nep-soc New Economics Papers
on Social Norms and Social Capital
Issue of 2016‒06‒14
nine papers chosen by
Fabio Sabatini
Università degli Studi di Roma “La Sapienza”

  1. Heterogeneous Motives in the Trust Game: A Tale of Two Roles By Espín, Antonio M.; Exadaktylos, Filippos; Neyse, Levent
  2. Social Ties and the Job Search of Recent Immigrants By Goel, Deepti; Lang, Kevin
  3. De Gustibus Non Est Disputandum revisited: The influence of social networks and health status on preferences for functional food By Henning, Christian; Zubek, Nana
  4. Liberation Technology: Mobile Phones and Political Mobilization in Africa By Marco Manacorda; Andrea Tesei
  5. For God's sake. The impact of religious proximity on firms' exports By Alessia Lo Turco; Daniela MAGGIONI
  6. Groups, Norms and Endogenous Membership: Towards a Socially Inclusive Economics By Raul V. Fabella
  7. The Family Peer Effect on Mothers' Labour Supply By Nicoletti, Cheti; Salvanes, Kjell G.; Tominey, Emma
  8. Homophily and Transitivity in Dynamic Network Formation By Bryan S. Graham
  9. Getting ahead or falling behind? – The importance of households’ ability to manage idiosyncratic risk in rural Ghana By Naschold, Felix

  1. By: Espín, Antonio M.; Exadaktylos, Filippos; Neyse, Levent
    Abstract: Trustful and trustworthy behaviors have important externalities for the society. But what exactly drives people to behave in a trustful and trustworthy manner? Building on research suggesting that individuals’ social preferences might be a common factor informing both behaviors, we study the impact of a set of different motives on individuals’ choices in a dual-role Trust Game (TG). We employ data from a large-scale representative experiment (N = 774), where all subjects played both roles of a binary TG with real monetary incentives. Subjects’ social motives were inferred using their decisions in a Dictator Game and a dual-role Ultimatum Game. Next to self-interest and strategic motives we consider preferences for altruism, spitefulness, egalitarianism, and efficiency. We demonstrate that there exists considerable heterogeneity in motives in the TG. Most importantly, among individuals who choose to trust as trustors, social motives can differ dramatically as there is a non-negligible proportion of them who seem to act out of (strategic) self-interest whereas others are driven more by efficiency considerations. Subjects’ elicited trustworthiness, however, can be used to infer such motivations: while the former are not trustworthy as trustees, the latter are. We discuss that research on trust can benefit from adding the second player’s choice in TG designs.
    Keywords: trust game,dictator game,ultimatum game,social preferences,self-interest
    Date: 2016
  2. By: Goel, Deepti (Delhi School of Economics); Lang, Kevin (Boston University)
    Abstract: In this paper we highlight a specific mechanism through which social networks help in job search. We characterize the strength of a network by its likelihood of providing a job offer. Using a theoretical model we show that the wage differential in jobs found using networks versus those found using formal channels, decreases as the network becomes stronger. We verify this result for recent immigrants to Canada for whom a strong network is captured by the presence of a 'close tie.' Furthermore, structural estimates confirm that the presence of a close tie operates by increasing the likelihood of generating a job offer from the network rather than by altering the wage distribution from which an offer is drawn.
    Keywords: job search, migration, networks
    JEL: J3
    Date: 2016–05
  3. By: Henning, Christian; Zubek, Nana
    Abstract: Combining the new consumer theory of Becker with a network model of belief formation developed in sociology we derive a theory of peer group influence on households' consumer beliefs regarding the impact of health related attributes on households utility and hence on households' willingness to pay for functional food. In particular, our theory implies peer group effects on households' preferences for functional food, while following the famous De-Gustibus-Non-Est-Disputandum paradigm of Bekcer and Stigler our theory implies no peer group effects on households z-good preferences, e.g. WTP for health, taste or convenience as nutrition related z-goods. Using own unique social and medical survey data of 2000 probands, the KIK-panel (Kieler- Interventions-Kohorte), collected within the Focus-project in Germany during the years 2012 and 2013 we test our theory applying a two-stage latent class estimation of macro and micro food preferences. In particular, the approach allows a statistical testing of the impact of peer group network effects on consumer beliefs, preferences and nutrition behavior. Central results are (i) estimation confirming our theory implying significant peer group effects on consumer beliefs and implied WTP for functional food attributes; (ii) however, we also found significant peer group effects on z-good preferences which contradicts the De-Gustibus-Non-Est-Disputandum paradigm. (iii) accordingly we offer a modified new consumer theory allowing for peer group effects on z-good preferences. At a practical level, our results have interesting implications for specific marketing strategies promoting demand for functional food as well as for specific political communication strategies preventing nutrition based morbidities and thus promoting public health.
