In this issue we feature 12 current papers on the theme of social capital, chosen by Fabio Sabatini (Università degli Studi di Roma “La Sapienza”):

1. Trust and Insurance Contracts Nicola Gennaioli; Rafael La Porta; Florencio Lopez-de-Silanes; Andrei Shleifer

2. Network-based Connectedness and the Diffusion of Cultural Traits Riccardo Turati

3. Social Interactions in Pandemics: Fear, Altruism, and Reciprocity Alfaro, Laura; Faia, Ester; Lamersdorf, Nora; Saidi, Farzad

4. Self-Assessment: The Role of the Social Environment Armin Falk; Fabian Kosse; Hannah Schildberg-Hörisch; Florian Zimmermann

5. Solidarity and Fairness in Times of Crisis Cappelen, Alexander W.; Falch, Ranveig; Sørensen, Erik Ø.; Tungodden, Bertil

6. Bitter Sugar: Slavery and the Black Family Bertocchi, Graziella; Dimico, Arcangelo

7. Africa's lockdown dilemma: High poverty and low trust Eva-Maria Egger; Sam Jones; Patricia Justino; Ivan Manhique; Ricardo Santos

8. Peer effects in art prices Maria Marchenko

9. Body Mass Index and Social Interactions from Adolescence to Adulthood Luisa Corrado; Roberta Distante; Majlinda Joxhe

10. The spatial extent of network externalities in international migration Roberto Basile; Francesca Licari

11. A Dynamic Structural Model of Virus Diffusion and Network Production: A First Report Aguirregabiria, Victor; Gu, Jiaying; Luo, Yao; Mira, Pedro Solbes 12. Local Social Interaction and Urban Equilibria Emmanuelle Augeraud-Veron; Francisco Marhuenda; Pierre M. Picard

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1. Trust and Insurance Contracts Nicola Gennaioli; Rafael La Porta; Florencio Lopez-de-Silanes; Andrei Shleifer

We assemble and analyze a new data set of homeowner insurance claims from 28 independently operated country subsidiaries of a multinational insurance company. A fundamental feature of the data is that such claims are often disputed, and lead to rejections or lower payments. We propose a new model of insurance, in which consumers can make invalid claims and firms can deny valid claims. In this environment, trust and honesty are critical factors that shape insurance contracts and the payment of claims, especially when the disputed amounts are too small for courts. We characterize equilibrium insurance contracts, and show how they depend on the quality of the legal system and the level of trust. We then investigate the incidence of claims, disputes and rejections of claims, and payment of claims in our data, as well as the cost and pricing of insurance. The evidence is consistent with the centrality of trust for insurance markets, as predicted by the model. JEL: D23 G22 L14 Z13 Date: 2020–05 URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:27189&r=soc

2. Network-based Connectedness and the Diffusion of Cultural Traits Riccardo Turati (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))

This paper empirically investigates the impact of network-based connectedness on the diffusion of cultural traits. Using Gallup World Poll data on 148 countries on individual connectedness, opinions and beliefs, we find that natives who have a connection abroad are associated with higher levels of social behavior, religiosity and gender-egalitarian attitudes. Due to the endogenous nature of the variables, we strongly mitigate the threat of selection into connectedness by showing robust estimates even after controlling for broad measure of connectedness and performing propensity score and covariate matching techniques. Statistical tests are carefully implemented to quantify the selection threat of unobserved factors, which appears negligible. Our evidence shows that connectedness leads to cultural convergence across regions, while increases cultural heterogeneity within regions. Exploring the mechanisms by which these effects occur, we provide evidence that the effects are precisely estimated among less educated natives and that connectedness affects economic outcomes through remittances. We estimate differential cultural effects based on the connection’s country of residence, suggesting a destination-specific transfer of norms. Overall, the effects on social behavior are sizeable at the global level, once simulations based on estimated coefficients are performed. Although robust and certainly not negligible, gender-egalitarian and pro-religiosity effects of connectedness are limited. JEL: F22 O15 Z10 Keywords: Cultural change, connectedness, international migration, gender-egalitarian views, religiosity, social behavior Date: 2020–03–27 URL: http://d.repec.org/n?u=RePEc:ctl:louvir:2020012&r=soc

