NEP: New Economics Papers - Social Norms and Social Capital - Digest, Vol 70, Issue 2

In this issue we feature 8 current papers on the theme of social capital:

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In this issue we have:

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

1. Growing Apart, Losing Trust? The Impact of Inequality on Social Capital

   Eric D Gould

   Alexander Hijzen

 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

URL: http://d.repec.org/n?u=RePEc:imf:imfwpa:16/176&r=soc

 

2. Trust and Trustworthiness under Information Asymmetry and Ambiguity

   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)

 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.

URL: http://d.repec.org/n?u=RePEc:chu:wpaper:16-17&r=soc

 

3. Do Economic Inequalities Affect Long-Run Cooperation?

   Gabriele Camera (Chapman University and University of Basel)

   Cary Deck (University of Arkansas and Chapman University)

   David Porter (Chapman University)

 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

URL: http://d.repec.org/n?u=RePEc:chu:wpaper:16-18&r=soc

 

4. Does Country Level Social Trust Predict the Size of the Sharing Economy?

   Bergh, Andreas (Research Institute of Industrial Economics (IFN))

   Funcke, Alexander (Philosophy, Politics & Economics)  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

URL: http://d.repec.org/n?u=RePEc:hhs:iuiwop:1130&r=soc

 

5. Informative Social Interactions

   Michael Haliassos (Goethe University Frankfurt)

   Hector F. CALVO PARDO (UNIVERSITY OF SOUTHAMPTON)

   Chryssi Giannitsarou (University of Cambridge)

   Luc Arrondel (CNRS-PSE)

 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.

URL: http://d.repec.org/n?u=RePEc:red:sed016:636&r=soc

 

6. Social Capital and Reconfiguration of 'Trust Networks': A Sociological Analysis

   Smolkin, Anton (Russian Presidential Academy of National Economy and Public Administration (RANEPA))

 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

URL: http://d.repec.org/n?u=RePEc:rnp:wpaper:7612&r=soc

 

7. Designing Online Marketplaces: Trust and Reputation Mechanisms

   Michael Luca (Harvard Business School, Negotiation, Organizations & Markets Unit)

 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.

URL: http://d.repec.org/n?u=RePEc:hbs:wpaper:17-017&r=soc

 

8. Economic Development and Preferences for Redistribution

   Hideaki Goto (International University of University)  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

URL: http://d.repec.org/n?u=RePEc:iuj:wpaper:ems_2016_10&r=soc


 

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14th PASCAL International Observatory Conference - South Africa

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