    Keywords: peer group effects, Consumer beliefs, social networks, functional foods, Consumer/Household Economics, Demand and Price Analysis, Food Consumption/Nutrition/Food Safety, Health Economics and Policy, Institutional and Behavioral Economics,
    Date: 2016–05–25
  4. By: Marco Manacorda (Queen Mary University of London, CEP (LSE), CEPR & IZA); Andrea Tesei (Queen Mary University of London and CEP (LSE))
    Abstract: Can digital information and communication technology (ICT) foster mass political mobilization? We use a novel geo-referenced dataset for the entire African continent between 1998 and 2012 on the coverage of mobile phone signal together with geo-referenced data from multiple sources on the occurrence of protests and on individual participation in protests to bring this argument to empirical scrutiny. We find that mobile phones are instrumental to mass mobilization during economic downturns, when reasons for grievance emerge and the cost of participation falls. Estimated effects are if anything larger once we use an instrumental variable approach that relies on differential trends in coverage across areas with different incidence of lightning strikes. The results are in line with insights from a network model with imperfect information and strategic complementarities in protest provision. Mobile phones make individuals more responsive to both changes in economic conditions - a mechanism that we ascribe to enhanced information - and to their neighbors’ participation - a mechanism that we ascribe to enhanced coordination. Empirically both effects are at play, highlighting the channels through which digital ICT can alleviate the collective action problem.
    Keywords: mobile phones, collective action, Africa, geo-referenced data
    JEL: D70 O55 L96
    Date: 2016–04
  5. By: Alessia Lo Turco (Università Politecnica delle Marche, Dipartimento di Scienze Economiche e Sociali); Daniela MAGGIONI (Università di Catania, Department of Political Sciences)
    Abstract: Using a rich firm level data set for Turkish manufacturing, we test whether the sharing of similar religious beliefs with potential contracting parties drives a firm.s first time entry in export markets. We exploit variation in the practice of Islam across Turkish provinces andwe find that firms located in provinces characterised by stronger religiousness are more likely to enter export destinations with a higher share ofMuslims among their population. This result is robust to the control for trade, cultural and migration ties, reverse causality and to several further sensitivity checks. Religious proximity, in particular, eases export entry for producers of "trust intensive" goods and mitigates the role of export experience in subsequent foreign market entries. All in all, our evidence hints at the important role of religious proximity in reducing export entry sunk costs by fostering higher trust among contracting parties.
    Keywords: Islam, export entry, uncertainty, cultural distance
    JEL: F14 F11 D22 D80 N30
    Date: 2016–05
  6. By: Raul V. Fabella (School of Economics, University of the Philippines Diliman; National Academy of Science and Technology)
    Abstract: In Part I, we argue that Economics must outgrow the narrow confines of Neo-Classical Economics to embrace ‘sociality’ first championed by Herbert Simon in the mid-1950s and now by a growing number of economists under the banner of Social Economics. We contend here that Neo-Classical Economics is incomplete, rather than wrong. Firstly any alternative model must subsume the Neo-Classical model as a special case even as it embraces conceptual promontories from other social science disciplines, viz., groups, norms and sanctions. Secondly, it must be couched in a language familiar to the economics profession? maintain optimizing behavior and equilibrium analysis. In Part II, we construct a formal model where the agent is at once a private entity and a member of a social group; his utility is inclusive combining the agent’s private utility over goods (the Neo-Classical utility) and the utility the he derives from being a member, viz., access to group’s collective good. As a member, he commits to support the procurement of the group’s collective good and submits to a system of norms and to the corresponding self-organized sanctions regime punishing violation of group norms. The agent solves a sequence of optimization problems: the first determines his optimal consumption basket given his budget constraint (net of group contribution), prices in the market location of the group; this gives his inclusive indirect utility; the second determines his optimal market hours by maximizing his indirect inclusive utility subject to time constraint and the market wage rate; this gives his doubly indirect inclusive utility; thirdly, he maximizes his inclusive doubly indirect utility with respect to the monetary contribution of the group given the sanctions for norm violation. The choice of social group follows from a rank order of groups by greatest inclusive utility an agent can attain in each competing social group. Finally, we show how the agent’s relative weighting of his private and group commitment may wax and wane depending upon the stakes of the inter-group competition.
    Keywords: Sociality, groups, norms, choice of groups, compliance with norms, inter-group competition
    JEL: D01 D11
    Date: 2016–05
  7. By: Nicoletti, Cheti (University of York); Salvanes, Kjell G. (Norwegian School of Economics); Tominey, Emma (University of York)
    Abstract: The documented historical rise in female labour force participation has flattened in recent decades, but the proportion of mothers working full-time has steadily increased. We provide the first empirical evidence that the increase in mothers' working hours is amplified through the influence of family peers. Using Norwegian administrative data we study the long-run influence of the family network on mothers' labour decisions up to seven years post birth. For identification, we exploit partially overlapping peer groups and assume that a mother interacts with her neighbours and family but not with her family's neighbours. We explore mechanisms including information and imitation.
