nep-soc New Economics Papers
on Social Norms and Social Capital
Issue of 2020‒06‒29
seventeen papers chosen by
Fabio Sabatini
Università degli Studi di Roma “La Sapienza”

  1. Institutions, Opportunism and Prosocial Behavior: Some Experimental Evidence By Cabrales, Antonio; Clots-Figueras, Irma; Hernán-González, Roberto; Kujal, Praveen
  2. The Ties That Bind Us: Social Networks and Productivity in the Factory By Afridi, Farzana; Dhillon, Amrita; Sharma, Swati
  3. I Have Nothing Against Them, But. . . By Leonardo Bursztyn; Ingar K. Haaland; Aakaash Rao; Christopher P. Roth
  4. The Seeds of Ideology: Historical Immigration and Political Preferences in the United States By Giuliano, Paola; Tabellini, Marco
  5. A Political Model of Trust By Agranov, Marina; Eilat, Ran; Sonin, Konstantin
  6. Divided We Stay Home: Social Distancing and Ethnic Diversity By Georgy Egorov; Ruben Enikolopov; Alexey Makarin; Maria Petrova
  7. Do farmers follow the herd? The influence of social norms in the participation to agri-environmental schemes. By Philippe Le Coent; Raphaële Préget; Sophie Thoyer
  8. The Coordinating Power of Social Norms By Francesco Fallucchi; Daniele Nosenzo
  9. It Takes a Village: The Economics of Parenting with Neighborhood and Peer Effects By Agostinelli, Francesco; Doepke, Matthias; Sorrenti, Giuseppe; Zilibotti, Fabrizio
  10. Bitter Sugar: Slavery and the Black Family By Bertocchi, Graziella; Dimico, Arcangelo
  11. Doing more with less: Leveraging social norms and status concerns in encouraging conservation farm practices By Howley, Peter; Ocean, Neel
  12. Social Proximity to Capital: Implications for Investors and Firms By Theresa Kuchler; Yan Li; Lin Peng; Johannes Stroebel; Dexin Zhou
  13. Fatalism, Beliefs, and Behaviors During the COVID-19 Pandemic By Jesper Akesson; Sam Ashworth-Hayes; Robert Hahn; Robert D. Metcalfe; Itzhak Rasooly
  14. Social and self-Image concerns in fair-trade consumption: Evidence from experimental auctions for chocolate By Sabrina Teyssier; Fabrice Etilé; Pierre Combris
  15. The Value of Firm Networks: A Natural Experiment on Board Connections By Faia, Ester; Mayer, Max; Pezone, Vincenzo
  16. The death of trust across the finance industry By Limbach, Peter; Rau, P. Raghavendra; Schürmann, Henrik
  17. Revenge of the Experts: Will COVID-19 Renew or Diminish Public Trust in Science? By Aksoy, Cevat Giray; Eichengreen, Barry; Saka, Orkun

  1. By: Cabrales, Antonio (University College London); Clots-Figueras, Irma (University of Kent); Hernán-González, Roberto (Burgundy School of Business); Kujal, Praveen (Middlesex University Business School, London)
    Abstract: Formal or informal institutions have long been adopted by societies to protect against opportunistic behavior. However, we know very little about how these institutions are chosen and their impact on behavior. We experimentally investigate the demand for different levels of institutions that provide low to high levels of insurance and its subsequent impact on prosocial behavior. We conduct a large-scale online experiment where we add the possibility of purchasing insurance to safeguard against low reciprocity to the standard trust game. We compare two different mechanisms, the private (purchase) and the social (voting) choice of institutions. Whether voted or purchased, we find that there is demand for institutions in low trustworthiness groups, while high trustworthiness groups always demand lower levels of institutions. Lower levels of institutions are demanded when those who can benefit from opportunistic behavior, i.e. low trustworthiness individuals, can also vote for them. Importantly, the presence of insurance crowds out civic spirit even when subjects can choose the no insurance option: trustworthiness when formal institutions are available is lower than in their absence.
