Kirov this research shows that the prevailing initial incentive to establish TOS is driven by the prospect of obtaining seed money from the government. We detected sources of TOS advantages over municipal authorities: ratio of costs and benefits, sensitivity to the demands of consumers, social capital, and voluntary nature of TOS. TOS are more likely to emerge in communities where people are sceptical about the efficacy of conventional mechanisms of democratic accountability, and prefer to collaborate with municipal governments on specific projects
    Keywords: TOS, non-profit organization, efficiency, social capital, local authorities, civil community, Russia
    JEL: L31 L33
    Date: 2015–07–28
  3. By: Luminita Postelnicu; Niels Hermes
    Abstract: This paper investigates the relationship between the extent to which informal institutions are developed at the country-level and the financial and social performance of MFIs, using data from institutions active in 100 countries. Based on the theoretical literature discussing the economic role of informal institutions such as trust, beliefs, norms and values we hypothesize that microfinance is more successful, both in terms of their financial and social aims, in countries with stronger informal institutions. We test this hypothesis using various direct and indirect measures of informal institutions and link them to measures of financial and social performance of MFIs. Our empirical results are generally supportive to our hypothesis.
    Keywords: Microfinance; social capital; trust; norms; values; culture; financial performance; social performance
    Date: 2015–08–20
  4. By: Cécile Perret (IREGE - Institut de Recherche en Gestion et en Economie - Université de Savoie)
    Abstract: Using a decomposition of social capital nature, this research performs an original analysis of the interactions between the social, the environmental, the governance and the economic sphere and their impact on a viable development in Kabylia (Algeria). In this region, the "art of association” is the expression of territoriality. When the governance is weak and/or when there is distrust in institutions, populations, according to their culture and to their territory, get organized to find solutions to the missing public goods. In Kabylia, the survival of an ancestral social organization (tajmaat) which has anchored in tradition and rooted values sometimes allows the local populations to overcome their difficulties. This paper demonstrates that the respect for deeply rooted regional identity as a cultural heritage, is necessary to perpetuate viable territorial development.
    Date: 2014–12–12
  5. By: Nicole Becker (TU Dortmund, Germany); Kirsten Häger (Friedrich Schiller University Jena, Germany); Jan Heufer (Erasmus University Rotterdam, the Netherlands)
    Abstract: In Becker et al. (2013a,b), we proposed a theory to explain giving behaviour in dictator experiments by a combination of selfishness and a notion of justice. The theory was tested using dictator, social planner, and veil of ignorance experiments. Here we analyse gender differences in preferences for giving and notions of justice in experiments using the same data. Similar to Andreoni and Vesterlund (2001), we find some differences in giving behaviour. We find even stronger differences in the notion of justice between men and women; women tend to be far more egalitarian. Using our preference decomposition approach from Becker et al. (2013a) and parametric estimates, we show that differences in the giving behaviour between men and women in dictator experiments are explained by differences in their notion of justice and not by different levels of selfishness. We employ both parametric and non-parametric techniques, and both methods confirm the result.
    Keywords: Altruism; Dictator Games; Distribution; Experimental Economics; Gender Differences; Justice; Social Preferences
    JEL: C91 D12 D61 D63 D64 J16
    Date: 2015–08–27
  6. By: Rodrigo De-Losso; Joelson Oliveira Sampaio, Luciana Grosso Cunha
    Abstract: One issue that affects the economic and social development of a country is the ability of the judiciary to present itself as a legitimate instance in resolving conflicts that arise in the social, business and economic development. One way to measure this is through legitimacy of the motivations that lead citizens to trust or not in the Judiciary. We created the Brazilian Confidence in Justice Index (BCJI) as a validation argument for our confidence measure. The BCJI is a measure of perception, which shows the opinion of the population about Brazil’s judiciary. Our results indicate that race and gender are important predictors once controlled for other characteristics of respondents. Blacks have a slightly lower level of confidence in the judiciary than whites. Women also present less confidence than men. We also show that people with low income have lower levels of trust. Our findings also have other important implications for confidence in the judicial system. We show that there is a positive and strong relationship between confidence in the judicial system and propensity to seek the judiciary.
    Keywords: Trust in the judicial system; Institutions; Judiciary
    JEL: G12
    Date: 2015–08–11
  7. By: Tor Eriksson (Department of economics - University of Aarhus); Lei Mao (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université Jean Monnet - Saint-Etienne - PRES Université de Lyon - CNRS, Central University of Finance and Economics); Marie Claire Villeval (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université Jean Monnet - Saint-Etienne - PRES Université de Lyon - CNRS)
    Abstract: Are people willing to sacrifice resources to save one's and others' face? In a laboratory experiment, we study whether individuals forego resources to avoid the public exposure of the least performer in their group. We show that a majority of individuals are willing to pay to preserve not only their self-but also other group members' image. This behavior is frequent even in the absence of group identity. When group identity is more salient, individuals help regardless of whether the least performer is an in-group or an out-group. This suggests that saving others' face is a strong social norm.