    Keywords: peer effects, family network, sibling spillover effects, cousins spillover effects, instrumental variable estimation
    JEL: D85 C21 C26
    Date: 2016–05
  8. By: Bryan S. Graham
    Abstract: In social and economic networks linked agents often share additional links in common. There are two competing explanations for this phenomenon. First, agents may have a structural taste for transitive links -- the returns to linking may be higher if two agents share links in common. Second, agents may assortatively match on unobserved attributes, a process called homophily. I study parameter identifiability in a simple model of dynamic network formation with both effects. Agents form, maintain, and sever links over time in order to maximize utility. The return to linking may be higher if agents share friends in common. A pair-specific utility component allows for arbitrary homophily on time-invariant agent attributes. I derive conditions under which it is possible to detect the presence of a taste for transitivity in the presence of assortative matching on unobservables. I leave the joint distribution of the initial network and the pair-specific utility component, a very high dimensional object, unrestricted. The analysis is of the `fixed effects' type. The identification result is constructive, suggesting an analog estimator, whose single large network properties I characterize.
    JEL: C1 C14 C23 C25 D85
    Date: 2016–04
  9. By: Naschold, Felix
    Abstract: A better understanding of why some households get ahead while others fall behind is crucial for achieving further worldwide poverty reduction in future. Who moves in and out of poverty over time has been the focus of a growing literature on household level poverty dynamics. A central theme in this literature has been the role of shocks and their impact on households’ risk management strategies. Risk and uncertainty diminish the current level of households’ economic well-being as well as their prospects for the future. This is particularly true when livelihood-generating activities are highly stochastic, as they are for many rural households in developing countries, and when mechanisms to insure against risk are either non-existent or insufficient. Moreover, the ability to manage risk is becoming more important as economic factors that are key to the poor, e.g., food prices, have become more volatile. Households face two distinct sources of risk: First, covariate risk such as drought, rainfall, pests or civil war affect the entire population. These types of risks have been the focus of much of the existing literature on welfare dynamics. Second, idiosyncratic or household-specific risk such as medical expenses or crop and livestock losses. Evidence suggests that such idiosyncratic risk often dominates covariate risk and that the latter requires different strategies to mitigate. This paper examines the importance of idiosyncratic risk for households in rural Ghana and the effectiveness of various ex ante and ex post risk management strategies in mitigating this risk, including support from social networks, self-insurance in the form of savings, accessing credit and diversifying livelihood activities. This paper uses an unusually rich set of panel data from rural Ghana covering the period between 1997 and 2009 and containing information on a large variety of formal and informal insurance mechanism, including on access to social networks, self-insurance, income diversification and asset sales. It quantifies the impact of different types of idiosyncratic shocks on households’ ability to get ahead, examines the individual and joint effect of households’ access to different types of insurance mechanisms and assesses the relative effectiveness of different risk management strategies on households’ ability to bounce back from negative shocks and to escape poverty. This paper makes three main contributions. First, it examines the impact of idiosyncratic risk on household level welfare dynamics, focusing on how idiosyncratic shocks affect welfare dynamics paths and whether those effects are mitigated differentially by different risk management strategies. Facing uninsured risk ex ante and coping with consequences of risk ex post households employ a range of strategies to minimize their exposure to risk and to smooth their consumption over time. These include mechanism such as self-insurance through savings (and precautionary savings), formal and informal insurance and credit, social networks, and labor market access and income diversification. Existing studies typically only have data for one of these insurance mechanisms. The second contribution of this paper is examine each of these risk management strategies individually as well as jointly. The unique panel data makes it possible to both assess the relative importance of these mechanisms as well as identify complementarities between them. This extension beyond a single risk management mechanism allows a more appropriate modeling of the behavior of households that face risk as when one or more risk management mechanisms are unavailable households resort to other mechanisms. A corollary question addressed is whether there are critical thresholds that establish some minimum effective scale of such risk management strategies. Existing studies impose strong assumptions on the low-order polynomial relationship between risk management strategies and welfare dynamics. This paper’s approach allows for such potentially highly non-linear threshold effects by using innovative semi-parametric panel data estimators. The paper also explores the interaction, substitution and complementarities between different risk management strategies. Third, this paper contributes to the emerging literature on household level welfare dynamics in Subsaharan Africa by providing a case study from rural Ghana. The results suggest varying degrees of effectiveness for the different mechanisms households use to reduce and mitigate risk. Having own savings and being able to draw on larger social networks offers a statistically significantly better chance of overcoming the consequences of negative shocks. Credit access also seems to help though the evidence is less strong. A greater diversity of income sources is associated with greater gains in expenditure but income diversification does not seem to help in overcoming shocks. This could be a reflection of many households diversifying into low-return activities that are positively correlated. Overall the results suggest some effectiveness of these formal and informal insurance mechanisms. However, even in their combination they are not sufficient in helping households overcome negative shocks and to ensure sustained improvement in well-being over time. Thus, while idiosyncratic risks can be partly ensured at the local level, there is a need for policy to supplement these mechanisms through social policy.
    Keywords: Ghana, risk, welfare, poverty, social networks, International Development, Risk and Uncertainty,
    Date: 2016

This nep-soc issue is ©2016 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.
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