nep-soc New Economics Papers
on Social Norms and Social Capital
Issue of 2019‒01‒14
thirteen papers chosen by
Fabio Sabatini
Università degli Studi di Roma “La Sapienza”

  1. The European Trust Crisis and the Rise of Populism By Yann Algan; Sergei Guriev; Elias Papaioannou; Evgenia Passari
  2. The Institutional Foundations of Religious Politics: Evidence from Indonesia By Samuel Bazzi; Gabriel Koehler-Derrick; Benjamin Marx
  3. Trust and Law in Credit Markets By Asano, Koji
  4. Financial Trust in Social Economic Network and Credit Risk By Muduli, Silu; Dash, Shridhar Kumar
  5. Interacting collective action problems in the commons By Nicolas Querou
  6. Altruism and Risk Sharing in Networks By Renaud Bourlès; Yann Bramoullé; Eduardo Perez-Richet
  7. Pro-environmental norms and subjective well-being: panel evidence from the UK By Martin Binder; Ann-Kathrin Blankenberg; Heinz Welsch
  8. Giving Once, Giving Twice: A Two-Period Field Experiment On Intertemporal Crowding in Charitable Giving By Adena, Maja; Huck, Steffen
  9. Do farmers follow the herd? The influence of social norms in the participation to agri-environmental schemes. By Philippe Le Coent; Raphaële Preget; Sophie Thoyer
  10. Racial Bias and In-group Bias in Judicial Decisions: Evidence from Virtual Reality Courtrooms By Samantha Bielen; Wim Marneffe; Naci H. Mocan
  11. Culture and collateral requirements: Evidence from developing countries By Panagiota Papadimitri; Fotios Pasiouras; Menelaos Tasiou
  12. Dishonesty, Social Information, and Sorting By AKIN, ZAFER
  13. A Model of Competing Narratives By Kfir Eliaz; Ran Spiegler

  1. By: Yann Algan (Département d'économie); Sergei Guriev (Département d'économie); Elias Papaioannou (London Business School (LBS)); Evgenia Passari (Université Paris-Dauphine)
    Abstract: We study the implications of the Great Recession for voting for antiestablishment parties, as well as for general trust and political attitudes, using regional data across Europe. We find a strong relationship between increases in unemployment and voting for nonmainstream parties, especially populist ones. Moreover, unemployment increases in tandem with declining trust toward national and European political institutions, though we find only weak or no effects of unemployment on interpersonal trust. The correlation between unemployment and attitudes toward immigrants is muted, especially for their cultural impact. To explore causality, we extract the component of increases in unemployment explained by the precrisis structure of the economy, in particular the share of construction in regional value added, which is strongly related both to the buildup preceding and the bursting of the crisis. Our results imply that crisis-driven economic insecurity is a substantial determinant of populism and political distrust.
    Date: 2017
  2. By: Samuel Bazzi (Boston University (Boston, Massachusetts) (BU)); Gabriel Koehler-Derrick (Harvard University); Benjamin Marx
    Abstract: Why do religious politics thrive in some societies but not others? This paper explores the institutional foundations of this process in Indonesia, the world’s largest Muslim democracy. We show that a major Islamic institution, the waqf, fostered the entrenchment of political Islam at a critical historical juncture. In the early 1960s, rural elites transferred large amounts of land into waqf—a type of inalienable charitable trust—to avoid expropriation by the government as part of a major land reform effort. Although the land reform was later undone, the waqf properties remained. We show that greater intensity of the planned reform led to more prevalent waqf land and Islamic institutions endowed as such, including religious schools, which are strongholds of the Islamist movement. We identify lasting effects of the reform on electoral support for Islamist parties, preferences for religious candidates, and the adoption of Islamic legal regulations (sharia). Overall, the land reform contributed to the resilience and eventual rise of political Islam by helping to spread religious institutions, thereby solidifying the alliance between local elites and Islamist groups. These findings shed new light on how religious institutions may shape politics in modern democracies.
    JEL: D72 D74 P16 P26 Z12
    Date: 2018–10
  3. By: Asano, Koji
    Abstract: This study examines the coevolution of trust and legal institutions in a model of competitive credit markets plagued by asymmetric information. When entrepreneurs' relative payoff to productive activities versus cheating is private information, uncivic ones, who intend to cheat, can enter credit markets and be cross-subsidized by civic ones, who engage in productive activities. To exploit this benefit, uncivic entrepreneurs demand weak legal enforcement through the political process. This rent-seeking behavior interacts with the formation of trust, generating an underdevelopment trap with weak enforcement and distrust. Technological advancement may encourage entrepreneurs' rent-seeking and aggravate distrust.