3. Social Interactions in Pandemics: Fear, Altruism, and Reciprocity Alfaro, Laura; Faia, Ester; Lamersdorf, Nora; Saidi, Farzad

In SIR models, homogeneous or with a network structure, infection rates are assumed to be exogenous. However, individuals adjust their behavior. Using daily data for 89 cities worldwide, we document that mobility falls in response to fear, as approximated by Google search terms. Combining these data with experimentally validated measures of social preferences at the regional level, we find that stringency measures matter less if individuals are more patient and altruistic (preference traits), and exhibit less negative reciprocity (community traits). We modify the homogeneous SIR and the SIR-network model to include agents' optimizing decisions on social interactions. Susceptible individuals internalize infection risk based on their patience, infected ones do so based on their altruism, and reciprocity matters for internalizing risk in SIR networks. A planner further restricts interactions due to a static and a dynamic inefficiency in the homogeneous SIR model, and due to an additional reciprocity inefficiency in the SIR-network model. We show that partial or targeted lockdown policies are efficient only when it is possible to identify infected individuals. JEL: D62 D64 D85 D91 I10 Keywords: cities; mobility; Pandemics; SIR-Network; Social interactions; Social planner; social preferences; targeted policies Date: 2020–05 URL: http://d.repec.org/n?u=RePEc:cpr:ceprdp:14716&r=soc

4. Self-Assessment: The Role of the Social Environment Armin Falk; Fabian Kosse; Hannah Schildberg-Hörisch; Florian Zimmermann

This study presents descriptive and causal evidence on the role of the social environment in shaping the accuracy of self-assessment. We introduce a novel incentivized measurement tool to measure the accuracy of self-assessment among children and use this tool to show that children from high socioeconomic status (SES) families are more accurate in their self-assessment, compared to children from low SES families. To move beyond correlational evidence, we then exploit the exogenous variation of participation in a mentoring program designed to enrich the social environment of children. We document that the mentoring program has a causal positive effect on the accuracy of children’s self-assessment. Finally, we show that the mentoring program is most effective for children whose parents provide few social and interactive activities for their children. JEL: D03 C21 C91 I24 Keywords: Self-Assessment, Beliefs, Experiments, Randomized Intervention, Children Date: 2020–05 URL: http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2020_172&r=soc

5. Solidarity and Fairness in Times of Crisis Cappelen, Alexander W. (Dept. of Economics, Norwegian School of Economics and Business Administration); Falch, Ranveig (Dept. of Economics, Norwegian School of Economics and Business Administration); Sørensen, Erik Ø. (Dept. of Economics, Norwegian School of Economics and Business Administration); Tungodden, Bertil (Dept. of Economics, Norwegian School of Economics and Business Administration)

In a large-scale pre-registered survey experiment with a representative sample of more than 8,000 Americans, we examine how the COVID-19 pandemic causally affects people’s solidarity and fairness. We randomly manipulate whether respondents are asked general questions about the crisis before answering moral questions. By making the pandemic particularly salient for treated respondents, we causally identify how the crisis changes moral views. We find that the crisis makes respondents more willing to prioritize society’s problems over their own problems, but also more tolerant of inequalities due to luck. We show that people’s moral views are strongly associated with their policy preferences for redistribution. The findings suggest that the pandemic may alter the moral and political landscape in the United States and, consequently, the support for redistribution and welfare policies. JEL: D63 D64 Keywords: Fairness; inequality; COVID-19 Date: 2020–05–14 URL: http://d.repec.org/n?u=RePEc:hhs:nhheco:2020_006&r=soc

6. Bitter Sugar: Slavery and the Black Family Bertocchi, Graziella; Dimico, Arcangelo

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 influence through migration and intermarriage, and black incarceration emerges as a powerful mediator. By matching slaves' ethnic origins with ethnographic data we rule out any influence of African cultural traditions. JEL: J12 J47 N30 O13 Z10 Keywords: Black family,slavery,sugar,migration,culture Date: 2020 URL: http://d.repec.org/n?u=RePEc:zbw:qucehw:202005&r=soc

