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on Social Norms and Social Capital |
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Issue of 2007‒01‒02
seventeen papers chosen by Fabio Sabatini Universita degli Studi di Roma, La Sapienza |
| By: | Douglass C North; John Joseph Wallis; Barry R. Weingast |
| Abstract: | Neither economics nor political science can explain the process of modern social development. The fact that developed societies always have developed economies and developed polities suggests that the connection between economics and politics must be a fundamental part of the development process. This paper develops an integrated theory of economics and politics. We show how, beginning 10,000 years ago, limited access social orders developed that were able to control violence, provide order, and allow greater production through specialization and exchange. Limited access orders provide order by using the political system to limit economic entry to create rents, and then using the rents to stabilize the political system and limit violence. We call this type of political economy arrangement a natural state. It appears to be the natural way that human societies are organized, even in most of the contemporary world. In contrast, a handful of developed societies have developed open access social orders. In these societies, open access and entry into economic and political organizations sustains economic and political competition. Social order is sustained by competition rather than rent-creation. The key to understanding modern social development is understanding the transition from limited to open access social orders, which only a handful of countries have managed since WWII. |
| JEL: | A0 K0 K22 N0 N4 N40 O1 O4 P0 P1 P16 P2 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12795&r=soc |
| By: | Houser, Daniel; Schunk, Daniel; Winter, Joachim |
| Abstract: | The relationship between trust and risk is a topic of enduring interest. Although there are substantial differences between the ideas the terms express, many researchers from different disciplines have pointed out that these two concepts become very closely related in personal exchange contexts. This raises the important practical concern over whether behaviors in the widely-used “trust game” actually measure trust, or instead reveal more about risk attitudes. It is critical to confront this question rigorously, as data from these games are increasingly used to support conclusions from a wide variety of fields including macroeconomic development, social psychology and cultural anthropology. The aim of this paper is to provide cogent evidence on the relationship between trust and risk in “trust” games. Subjects in our experiment participate either in a trust game or in its risk game counterpart. In the trust version, subjects play a standard trust game and know their counterparts are human. In the risk version, subjects know their counterparts are computers making random decisions. We compare decisions between these treatments, and also correlate behavior with subjects’ risk attitudes as measured by the Holt and Laury (2002) risk instrument. We provide evidence that trusting behavior is different than behavior under risk. In particular, (i) decisions patterns in our trust and risk games are significantly different; and (ii) risk attitudes correlate with decisions in the risk game, but not the trust game. |
| Keywords: | trust; risk attitudes; laboratory experiments |
| JEL: | C91 C92 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:lmu:muenec:1350&r=soc |
| By: | Avner Ben-Ner; Louis Putterman |
| Abstract: | In the one-shot trust or investment game without opportunities for reputation formation or contracting, economic theory predicts no trusting because there is no incentive for trustworthiness. Under these conditions, theory predicts (a) no effect of pre-play communication, and (b) universal preference for moderate cost binding contracts over interacting without contracts. We introduce the opportunities to engage in pre-play communication and to enter binding or non-binding contracts, and find (a) communication increases trusting and trustworthiness, (b) contracts are largely unnecessary for trusting and trustworthy behaviors and are eschewed by many players, and (c) more trusting leads to higher earnings, and (d) both trustors and trustees favor “fair and efficient” proposals over the more unequal proposals predicted by theory. |
| Keywords: | trust game, trust, trustworthiness, reciprocity, commitment, communication. Comparative analysis of agency problems, Production of public goods |
| JEL: | C72 C91 D63 |
| URL: | http://d.repec.org/n?u=RePEc:hrr:papers:0206&r=soc |
| By: | Vittorio Pelligra |
| Abstract: | Trust and trustworthiness are key elements, both at the micro and macro level, in sustaining the working of modern economies and their institutions. However, despite its centrality, trust continues to be considered as a “conceptual bumblebee”, it works in practice but not in theory. In particular, its behavioural rationale still represents a puzzle for traditional rational choice theory and game theory. In this paper “trust responsiveness”, an alternative explanatory principle that can account for trustful and trustworthy behaviour, is proposed. Such principle assumes that people can be motivated to behave trustworthily by trustful actions. The paper discusses the philosophical roots, the historical development, as well as the relational nature of this principle as well as its theoretical implications. |
| Keywords: | Trust, Trustworthiness, Game Theory, Adam Smith |
| JEL: | Z13 B31 C7 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:cns:cnscwp:200615&r=soc |
| By: | Fiorenza BELUSSI; Luciano PILOTTI; Silvia Rita SEDITA |