    Keywords: institutions, trust, trustworthiness, voting, insurance
    JEL: C92 D02 D64
    Date: 2020–05
  2. By: Afridi, Farzana; Dhillon, Amrita; Sharma, Swati
    Abstract: We use high frequency worker level productivity data from garment manufacturing units in India to study the effects of caste-based social networks on individual and group productivity when workers are complements in the production function but wages are paid at the individual level. Using exogenous variation in production line composition for almost 35,000 worker-days, we find that a 1 percentage point increase in the share of own caste workers in the line increases daily individual productivity by about 10 percentage points. The lowest performing worker increases her effort by more than 15 percentage points when the production line has a more homogeneous caste composition. Production externalities that impose financial costs due to worker's poor performance on co-workers within her social network can explain our findings. Our results suggest that even in the absence of explicit group-based financial incentives, social networks can be leveraged to improve both worker and group productivity.
    Keywords: assembly lines; caste; India; labor productivity; Social Networks
    JEL: J15 J24 Y40 Z13
    Date: 2020–04
  3. By: Leonardo Bursztyn; Ingar K. Haaland; Aakaash Rao; Christopher P. Roth
    Abstract: We study the use of excuses to justify socially stigmatized actions, such as opposing minority groups. Rationales to oppose minorities change some people’s private opinions, leading them to take anti-minority actions even if they are not prejudiced against minorities. When these rationales become common knowledge, prejudiced people who are not persuaded by the rationale can pool with unprejudiced people who are persuaded. This decreases the stigma associated with anti-minority expression, increasing public opposition to minority groups. We examine this mechanism through several large-scale experiments in the context of anti-immigrant behavior in the United States. In the first main experiment, participants learn about a study claiming that immigrants increase crime rates and then choose whether to authorize a publicly observable donation to an anti-immigrant organization. Informing participants that others will know that they learned about the study substantially increases donation rates. In the second main experiment, participants learn that a previous respondent authorized a donation to an anti-immigrant organization and then make an inference about the respondent’s motivations. Participants who are informed that the respondent learned about the study prior to authorizing the donation see the respondent as less intolerant and more easily persuadable.
    JEL: C90 D03 D72 D83 P16 Z10
    Date: 2020–05
  4. By: Giuliano, Paola (University of California, Los Angeles); Tabellini, Marco (Massachusetts Institute of Technology)
    Abstract: We test the relationship between historical immigration to the United States and political ideology today. We hypothesize that European immigrants brought with them their preferences for the welfare state, and that this had a long-lasting effect on the political ideology of US born individuals. Our analysis proceeds in three steps. First, we document that the historical presence of European immigrants is associated with a more liberal political ideology and with stronger preferences for redistribution among US born individuals today. Next, we show that this correlation is not driven by the characteristics of the counties where immigrants settled or other specific, socioeconomic immigrants' traits. Finally, we conjecture and provide evidence that immigrants brought with them their preferences for the welfare state from their countries of origin. Consistent with the hypothesis that immigration left its footprint on American ideology via cultural transmission from immigrants to natives, we show that our results are stronger when inter-group contact between natives and immigrants, measured with either intermarriage or residential integration, was higher. Our findings also indicate that immigrants influenced American political ideology during one of the largest episodes of redistribution in US history — the New Deal — and that such effects persisted after the initial shock.
    Keywords: immigration, culture, political ideology, preferences for redistribution
    JEL: D64 D72 H2 J15 N32 Z1
    Date: 2020–05
  5. By: Agranov, Marina; Eilat, Ran; Sonin, Konstantin
    Abstract: We analyze a simple model of political competition, in which the uninformed median voter chooses whether to follow or ignore the advice of the informed elites. In equilibrium, information transmission is possible only if voters trust the elites' endorsement of potentially biased candidates. When inequality is high, the elites' informational advantage is minimized by the voters' distrust. When inequality reaches a certain threshold, the trust, and thus the information transmission, breaks down completely. Finally, the size of the elite forming in equilibrium depends on the amount of trust they are able to maintain.