    Keywords: culture, institutions, financial development, adverse selection
    JEL: O10 O16 Z13
    Date: 2018–12–13
  4. By: Muduli, Silu; Dash, Shridhar Kumar
    Abstract: Paper models lender’s decision based on project riskiness, trust from borrower’s socioeconomic network, and social cost of default for the borrower. The paper suggests a methodology to estimate aggregate level of trustworthiness of borrower in socio-economic network. Our model links the social cost of default to credit default. A relatively safer project executed by a borrower with lower social cost of default is likely to be a willful defaulter. Similarly, relatively safer project executed by a borrower with high social cost of default is likely to pay-back the loan.
    Keywords: Social Economic Network,Trust,Credit Risk
    JEL: D85 G21 L14
    Date: 2019
  5. By: Nicolas Querou (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier)
    Abstract: We consider a setting where agents are subject to two types of collective action problems, any group user's individual extraction inducing an externality on others in the same group (intra-group problem), while aggregate extraction in one group induces an externality on each agent in other groups (intergroup problem). One illustrative example of such a setting corresponds to a case where a common-pool resource is jointly extracted in local areas, which are managed by separate groups of individuals extracting the resource in their respective location. The interplay between both types of externality is shown to affect the results obtained in classical models of common-pool resources. We show how the fundamentals affect the individual strategies and welfare compared to the benchmark commons problems. Finally, different initiatives (local cooperation, inter-area agreements) are analyzed to assess whether they may alleviate the problems, and to understand the conditions under which they do so.
    Keywords: externalities,common-pool resource,collective action
    Date: 2018
  6. By: Renaud Bourlès (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - Ecole Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique); Yann Bramoullé (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - Ecole Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique); Eduardo Perez-Richet (IEP Paris - Sciences Po Paris - Institut d'études politiques de Paris, CEPR)
    Abstract: We provide the first analysis of the risk-sharing implications of altruism networks. Agents are embedded in a fixed network and care about each other. We study whether altruistic transfers help smooth consumption and how this depends on the shape of the network. We identify two benchmarks where altruism networks generate efficient insurance: for any shock when the network of perfect altruism is strongly connected and for any small shock when the network of transfers is weakly connected. We show that the extent of informal insurance depends on the average path length of the altruism network and that small shocks are partially insured by endogenous risk-sharing communities. We uncover complex structural effects. Under iid incomes, central agents tend to be better insured, the consumption correlation between two agents is positive and tends to decrease with network distance, and a new link can decrease or increase the consumption variance of indirect neighbors. Overall, we show that altruism in networks has a first-order impact on risk and generates specific patterns of consumption smoothing.
    Keywords: altruism,networks,risk sharing,informal insurance
    Date: 2018–11
  7. By: Martin Binder (Bard College Berlin); Ann-Kathrin Blankenberg; Heinz Welsch (University of Oldenburg, Department of Economics)
    Abstract: Tying in with a small number of studies on green norms, identity and subjective well-being, this paper studies the relationship between holding a green self-image and life satisfaction in the UK. Focusing on (sub-national) regions as the unit of reference, we investigate if and how the individual-level greenness-satisfaction relationship varies with measures of the prevalence and distribution (disparity) of greenness at the regional level, taking these measures as indicators of a green social norm. Two key findings emerge from our analysis. First, life satisfaction is negatively related to the regional-level mean (prevalence) and positively related to the regional-level diversity of greenness, while being unrelated to the degree of polarization of greenness. Taking the prevalence as a direct and diversity as an inverse measure of the validity of a greenness norm, these results are consistent with the idea that the norm is experienced (by greens) as a standard of reference in the process of green status competition or (by non-greens) as a source of social pressure. Second, the well-being benefits from holding a greener self-image are unrelated to the prevalence and diversity of greenness, but positively related to the polarization of greenness for those either very green or not green at all. This is consistent with the idea that green self-image yields well-being benefits through identity, that is, by identifying with the own group and differentiating oneself from other groups – a possibility that relies on sufficiently large differentiation/polarization of groups. We discuss differences between these results and previous findings based on measures of nation-wide prevalence and disparity of greenness.
    Keywords: subjective well-being, norms, green behavior, green self-image, fractionalization, polarization
    Date: 2019–01
  8. By: Adena, Maja (WZB Berlin); Huck, Steffen (WZB Berlin and University College London)
    Abstract: We study intertemporal crowding between two fundraising campaigns for the same charitable organization by manipulating donors\' beliefs about the likelihood of future campaigns in two subsequent field experiments. The data shows that initial giving is decreasing in the likelihood of a future campaign while subsequent giving increases in initial giving. While this refutes the predictions of a simple expected utility model, the pattern is in line with a model that allows for (anticipated or unanticipated) habit formation provided that donations in the two periods are substitutes.