    Date: 2015
  8. By: Arun G. Chandrasekhar; Horacio Larreguy; Juan Pablo Xandri
    Abstract: Agents often use noisy signals from their neighbors to update their beliefs about a state of the world. The effectiveness of social learning relies on the details of how agents aggregate information from others. There are two prominent models of information aggregation in networks: (1) Bayesian learning, where agents use Bayes' rule to assess the state of the world and (2) DeGroot learning, where agents instead consider a weighted average of their neighbors' previous period opinions or actions. Agents who engage in DeGroot learning often double-count information and may not converge in the long run. We conduct a lab experiment in the field with 665 subjects across 19 villages in Karnataka, India, designed to structurally test which model best describes social learning. Seven subjects were placed into a network with common knowledge of the network structure. Subjects attempted to learn the underlying (binary) state of the world, having received independent identically distributed signals in the first period. Thereafter, in each period, subjects made guesses about the state of the world, and these guesses were transmitted to their neighbors at the beginning of the following round. We structurally estimate a model of Bayesian learning, relaxing common knowledge of Bayesian rationality by allowing agents to have incomplete information as to whether others are Bayesian or DeGroot. Our estimates show that, despite the flexibility in modeling learning in these networks, agents are robustly best described by DeGroot-learning models wherein they take a simple majority of previous guesses in their neighborhood.
    JEL: C91 C92 C93 D83
    Date: 2015–08
  9. By: Jasmina Arifovic; B. Curtis Eaton (University of Calgary); Graeme Walker
    Abstract: Social psychologists have shown that people experience cognitive dissonance when two or more of their cognitions diverge, and that they actively manage the dissonance. With this in mind, we develop a model of social learning in networks to understand the coevolution of beliefs and networks. We focus on beliefs concerning an objective phenomenon. Initial beliefs are based on noisy, private and unbiased information. Because the information is noisy, initial beliefs differ,creating dissonance. In our model, behavior is motivated by a desire to minimize this dissonance. In many circumstances this behavior adversely affects the efficiency of social learning, such that in equilibrium the mean aggregate belief is biased and there is significant variation of beliefs across the population. The parameterizations of our model that result in the most inefficient learning produce a fractionalized network structure in which there are a number of distinct groups: within any group all beliefs are identical; beliefs differ from group to group, sometimes greatly; there is no intergroup interaction. Since dissonance minimizing behavior is apparently a deeply rooted feature of humans, we are led to ask: What policies could improve the situation? Our results suggest that policies that improve the availability of objective information and/or increase the size of networks enhance efficiency of social learning. On the other hand, anything that makes changing networks more attractive as a dissonance minimizing strategy has the opposite effect. 1
    Date: 2015–08–10
  10. By: Hannu Salonen (Department of Economics, University of Turku)
    Abstract: We investigate the cases when the Bonacich measures of strongly connected directed bipartite networks can be interpreted as a Nash equilibrium of a non-cooperative game. One such case is a two-person game such that the utility functions are bilinear, the matrices of these bilinear forms represent the network, and strategies have norm at most one. Another example is a two-person game with quadratic utility functions. A third example is an m + n person game with quadratic utilitity functions, where the matrices representing the network have dimension m × n. For connected directed bipartite networks we show that the Bonacich measures are unique and give a recursion formula for the computation of the measures. The Bonacich measures of such networks can be interpreted as a subgame perfect equilibrium path of an extensive form game with almost perfect information.
    Keywords: networks, influence measures, Nash equilibrium
    JEL: C71 D85
    Abstract: The purpose of this paper is to analyze empirically if the effect of social cohesion on economic growth is conditioned by country size. Two groups of countries, large and small, were set up, and by using the System-GMM estimator and panel data in a 5-year rolling window, from 1970 to 2010, the impact of civil war and ethnic tension on growth rate of GDP per capita of the two groups of states was estimated. Also, the difference between small and large states in terms of the impact of civil war and ethnic tension on β-convergence rate was analyzed. We conclude that the effects of social cohesion (measured by civil war) in economic growth and in β-convergence rate are influenced by country size, and the positive effect is higher in small states.
    Keywords: Country Size, Small States, Social Cohesion and Economic Growth
    JEL: O47 O57
    Date: 2015–07

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