    Keywords: cheap talk; inequality; information club; political economy; Trust
    JEL: D72 D83
    Date: 2020–04
  6. By: Georgy Egorov; Ruben Enikolopov; Alexey Makarin; Maria Petrova
    Abstract: Voluntary social distancing plays a vital role in containing the spread of the disease during a pandemic. As a public good, it should be more commonplace in more homogeneous and altruistic societies. However, for healthy people, observing social distancing has private benefits, too. If sick individuals are more likely to stay home, healthy ones have fewer incentives to do so, especially if the asymptomatic transmission is perceived to be unlikely. Theoretically, we show that this interplay may lead to a stricter observance of social distancing in more diverse and less altruistic societies. Empirically, we find that, consistent with the model, the reduction in mobility following the first local case of COVID-19 was stronger in Russian cities with higher ethnic fractionalization and cities with higher levels of xenophobia. For identification, we predict the timing of the first case using pre-existing patterns of internal migration to Moscow. Using SafeGraph data on mobility patterns, we confirm that mobility reduction in the United States was also higher in counties with higher ethnic fractionalization. Our findings highlight the importance of strategic incentives of different population groups for the effectiveness of public policy.
    JEL: D64 D74 I12
    Date: 2020–05
  7. 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 Préget (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, 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: social norms,behaviour,agri-environmental contracts
    Date: 2020–06–05
  8. By: Francesco Fallucchi (Luxembourg Institute of Socio-Economic Research (LISER), Luxembourg); Daniele Nosenzo (Department of Economics and Business Economics, Aarhus University)
    Abstract: A popular empirical technique to measure norms uses coordination games to elicit what subjects in an experiment consider appropriate behavior in a given situation (Krupka and Weber, 2013). The Krupka-Weber method works under the assumption that subjects use their normative expectations to solve the coordination game. However, subjects might use alternative focal points to coordinate, in which case the method may deliver distorted measurements of the social norm. We test the vulnerability of the Krupka-Weber method to the presence of alternative salient focal points. We find that the method is robust as long as there are clear normative expectations about what constitutes appropriate behavior. In settings where there is a less clear consensus about the social norm, the method is more vulnerable.
    Keywords: Social norms, Krupka-Weber method, Coordination, Focal point, Saliency, Dictator game
    JEL: C72 C91
    Date: 2020–06–19
  9. By: Agostinelli, Francesco; Doepke, Matthias; Sorrenti, Giuseppe; Zilibotti, Fabrizio
    Abstract: As children reach adolescence, peer interactions become increasingly central to their development, whereas the direct influence of parents wanes. Nevertheless, parents may continue to exert leverage by shaping their children's peer groups. We study interactions of parenting style and peer effects in a model where children's skill accumulation depends on both parental inputs and peers, and where parents can affect the peer group by restricting who their children can interact with. We estimate the model and show that it can capture empirical patterns regarding the interaction of peer characteristics, parental behavior, and skill accumulation among US high school students. We use the estimated model for policy simulations. We find that interventions (e.g., busing) that move children to a more favorable neighborhood have large effects but lose impact when they are scaled up because parents' equilibrium responses push against successful integration with the new peer group.
