nep-soc New Economics Papers
on Social Norms and Social Capital
Issue of 2020‒03‒23
twelve papers chosen by
Fabio Sabatini
Università degli Studi di Roma “La Sapienza”

  1. Epidemics and Trust: The Case of the Spanish Flu By Arnstein Aassve; Guido Alfani; Francesco Gandolfi; Marco Le Moglie
  2. Who Is Bowling Alone? Quantile Treatment Effects of Unemployment on Social Participation By Lars Kunze; Nicolai Suppa
  3. Facebook Causes Protests By Leopoldo Fergusson; Carlos Molina
  4. Inherent effects of corruption on the erosion of political trust in developing countries:Evidence from Ghana By Julia Pullbeck; Firmin Doko Tchatoka
  5. Corruption and the Cultural Evolution of Family Ties By Litina, Anastasia; Varvarigos, Dimitrios
  6. Active Trading and (Poor) Performance : The Social Transmission Channel By Escobar Pradilla,Laura Manuela; Pedraza Morales,Alvaro Enrique
  7. Network-Based Hiring: Local Benefits; Global Costs By Arun G. Chandrasekhar; Melanie Morten; Alessandra Peter
  8. Trust and Saving in Financial Institutions By Sebastian Galiani; Paul Gertler; Camila Navajas Ahumada
  9. Genetic distance, cultural differences, and the formation of regional trade agreements By Benedikt Heid; Wenxi Lu
  10. Competition Among Charities: Field Experimental Evidence from a State Income Tax Credit for Charitable Giving By Chandrayee Chatterjee; James C. Cox; Michael K. Price; Florian Rundhammer
  11. The Gender Gap in Peer-to-Peer Lending: Evidence from the People’s Republic of China By Chen, Xiao; Huang, Bihong; Ye, Dezhu
  12. Education-Occupation Mismatch and Social Networks for Hispanics in the US: Role of Citizenship By Mundra, Kusum; Rios-Avila, Fernando

  1. By: Arnstein Aassve; Guido Alfani; Francesco Gandolfi; Marco Le Moglie
    Abstract: Recent studies argue that major crises can have long lasting effects on individual behavior. While most studies focused on natural disasters, we explore the consequences of the global pandemic caused by a lethal influenza virus in 1918-19: the so-called “Spanish Flu”. This was by far the worst pandemic of modern history, causing up to 100 million deaths worldwide. Using information about attitudes of respondents to the General Social Survey (GSS), we find evidence that experiencing the pandemic likely had permanent consequences in terms of individuals’ social trust. Our findings suggest that lower social trust was passed on to the descendants of the survivors of the Spanish Flu who migrated to the US. As trust is a crucial factor for long-term economic development, our research offers a new angle from which to assess current health threats. JEL Classification: I15, N3, Z1 Keywords: Epidemic, Generalized trust, Spanish flu, Pandemic, Mortality crisis
    Date: 2020
  2. By: Lars Kunze; Nicolai Suppa
    Abstract: This article examines heterogeneity in the effect of unemployment on social participation. Whereas existing studies on this relationship essentially estimate mean effects, we use quantile regression methods to provide a broader and more complete picture. To ac-count for the potential endogeneity of job loss, we estimate quantile treatment effects (on the treated) based on entropy balancing and focus on unemployment due to plant closures. Using German panel data, we show that the effect of unemployment varies across the distribution of public social activities. It is large and negative for individuals in the middle and lower part of the distribution of public activities, whereas those participating a lot are not affected. By contrast, the effect of unemployment on private social participation is virtually zero for individuals at the lower part of the outcome distribution and weakly positive in the middle. Our findings suggest that active labor market policies should account for target-group specific elements, tailored to those individuals which are most adversely affected by unemployment.
    Keywords: unemployment; social participation; plant closure; quantile treatment effects; entropy balancing
    Date: 2020
  3. By: Leopoldo Fergusson; Carlos Molina
    Abstract: The Internet and social media have been considered crucial determinants of recent political turmoil and protests. To estimate the causal impact of Facebook on collective action for a large set of countries, we use its release in a given language as an exogenous source of variation in access to social media where the language is spoken. Using country-, subnational-, and individual-level data, we show that Facebook has had a significant and sizable positive impact on citizen protests. Complementary findings show that reverse causality and correlated changes in protest reporting are not driving these results. Facebook’s effect is particularly important in countries with: underlying conditions that facilitate using the technology (more Internet access), grievances (economic downturns), few other opportunities to coordinate action against authorities (no freedom of assembly, repression of the opposition), and factors that make the country more conflict prone (natural resource abundance, denser urban populations). The effect is also stronger in countries with either very low or very high levels of accountability. Finally, we find that Facebook impacts individuals with very different characteristics; we detect no evidence of displacement in other forms of political participation or news consumption; and we document an increase in individuals’ perceived freedom to express what they think, to join political organizations, to vote, and to voice their political opinions.