| Abstract: | The work offers an integrated view on how knowledge is developed in localised systems of specialised firms (industrial districts - IDs), through informal social networks (communities of practice - CoPs), and firms networks, in an osmotic process between the internal to the district knowledge and the external to the district knowledge. Contrary to the Marshallian consolidated tradition, we describe the functioning of the modern industrial district emphasising not just the role of the local “industrial atmosphereâ€, but the modern aspect of “learning at the boundariesâ€, where local actors mix sources of knowledge located inside the district (exploitation of local resources) with external sources (exploration of global knowledge). Our empirical work, based on the analysis of three Italian industrial districts, shows that, in relation to the aspect of exploitation of local resources, the investment (both direct and indirect) of firms in augmenting their capabilities is juxtaposed to the activity organised by the district meta-organisers of cultivating local resources; furthermore, in relation to the exploration of global knowledge, internal/external switchers allow the exploration of global knowledge flows. It is a process that combines forms of localised learning with learning at the boundaries, through the access to pipelines (FDI, firms networks, distant KIBS) and boundary spanning actors (external CoPs). |
| Keywords: | Industrial Districts, Learning, Communities of Practice, Networks |
| JEL: | D83 M54 R12 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:mil:wpdepa:2006-40&r=soc |
| By: | Botticini, Maristella; Eckstein, Zvi |
| Abstract: | From the end of the second century C.E., Judaism enforced a religious norm requiring Jewish fathers to educate their sons. We present evidence supporting our thesis that this change in the religious and social norm had a major influence on Jewish economic and demographic history. First, the high individual and community cost of educating children in subsistence farming economies (2nd to 7th centuries) prompted voluntary conversions, which account for a large share of the reduction in the size of the Jewish population from 4.5 million to 1.2 million. Second, the Jewish farmers who invested in education, gained the comparative advantage and incentive to enter skilled occupations during the vast urbanization in the newly developed Muslim Empire (8th and 9th centuries) and they actually did select themselves into these occupations. Third, as merchants the Jews invested even more in education---a pre-condition for the extensive mailing network and common court system that endowed them with trading skills demanded all over the world. Fourth, the Jews generated a voluntary diaspora by migrating within the Muslim Empire, and later to western Europe where they were invited to settle as high skill intermediaries by local rulers. By 1200, the Jews were living in hundreds of towns from England and Spain in the West to China and India in the East. Fifth, the majority of world Jewry (about one million) lived in the Near East when the Mongol invasions in the 1250s brought this region back to a subsistence farming and pastoral economy in which many Jews found it difficult to enforce the religious norm regarding education, and hence, voluntarily converted, exactly as it had happened centuries earlier. |
| Keywords: | human capital; Jewish economic and demographic history; migration; occupational choice; religion; social norms |
| JEL: | J1 J2 N3 O1 Z12 Z13 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6006&r=soc |
| By: | Fernando Aguiar (IESA/CSIC); Pablo Brañas-Garza (Department of Economic Theory and Economic History, University of Granada.); Ramón Cobo-Reyes (Department of Economic Theory and Economic History, University of Granada.); Natalia Jiménez (Department of Economic Theory and Economic History, University of Granada.); Luis M. Miller (IESA/CSIC) |
| Abstract: | This paper analyzes the way in which men and women are expected to behave differently in an experimental situation. To do so, we concentrate on a single topic: altruism. Since the dictator game provides the most suitable design for studying altruism and generosity in the lab setting, we use a modified version to study the beliefs involved in the game. Our results are substantial: men and women are expected to behave differently and both believe that women are more generous. These two premises affect their behavior. |
| Keywords: | prescriptions, dictator game, beliefs, generosity, gender |
| JEL: | C91 D64 J16 |
| Date: | 2006–12–14 |
| URL: | http://d.repec.org/n?u=RePEc:gra:wpaper:06/11&r=soc |
| By: | Johannes Abeler (IZA Bonn and University of Bonn); Steffen Altmann (IZA Bonn and University of Bonn); Sebastian Kube (University of Karlsruhe); Matthias Wibral (IZA Bonn and University of Bonn) |
| Abstract: | A growing literature stresses the importance of reciprocity, especially for employment relations. In this paper, we study the interaction of different payment modes with reciprocity. In particular, we analyze how equal wages affect performance and efficiency in an environment characterized by contractual incompleteness. In our experiment, one principal is matched with two agents. The principal pays equal wages in one treatment and can set individual wages in the other. We find that the use of equal wages elicits substantially lower efforts and efficiency. This is not caused by monetary incentives per se since under both wage schemes it is profit-maximizing for agents to exert high efforts. The treatment difference is rather driven by the fact that reciprocity is violated far more frequently in the equal wage treatment. Agents suffering from a violation of reciprocity subsequently withdraw effort. Our results suggest that individual reward and punishment opportunities are crucial for making reciprocity a powerful contract enforcement device. |
| Keywords: | laboratory experiment, wage setting, wage equality, gift exchange, reciprocity, social norms, incomplete contracts, multiple agents |