    Keywords: neighborhood effects; Parenting; parenting style; peer effects; skill acquisition
    JEL: I24 J13 J24 R20
    Date: 2020–04
  10. By: Bertocchi, Graziella; Dimico, Arcangelo
    Abstract: We empirically assess the effect of historical slavery on the African American family structure. Our hypothesis is that female single headship among blacks is more likely to emerge in association not with slavery per se, but with slavery in sugar plantations, since the extreme demographic and social conditions prevailing in the latter have persistently affected family formation patterns. By exploiting the exogenous variation in sugar suitability, we establish the following. In 1850, sugar suitability is indeed associated with extreme demographic outcomes within the slave population. Over the period 1880-1940, higher sugar suitability determines a higher likelihood of single female headship. The effect is driven by blacks and starts fading in 1920 in connection with the Great Migration. OLS estimates are complemented with a matching estimator and a fuzzy RDD. Over a linked sample between 1880 and 1930, we identify an even stronger intergenerational legacy of sugar planting for migrants. By 1990, the effect of sugar is replaced by that of slavery and the black share, consistent with the spread of its in uence through migration and intermarriage, and black incarceration emerges as a powerful mediator. By matching slaves' ethnic origins with ethnographic data we rule out any in uence of African cultural traditions.
    Keywords: Black family,slavery,sugar,migration,culture
    JEL: J12 J47 N30 O13 Z10
    Date: 2020
  11. By: Howley, Peter; Ocean, Neel
    Abstract: Using an online survey with randomisation, we illustrate how identity-based utility can be harnessed to encourage pro-environmental behaviours. Results show that providing farmers with an opportunity to demonstrate their ‘green credentials’ increases their intention of maintaining environmental practices by an average of 19%, while the use of descriptive norms increases intent to participate in a biodiversity activity by an average of 8%. Interventions such as these represent a low-cost, yet powerful supplement to traditional policy tools. New approaches for engendering behavioural change are likely to be particularly important in a UK context as the UK transitions out of the EU.
    Keywords: Agricultural and Food Policy, Environmental Economics and Policy, Farm Management
    Date: 2020–04
  12. By: Theresa Kuchler; Yan Li; Lin Peng; Johannes Stroebel; Dexin Zhou
    Abstract: We use social network data from Facebook to show that institutional investors are more likely to invest in firms from regions to which they have stronger social ties. This effect of social proximity on investment behavior is distinct from the effect of geographic proximity. Social connections have the largest influence on investments of small investors with concentrated holdings as well as on investments in firms with a low market capitalization and little analyst coverage. We also find that the response of investment decisions to social connectedness affects equilibrium capital market outcomes: firms in locations with stronger social ties to places with substantial institutional capital have higher institutional ownership, higher valuations, and higher liquidity. These effects of social proximity to capital on capital market outcomes are largest for small firms with little analyst coverage. We find no evidence that investors generate differential returns from investments in locations to which they are socially connected. Our results suggest that the social structure of regions affects firms' access to capital and contributes to geographic differences in economic outcomes.
    JEL: G2 G3
    Date: 2020–06
  13. By: Jesper Akesson; Sam Ashworth-Hayes; Robert Hahn; Robert D. Metcalfe; Itzhak Rasooly
    Abstract: Little is known about individual beliefs concerning the Coronavirus Disease 2019 (COVID-19). Still less is known about how these beliefs influence the spread of the virus by determining social distancing behaviors. To shed light on these questions, we conduct an online experiment (n = 3,610) with participants in the US and UK. Participants are randomly allocated to a control group, or one of two treatment groups. The treatment groups are shown upper- or lower-bound expert estimates of the infectiousness of the virus. We present three main empirical findings. First, individuals dramatically overestimate the infectiousness of COVID-19 relative to expert opinion. Second, providing people with expert information partially corrects their beliefs about the virus. Third, the more infectious people believe that COVID-19 is, the less willing they are to take social distancing measures, a finding we dub the “fatalism effect”. We estimate that small changes in people's beliefs can generate billions of dollars in mortality benefits. Finally, we develop a theoretical model that can explain the fatalism effect.