    Keywords: Collective action, Protests, Social media, Facebook
    JEL: D70 L82 D80
    Date: 2020–03–12
  4. By: Julia Pullbeck (School of Economics, University of Adelaide); Firmin Doko Tchatoka (School of Economics, University of Adelaide)
    Abstract: A growing literature highlighting the inherent effects of corruption on the erosion of political trust has emerged recently, but few studies focus on Sub-Saharan African countries. The paper uses an identification strategy based on a control function approach, along with individual level data to disentangle the nexus between perceived corruption and political trust in Ghana. Results show that perceived corruption substantially erodes political trust, whilst political trust only slightly impacts people’s perception of corruption. In essence, perceived corruption propagates a climate of mistrust in Ghana. Moreover, heterogeneous effects on these relationships are observed across regions, ethnic groups, gender and education. For example, men tend to perceive the presidency office as corrupt whilst trusting the president, thereby repudiating the general view that individuals who trust more automatically perceive less corruption.
    Keywords: Corruption; Mistrust; Simultaneity; Ghana; Presidency office; Control function approach.
    JEL: O17 N27 C35
    Date: 2020–02
  5. By: Litina, Anastasia; Varvarigos, Dimitrios
    Abstract: We study the relation between conjugal family ties and corruption, as well as the important role of this relation for the cultural transmission of preferences regarding the strength of family ties. We show that the impact of family ties on the level of corruption, which can be either positive or negative, feeds back into the very process through which preferences for family ties are diffused from the older to the younger generations. As a result, the relation between family ties and corruption sets in motion mechanisms that govern the dynamics of cultural transmission. These dynamics determine long-term outcomes in terms of the population’s cultural homogeneity or diversity with regard to their attitudes towards family ties.
    Keywords: Corruption; Cultural transmission; Family ties
    JEL: A13 D73 Z13
    Date: 2020–03–01
  6. By: Escobar Pradilla,Laura Manuela; Pedraza Morales,Alvaro Enrique
    Abstract: Active investors often generate inferior returns. Social interactions might exacerbate this tendency, but the causal link between peer effects and active trading is difficult to identify empirically. This paper exploits the exogenous assignment of students to classrooms in a large-scale financial education initiative to evaluate the transmission of trading strategies among individual investors. The paper shows that students assigned to groups where classmates have more trading background, are more likely to start trading after completing the program. These social effects are stronger when peers have experienced favorable outcomes. The paper documents a negative consequence from social interactions: students that registered for courses where peer returns are large, generate lower trading profits than other investors. The evidence is consistent with social learning under biased information -- people share their most successful experiences, encouraging stock trading among uninformed investors. The results shed light on the role of selective communication in the transmission and adoption of ideas, and more importantly, in the behavior of people expose to biased information. The findings show that social learning can lead to misguided decisions when peer choices are not accurately observed by members of the social network.
    Keywords: International Trade and Trade Rules,Educational Sciences,Gender and Development,Financial Literacy,Educational Institutions&Facilities,Effective Schools and Teachers
    Date: 2019–03–07
  7. By: Arun G. Chandrasekhar; Melanie Morten; Alessandra Peter
    Abstract: Entrepreneurs, particularly in the developing world, often hire from their networks: friends, family, and resulting referrals. Network hiring has two benefits, documented extensively in the empirical literature: entrepreneurs know more about the ability of their network (and indeed they are often positively selected), and network members may be less likely to engage in moral hazard. We study theoretically how network hiring affects the size and composition (i.e., whether to hire friends or strangers) of the firm. Our primary result is that network hiring, while locally beneficial, can be globally inefficient. Because of the existence of a network, entrepreneurs set inefficiently low wages, firms are weakly too small, rely too much on networks for hiring, and resulting welfare losses increase in the quality of the network. Further, if entrepreneurs are uncertain about the true quality of the external labor market, the economy may become stuck in an information poverty trap where forward-looking entrepreneurs or even entrepreneurs in a market with social learning never learn the correct distribution of stranger ability, exacerbating welfare losses. We show that the poverty trap can worsen when network referrals are of higher quality.
    JEL: D83 D86 J46 L14 O1
    Date: 2020–02
  8. By: Sebastian Galiani; Paul Gertler; Camila Navajas Ahumada
    Abstract: We examine the role of trust in financial institutions as a necessary condition for the wider use of formal financial services by the poor. We randomly assigned beneficiaries of a conditional cash transfer program in 130 villages in Peru to attend a 3.5 hour training session designed to build their trust in financial institutions. Using household survey data combined with high-frequency administrative data, we find that the intervention: (a) significantly increased the level of trust in the financial system, but had no effect on knowledge of the banking system or financial literacy; and (b) resulted in the treatment group saving 13 Peruvian Soles more than he control group over a ten month period and (c) had no effect of the use of bank accounts for transactions. The increase in savings is close to double the savings of the treatment over the 10 month period prior to the intervention, 7 times the savings of the control group over the same period, and a 1.6 percentage point increase in the savings rate out of the cash transfer depostis.