    Keywords: charitable giving; field experiments; intertemporal crowding;
    JEL: C93 D64 D12
    Date: 2018–12–20
  9. By: Philippe Le Coent (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier); Raphaële Preget (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier); Sophie Thoyer (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier)
    Abstract: This article analyses the role played by social norms in farmers' decisions to enroll into an agri-environmental scheme (AES). First, it develops a simple theoretical model highlighting the interplay of descriptive and injunctive norms in farmers' utility functions. Second, an empirical valuation of the effect of social norms is provided based on the results of a stated preference survey conducted with 98 wine-growers in the South of France. Proxies are proposed to capture and measure the weight of social norms in farmers' decision to sign an agri-environmental contract. Our empirical results indicate that the injunctive norm seems to play a stronger role than the descriptive norm.
    Keywords: agri-environmental contracts,behaviour,social norms
    Date: 2018
  10. By: Samantha Bielen; Wim Marneffe; Naci H. Mocan
    Abstract: We shot videos of criminal trials using 3D Virtual Reality (VR) technology, prosecuted by actual prosecutors and defended by actual defense attorneys in an actual courtroom. This is the first paper that utilizes VR technology in a non-computer animated setting, which allows us to replace white defendants in the courtroom with individuals who have Middle Eastern or North African descent in a real-life environment. We alter only the race of the defendants in these trials, holding all activity in the courtroom constant ( Law students, economics students and practicing lawyers are randomly assigned to watch with VR headsets, from the view point of the judge, the trials that differed only in defendants’ skin color. Background information obtained from the evaluators allowed us to identify their cultural heritage. Evaluators made decisions on guilt/innocence in these burglary and assault cases, as well as prison sentence length and fine in accordance with the guidelines provided by the relevant law. There is suggestive evidence of negative in-group bias in conviction decisions where evaluators are harsher against defendants of their own race. There is, however, significant overall racial bias in conviction decisions against minorities. In the sentencing phase, we find in-group favoritism in prison times and fines, driven by white evaluators. This translates into overall racial bias against minority defendants in prison sentences and fines. We find only scant evidence that the concerns of the evaluators about terrorism, about immigration, or their trust in the judiciary or the police have an impact on their judicial decisions, suggesting that the source of the bias may be deep-rooted. Merging a small sample of judges and prosecutors with the sample of lawyers provides very similar results as those obtained from the analysis of lawyers.
    JEL: K4 Z1
    Date: 2018–12
  11. By: Panagiota Papadimitri (Portsmouth Business School); Fotios Pasiouras (Montpellier Business School); Menelaos Tasiou (Portsmouth Business School)
    Abstract: We study the relationship between culture and the use of collateral in corporate borrow- ing. Using a dataset of over 14,000 firms from 70 transition and developing countries, we find evidence that the likelihood to pledge collateral is lower in countries with higher un- certainty avoidance and corporate ethical behavior. In contrast, long-term orientation and individualism enhance the likelihood to use collateral. These results hold when using sub- samples and further controls for various firm and country-specific attributes. Additional analysis reveals that culture influences not only the likelihood to pledge collateral but also its type (movable versus non-movable) and its value relative to the value of the loan.
    Keywords: Culture, Ethics, Collateral
    JEL: G21 G32
    Date: 2019–01–09
  12. By: AKIN, ZAFER
    Abstract: The dishonesty literature investigates how people behave when they are provided certain types of information. However, this approach predominantly ignores the fact that people -to some extent- can choose which information they want to be exposed to. By conducting a laboratory experiment, we study individuals’ decisions to choose which social information they would like to observe and the effect of this sorting on their engagement in unethical conduct. We find evidence that sorting exacerbates the prevalence of dishonesty, which is mainly driven by the ones who chose maximum information. Our results demonstrate that sorting is an important factor determining dishonest behavior and that previously observed levels of prevalence of dishonesty in the literature can be an underestimate of actual level of dishonest behavior in real-world situations.
    Keywords: Dishonesty; social norms; selection; laboratory experiments
    JEL: C91 D03
    Date: 2018–08–01
  13. By: Kfir Eliaz; Ran Spiegler
    Abstract: We formalize the argument that political disagreements can be traced to a "clash of narratives". Drawing on the "Bayesian Networks" literature, we model a narrative as a causal model that maps actions into consequences, weaving a selection of other random variables into the story. An equilibrium is defined as a probability distribution over narrative-policy pairs that maximizes a representative agent's anticipatory utility, capturing the idea that public opinion favors hopeful narratives. Our equilibrium analysis sheds light on the structure of prevailing narratives, the variables they involve, the policies they sustain and their contribution to political polarization.
    Date: 2018–11

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