| JEL: | C92 J33 J41 M12 M52 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2500&r=soc |
| By: | Eric Maurin (Paris School of Economics, CEE, CEPR, CREST and IZA Bonn); Julie Moschion (CES, University of Paris 1) |
| Abstract: | A mother’s decision to participate in the labour market is correlated with those of the other mothers living in the same neighbourhood. This paper studies the extent to which this is causal. An identification problem exists because mothers with similar characteristics are often observed living in close proximity. Our identifying strategy uses instrumental variables. Specifically, the sex of the eldest siblings of the other mothers living in the neighbourhood is used as an instrument to identify the effect of neighbours’ participation in the labour market on own participation. The IV estimate suggests a strong elasticity of own participation to neighbours participation. Interestingly enough, estimates using the quarters of birth of the children of the other mothers living in the neighbourhood as instruments are as large as estimates using the sex-mix instruments. We provide additional evidence showing that the random fertility shocks that affect the timing of births and the participation in the labour market of a mother, affect the participation in the labour market of the other mothers in the neighbourhood too. |
| Keywords: | female participation in the labour market, neighbourhood effects, social multiplier |
| JEL: | J22 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2513&r=soc |
| By: | Marc Fleurbaey |
| Abstract: | It has become accepted that social choice is impossible in absence of interpersonal comparisons of well-being. This view is challenged here. Arrow obtained an impossibility theorem only by making unreasonable demands on social choice functions. With reasonable requirements, one can get very attractive possibilities and derive social preferences on the basis of non-comparable individual preferences. This new approach makes it possible to design optimal second-best institutions inspired by principles of fairness, while traditionally the analysis of optimal second-best institutions was thought to require interpersonal comparisons of well-being. In particular, this approach turns out to be especially suitable for the application of recent philosophical theories of justice formulated in terms of fairness, such as equality of resources. |
| Keywords: | social choice, theories of justice |
| Date: | 2006–12–20 |
| URL: | http://d.repec.org/n?u=RePEc:hal:papers:halshs-00121378_v1&r=soc |
| By: | Don J. DeVoretz (RIIM, Simon Fraser University and IZA Bonn); Florin P. Vadean (HWWI Hamburg and RIIM, Simon Fraser University) |
| Abstract: | We theorise that remittances to persons outside the households represent transfers to maintain social relations with relatives and friends and charitable remittances are expenditures which foster group membership. We estimate transfer functions as part of a larger expenditure system and calculate Engel elasticities for remittances to persons and to charities. We conclude that expenditures to enhance social relations with relatives and friends are a normal good for recent Asian immigrants and a luxury good for all other immigrants and Canadians. This fact indicates strong cultural differences in the remittance behaviour of the population groups included. |
| Keywords: | international migration, household behaviour, remittances |
| JEL: | C31 D12 F22 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2501&r=soc |
| By: | Andrew Mason; Ronald Lee; An-Chi Tung; Mun-Sim Lai; Tim Miller |
| Abstract: | In all societies intergenerational transfers are large and have an important influence on inequality and growth. The development of each generation of youth depends on the resources that it receives from productive members of society for health, education, and sustenance. The well-being of the elderly depends on familial support and a variety of social programs. The National Transfer Accounts (NTA) system provides a comprehensive approach to measuring all reallocations of income across age and time at the aggregate level. It encompasses reallocations achieved through capital accumulation and transfers, distinguishing those mediated by public institutions from those relying on private institutions. This paper introduces the methodology and presents preliminary results emphasizing economic support systems in Taiwan and the United States. As the two economies differ in their demographic configuration, their level of development, and their old-age support systems, comparing them will shed light on the economic implications of population aging under alternative institutional arrangements. |
| JEL: | J10 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12770&r=soc |
| By: | Constant, Amelie; Gataullina, Liliya; Zimmermann, Klaus F |
| Abstract: | The European Union’s strategy to raise employment is confronted with very low work participation among many minority ethnic groups, in particular among immigrants. This study examines the potential of immigrants’ identification with the home and host country ethnicity to explain that deficit. It introduces a two-dimensional understanding of ethnic identity, as a combination of commitments to the home and host cultures and societies, and links it to the labour market participation of immigrants. Using unique German survey data, the paper identifies marked gender differences in the effects of ethnic identification on the probability to work controlling for a number of other determinants. While ethnically assimilated immigrant men outperform those who are ethnically separated and marginalized, they are not different from those with openness to both cultures. Assimilated immigrant women do better than those separated and marginalized, but those who develop an attachment to both cultures clearly fare the best. |
| Keywords: | acculturation; ethnic identity; ethnicity; gender; immigrant assimilation; immigrant integration; work |