    JEL: O16
    Date: 2020–02
  9. By: Benedikt Heid (School of Economics, University of Adelaide and CESifo); Wenxi Lu (Department of Economics and Trade, School of Management, Harbin Institute of Technology)
    Abstract: Genetic distance between countries’ populations has been shown to proxy cross-country differences in cultures and preferences. In a panel of 176 countries from 1970 to 2014, we find that higher genetic distance between two countries decreases their probability of having a trade agreement, even when controlling for geographic distance and other controls. The impact of cultural differences proxied by genetic distance is persistent over time and economically significant: while increasing the geographic distance between two countries by 1% decreases the probability of a regional trade agreement by 1.6%, increasing their genetic distance by 1% decreases the probability by 0.9%
    Keywords: trade agreements; trade policy; genetic distance; cultural difference
    JEL: F13 F14 F15 Z10
    Date: 2020–02
  10. By: Chandrayee Chatterjee; James C. Cox; Michael K. Price; Florian Rundhammer
    Abstract: Donations to charity are widely encouraged by policymakers through targeted tax incentives such as tax credits for contributions only to qualifying causes. We use an online field experiment to test how the largest such program, Arizona\'s state income tax credit for donations to qualifying charities, affects donation decisions in a modified dictator game. In the experiment, we randomize whether subjects receive detailed information about the tax credit program prior to selecting potential recipients and completing the allocation task. We also vary the number of charities that subjects can select as recipients along with the (tax-credit) qualifying vs. non-qualifying composition of the choice set. We find that average giving is unaffected by the information provision and composition of the choice set. However, we find that subjects direct significantly more funds towards qualifying charities when provided information about the tax program; an effect that is enhanced when subjects select multiple recipients from lists that contain a mixture of qualifying and non-qualifying organizations. Our results underline the importance of including a portfolio of choices when studying the impact of targeted incentives because this makes it possible to identify a central feature of our data: participants \"rob Peter\" (non-qualifying charities) \"to pay Paul\" (qualifying charities).
    Date: 2020–03
  11. By: Chen, Xiao (Asian Development Bank Institute); Huang, Bihong (Asian Development Bank Institute); Ye, Dezhu (Asian Development Bank Institute)
    Abstract: We document and analyze the gender gap in the online credit market. Using data from Renrendai, a leading peer-to-peer lending platform in the People’s Republic of China (PRC), we show that lending to female borrowers is associated with better loan performance, including a lower probability of default, a higher expected profit, and a lower expected loss than for their male peers. However, despite the higher creditworthiness, we don’t find any measurable gender impact on funding success rate, meaning that female borrowers have to compensate lenders by providing higher profitability to achieve a similar funding probability to their male peers. This evidence indicates the existence of a gender gap that discriminates against female borrowers. Further analysis implies that this gender gap is independent of the amount of information disclosed by borrowers.
    Keywords: P2P lending; gender gap; loan performance
    JEL: G20 G21 J16
    Date: 2019–07–10
  12. By: Mundra, Kusum (Rutgers University); Rios-Avila, Fernando (Levy Economics Institute)
    Abstract: In this paper we examine the education and occupation mismatch for Hispanics in the US using a novel objective continuous mismatch index and explore the role of immigrants' social networks on this mismatch. We explore whether having a larger social network helps Hispanics in finding jobs that better match with their skill and education levels or whether living in areas with larger concentration of Hispanics leads to more competition for the same jobs in the labor market. Given that the legal status of immigrants influence how the social networks are leveraged and their impact on labor market outcomes, we focus on the citizenship status for Hispanics. The quality of match between Hispanic's college degree major and occupation is measured using one of the continuous indices proposed in Rios-Avila and Saavedra-Caballero (2019) and calculated using pooled data for all college graduates in the US from 2010 to 2017. The Hispanic networks measures are constructed as the share of Hispanic population who are 25 years or older with respect to the total population of the same age and the second measure only includes Hispanics with at least a bachelor's degree using the weighted pooled data from 2010 to 2015. We find that networks have a positive impact on the job-match quality, but mostly for Hispanic citizens and this effect is stronger when the networks constitutes of at least a college degree. This shows that Hispanic citizens living in higher concentration of Hispanic college graduates are better able to leverage their networks or their networks are better able to match them with jobs closer to their field of specialization and skill set.
    Keywords: education-occupation mismatch, horizontal mismatch, social networks, hispanics, citizenship
    JEL: J15 J24 J61
    Date: 2020–02

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