    JEL: I0
    Date: 2020–05
  14. By: Sabrina Teyssier (ALISS - Alimentation et sciences sociales - INRA - Institut National de la Recherche Agronomique); Fabrice Etilé (ALISS - Alimentation et sciences sociales - INRA - Institut National de la Recherche Agronomique); Pierre Combris (ALISS - Alimentation et sciences sociales - INRA - Institut National de la Recherche Agronomique)
    Abstract: Can social interactions be used to favor the consumption of fair-trade products? Social interactions can alter purchase behaviors by triggering either self-image concerns (when one observes others' decisions without being observed) or social-image concerns (when everybody observes everyone). A laboratory experiment is designed to identify separately the role of these motivators, using real auctions for a standard and a fair-trade chocolate, and controlling carefully for taste and package differences. The willingness-to-pay (WTP) for the chocolates and the premium that the subjects grant to the fair-trade variety are analyzed. The results reveal that both social and self-image matter: the subjects give a higher premium to the fairtrade chocolate when their decisions are made public; the premium is adjusted according to the information that is received about the premium granted by other subjects, even when decisions remain private. However, the higher premium in public auctions is obtained through a decrease in the WTP for the standard chocolate, rather than an increase in the WTP for the fair-trade chocolate. In addition, the subjects are much more sensitive to information about others' choices that relax the moral or social norm constraining their own choices. We thus conclude that social interactions cannot be used to nudge consumers into fair-trade consumption, at least for ordinary products such as chocolate.
    Keywords: fair-trade, image motivation, willingness-to-pay, experiment, chocolate
    Date: 2020–06–05
  15. By: Faia, Ester; Mayer, Max; Pezone, Vincenzo
    Abstract: This paper presents causal evidence of the effects of boardroom networks on firm value and compensation policies. We exploit exogenous variation in network centrality arising from a ban on interlocking directorates of Italian financial and insurance companies. We leverage this shock to show that firms whose centrality in the network rises after the reform experience positive abnormal returns around the announcement date and are better hedged against shocks. Information dissemination plays a central role: results are driven by firms that have higher idiosyncratic volatility, low analyst coverage, and more uncertainty surrounding their earnings forecasts. Firms benefit more from boardroom centrality when they are more central in the input-output network, hence more susceptible to upstream shocks, when they are less central in the cross-ownership network, or when they have low profitability or low growth opportunities. Network centrality also results in higher directors' compensation, due to rent sharing and improved executives' outside option, and more similar compensation policies between connected firms.
    Keywords: executives' compensation; firms networks; Natural Experiment
    JEL: D57 G14 G32 L14
    Date: 2020–04
  16. By: Limbach, Peter; Rau, P. Raghavendra; Schürmann, Henrik
    Abstract: Across all industries in the U.S., we document a significant and unique decline in the level of generalized trust among finance professionals relative to the decline of trust in the general U.S. population. This decline occurs in different age cohorts and among different levels of seniority. It is related to a lack of confidence only in institutions that are relevant to the finance industry. The relative decline of trust is associated with changes in economic conditions, the professional environment in the finance industry, and with the decreasing level of socialization among finance professionals.
    Keywords: Finance industry,Generalized trust,Implicit incentives,Professional environment,Socialization
    JEL: G20 G21 G22 G24 L14 A14
    Date: 2020
  17. By: Aksoy, Cevat Giray; Eichengreen, Barry; Saka, Orkun
    Abstract: An effect of the COVID-19 pandemic, it is sometimes suggested, will be to reverse the secular trend toward questioning the value of scientific research and expertise. We analyze this hypothesis by examining how exposure to previous epidemics affected the confidence of individuals in science and scientists. Consistent with theory and evidence that attitudes are durably formed when individuals are in their impressionable years between the ages of 18 and 25, we focus on people who were exposed to epidemics in their country of residence at this stage of the life course. Combining data from a 2018 Wellcome Trust survey of more than 70,000 individuals in 160 countries with data on global epidemics since 1970, we show that such exposure has no impact on views of science as an endeavor or on opinions of whether the study of disease is properly an aspect of science, but that it significantly reduces confidence in scientists and the benefits of their work. These findings are robust to a variety of controls, empirical methods and sensitivity checks. We suggest some implications for how scientific findings are communicated and for how scientists seeking to inform and influence public opinion should position themselves in the public sphere.
    Date: 2020–05–30

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