nep-soc New Economics Papers
on Social Norms and Social Capital
Issue of 2016‒09‒11
eight papers chosen by
Fabio Sabatini
Università degli Studi di Roma “La Sapienza”

  1. Growing Apart, Losing Trust? The Impact of Inequality on Social Capital By Eric D Gould; Alexander Hijzen
  2. Trust and Trustworthiness under Information Asymmetry and Ambiguity By Irma Clots-Figueras; Roberto Hernán González; Praveen Kujal
  3. Do Economic Inequalities Affect Long-Run Cooperation? By Gabriele Camera; Cary Deck; David Porter
  4. Does Country Level Social Trust Predict the Size of the Sharing Economy? By Bergh, Andreas; Funcke, Alexander
  5. Informative Social Interactions By Michael Haliassos; Hector F. CALVO PARDO; Chryssi Giannitsarou; Luc Arrondel
  6. Social Capital and Reconfiguration of 'Trust Networks': A Sociological Analysis By Smolkin, Anton
  7. Designing Online Marketplaces: Trust and Reputation Mechanisms By Michael Luca
  8. Economic Development and Preferences for Redistribution By Hideaki Goto

  1. By: Eric D Gould; Alexander Hijzen
    Abstract: There is a widespread perception that trust and social capital have declined in United States as well as other advanced economies, while income inequality has tended to increase. While previous research has noted that measured trust declines as individuals become less similar to one another, this paper examines whether the downward trend in social capital is responding to the increasing gaps in income. The analysis uses data from the American National Election Survey (ANES) for the United States, and the European Social Survey (ESS) for Europe. Our analysis for the United States exploits variation across states and over time (1980-2010), while our analysis of the ESS utilizes variation across European countries and over time (2002-2012). The results provide robust evidence that overall inequality lowers an individual’s sense of trust in others in the United States as well as in other advanced economies. These effects mainly stem from residual inequality, which may be more closely associated with the notion of fairness, as well as inequality in the bottom of the distribution. Since trust has been linked to economic growth and development in the existing literature, these findings suggest an important, indirect way through which inequality affects macro-economic performance.
    Keywords: Income inequality;United States;Europe;Developed countries;Social and Demographic Sector;Cross country analysis;social capital, earnings, redistribution
    Date: 2016–08–22
  2. By: Irma Clots-Figueras (Universidad Carlos III de Madrid); Roberto Hernán González (University of Nottingham and Economic Science Institute, Chapman University); Praveen Kujal (Middlesex University and Economic Science Institute, Chapman University)
    Abstract: We introduce uncertainty and ambiguity in the standard investment game. In the uncertainty treatment, investors are informed that the return of the investment is drawn from a publicly known distribution function. In the ambiguity treatment, investors are not informed about the distribution function. We find that both trust and trustworthiness are robust to the introduction of these changes.
    Date: 2016
  3. By: Gabriele Camera (Chapman University and University of Basel); Cary Deck (University of Arkansas and Chapman University); David Porter (Chapman University)
    Abstract: Does inequality affect a group’s cohesion and ability to prosper? Participants in laboratory economies played an indefinite sequence of helping games in random, anonymous pairs. A coin flip determined donor and recipient roles in each pair. This random shock ensured equality of opportunity but not of results, because earnings depended on realized shocks. We manipulated the ability to condition choices on this uncontrollable inequality source. In all treatments, uncertain ending supports multiple Pareto-ranked equilibria, including full cooperation. Theoretically, inequalities do not alter the incentives’ structure. Empirically, inequality disclosures altered conduct, weakened norms of mutual support and reduced efficiency.
    Keywords: experiments, indefinitely repeated games, social norms, social dilemmas
    JEL: C70 C90 D03 E02
    Date: 2016
  4. By: Bergh, Andreas (Research Institute of Industrial Economics (IFN)); Funcke, Alexander (Philosophy, Politics & Economics)
    Abstract: The sharing economy (peer-to-peer based sharing or renting activities coordinated through community-based online services) is typically assumed to be closely related to social trust. The two sharing economy companies Airbnb and Flipkey exist in over 100 countries, allowing us to construct a measure of sharing economy penetration to test against social trust and other potential explanations. Results indicate that sharing economy penetration is promoted by ICT-infrastructure and economic openness, whereas the correlation with social trust is negative and often statistically significant. Our conclusion is that sharing economy services do not require high levels of social trust to succeed. Rather, they provide institutions that facilitate trust-intensive economic activities also where social trust is low.
    Keywords: Sharing economy; Trust; Information technology
    JEL: E20 M13 O17
    Date: 2016–08–19
  5. By: Michael Haliassos (Goethe University Frankfurt); Hector F. CALVO PARDO (UNIVERSITY OF SOUTHAMPTON); Chryssi Giannitsarou (University of Cambridge); Luc Arrondel (CNRS-PSE)
    Abstract: We design, field and exploit novel survey data, from a representative sample of the French population in December 2014 and May 2015, that provide insights regarding two channels via which social interactions may generally affect financial decisions. The first is a pure information effect, which arises solely from communicating and disseminating information to and from friends and acquaintances. The second is an imitation effect, broadly understood as comprising of social norm effects, complementarities, fads, etc. We find that both effects are positive, sizeable and significant. The more (and better) informed about the stock market members of respondents' social circles are, the higher the share of respondents' financial wealth that is invested in the stock market (information), in accordance with theoretical predictions. The same effect is found for more members of respondents' circles participating in the stock market (imitation). In the latter case however, we only find evidence of selective imitation, by identifying a positive and significant effect coming only from a subset of respondents' social circle with whom respondents interact regarding financial matters. These findings suggest that both directly and indirectly informative social interactions are important for financial behavior and stock market participation.
    Date: 2016
  6. By: Smolkin, Anton (Russian Presidential Academy of National Economy and Public Administration (RANEPA))
    Abstract: This research work deals with trust networks and social capital as main tools of repairing improper work of formal institutions. It is shown, basing on data for study ‘Eurobarometer in Russia’ conducted in 2012-2015, how different levels of trust (generalized, interpersonal, institutional) are combined in Russian society. Moreover, the connection of interpersonal trust and the level of social capital is demonstrated. The ways of solving problems, reared sue to ineffective work of institutions, using trust networks are also examined.
    Keywords: trust networks, social capital, interpersonal trust, institutional trust, economic behavior
    Date: 2016–06–07
  7. By: Michael Luca (Harvard Business School, Negotiation, Organizations & Markets Unit)
    Abstract: Online marketplaces have proliferated over the past decade, creating new markets where none existed. By reducing transaction costs, online marketplaces facilitate transactions that otherwise would not have occurred and enable easier entry of small sellers. One central challenge faced by designers of online marketplaces is how to build enough trust to facilitate transactions between strangers. This paper provides an economist's toolkit for designing online marketplaces, focusing on trust and reputation mechanisms.
    Date: 2016–09
  8. By: Hideaki Goto (International University of University)
    Abstract: This study empirically analyzes whether people's preferences for redistribution change as their countries develop. The results show that after controlling for income inequality, political orientation, and demographic and institutional factors, among others, people in more developed countries are more in favor of redistribution. This implies that concern for, or a social norm of caring about, the poor grows as a country becomes richer.
    Keywords: Redistribution, GDP per capita, Social preferences, Social norms
    JEL: D31 D63 H20
    Date: 2016–08

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