| JEL: | F22 J15 J16 Z10 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5983&r=soc |
| By: | de Palo, Domenico; Faini, Riccardo; Venturini, Alessandra |
| Abstract: | Policy makers in migrant-receiving countries must often strike a delicate balance between economic needs, that would dictate a substantial increase in the number of foreign workers, and political and electoral imperatives, that typically result in highly restrictive immigration policies. Promoting integration of migrants into the host country would go a long way in alleviating the trade off between economic and political considerations. While there is a large literature on the economic assimilation of immigrants, somewhat less attention has been devoted to other - and equally crucial - dimensions of migrants’ integration, namely the process of social assimilation. The aim of this paper is to take a close look at migrants social integration into the host country. We rely on the European Community Household panel (ECHP), which devotes a full module to the role and relevance of social relations for both migrants and natives. An innovative feature of this analysis is that it relies on migrants perceptions about their integration rather than - as is typically the case in most opinion surveys - on natives attitudes toward migrants. The main results of the paper can be summarized as follows. First, migrants - particularly from non EU origins - are at a disadvantage in the fields of social relations. Even after controlling for their individual characteristics, such as age, education, family size, and employment status, they tend to socialize less than natives. Second, migrants tend to converge, albeit quite slowly, to the standard of natives. This finding highlights the risks of short term migration, where migrants tend to be constantly marginalized. Third, education has a significant impact on the type of social activities that individuals undertake. More educated people tend to relate somewhat less with their close neighbourhood, but quite intensively with the broader community. The implication for policy makers concerned about the creation of ethnic enclaves is to promote education among immigrants’ community. |
| Keywords: | assimilation; immigration; social relationships |
| JEL: | F22 J15 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5992&r=soc |
| By: | Graziella Bertocchi (Università di Modena e Reggio Emilia, CEPR, CHILD and IZA Bonn); Chiara Strozzi (Università di Modena e Reggio Emilia) |
| Abstract: | We investigate the origin and evolution of the legal institution of citizenship from a political economy perspective. We compile a new data set on citizenship laws across countries of the world which documents how these institutions have evolved in the postwar period. We show that, despite a persistent impact of the original legislation, they have responded endogenously and systematically to a number of economic determinants, such as migration, the size of government, and the demographic structure of the population. Overall, a large stock of migrants decreases the probability of adoption of a mix of jus soli and jus sanguinis provisions, while it pushes jus sanguinis countries toward the adoption of jus soli elements. The welfare burden proves not to be an obstacle for a jus soli legislation, while demographic stagnation encourages the adoption of mixed and jus soli regimes. We also gauge the potential role of legal, political and cultural determinants, and find that a jus sanguinis origin is a factor of resistance to change, that a high degree of democracy promotes the adoption of jus soli elements while the instability of state borders associated with decolonization impedes it, and that cultural factors have no impact. |
| Keywords: | citizenship laws, international migration, legal origins, democracy, borders |
| JEL: | P16 K40 F22 O15 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2510&r=soc |
| By: | Albert Saiz; Susan Wachter |
| Abstract: | What impact does immigration have on neighborhood dynamics? Within metropolitan areas, the authors find that housing values have grown relatively more slowly in neighborhoods of immigrant settlement. They propose three nonexclusive explanations: changes in housing quality, reverse causality, or the hypothesis that natives find immigrant neighbors relatively less attractive (native flight). To instrument for the actual number of new immigrants, the authors deploy a geographic diffusion model that predicts the number of new immigrants in a neighborhood using lagged densities of the foreign-born in surrounding neighborhoods. Subject to the validity of their instruments, the evidence is consistent with a causal interpretation of an impact from growing immigration density to native flight and relatively slower housing price appreciation. Further evidence indicates that these results may be driven more by the demand for residential segregation based on race and education than by foreignness per se. |
| Keywords: | Immigrants |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedpwp:06-22&r=soc |
| By: | Huck, Steffen; Ruchala, Gabriele K.; Tyran, Jean-Robert |
| Abstract: | We study the effects of reputation and competition in a stylized market for experience goods. If interaction is anonymous, such markets perform poorly: sellers are not trustworthy, and buyers do not trust sellers. If sellers are identifiable and can, hence, build a reputation, efficiency quadruples but is still at only a third of the first best. Adding more information by granting buyers access to all sellers’ complete history has, somewhat surprisingly, no effect. On the other hand, we find that competition, coupled with some minimal information, eliminates the trust problem almost completely. |
| Keywords: | moral hazard; competition; experience goods; information conditions; reputation; trust |
| JEL: | C72 C92 D40 L14 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6009&r=soc |