7. Africa's lockdown dilemma: High poverty and low trust Eva-Maria Egger; Sam Jones; Patricia Justino; Ivan Manhique; Ricardo Santos The primary policy response to suppress the spread of COVID-19 in high-income countries has been to lock down large sections of the population. However, there is growing unease that blindly replicating these policies might inflict irreparable damage to poor households and foment social unrest in developing countries. We investigate this concern using Afrobarometer data from 2019 for 30 sub-Saharan African countries. We create a multidimensional index of lockdown readiness based on living conditions and explore its relationship with forms of trust and the potential for social unrest. Keywords: COVID-19, lockdown measures, lockdown policies, Poverty, social unrest, Sub-Saharan Africa, Trust Date: 2020 URL: http://d.repec.org/n?u=RePEc:unu:wpaper:wp-2020-76&r=soc

8. Peer effects in art prices Maria Marchenko (Department of Economics, Vienna University of Economics and Business)

Art often serves as an investment tool. However, the prices for some of the pieces are not easy to predict, and removing the price uncertainty is crucial to attracting even more investment in the art market. This paper assumes that the reputation of the artists and their social connections can play a significant role in determining the prices of their work. I check if a link to a higher valued or more famous peer has a positive effect on the prices of art pieces and on the probability of a successful sale. To test this hypothesis, I use the network of abstract artists, whose works' value is not always straightforward determined, and the prices of their works auctioned in 2000-2015 at Sotheby's, one of the most significant art and collectibles brokers in the world. The results suggest that consumers are willing to pay more for a particular artist's work, once there is a connection between the artist and a more valuable set of peers. However, the probability of sale is not affected. The auctioneer's predictions about future prices exhibit a similar trend. JEL: C49 D44 D85 Z11 Keywords: peer effects, art prices, art market Date: 2020–05 URL: http://d.repec.org/n?u=RePEc:wiw:wiwwuw:wuwp298&r=soc

9. Body Mass Index and Social Interactions from Adolescence to Adulthood Luisa Corrado (University of Rome Tor Vergata, Italy); Roberta Distante (University of Copenhagen & Nordea, Denmark); Majlinda Joxhe (CREA, Université du Luxembourg)

We apply a dynamic linear-in-means model to analyze the importance of social ties for the body-weight-related behavior of US youth. Our methodology shows how to estimate peer effects free of the “reflection problem” in a dynamic context where individual- and group-specific unobservable effects are controlled for. Our results show that the main drivers for the body-weight-related behavior are past and peer effects. For individuals who were normal-weight or obese during adolescence, past and peer effects are shown to be both relevant. Peer effects, instead, explain more the variation in the BMI for individuals who were over-weight during adolescence, showing in this way the importance of social interactions for body-weight-related behavior. JEL: C01 D10 D71 I19 J11 Z13 Keywords: Over-weight, Obesity, Peer Effects, Social Networks, Personal History, Dynamic Linear-in-means Model Date: 2019 URL: http://d.repec.org/n?u=RePEc:luc:wpaper:19-06&r=soc

10. The spatial extent of network externalities in international migration Roberto Basile (Department of Industrial and Information Engineering and Economics. University of L'Aquila); Francesca Licari (Italian National Institute of Statistics (ISTAT))

In this paper, we assess the effect of community networks on the location choice of foreign immigrants in Italy. Our results confirm the existence of strong network externalities, but they also suggest that these effects spill over the borders of local labor markets areas (LLMAs). Significant positive spatial spillovers are indeed evident up to the second-order of contiguity, while a negative (spatial competition) effect emerges at the third-order. A possible channel for the generation of these spatial spillovers is the existence of common markets for unskilled and ethnic-specific jobs. JEL: F22 J61 R23 C14 C21 Keywords: Community networks, Immigration, Gravity models, Spatial dependence Date: 2020–05 URL: http://d.repec.org/n?u=RePEc:ahy:wpaper:wp2&r=soc

11. A Dynamic Structural Model of Virus Diffusion and Network Production: A First Report Aguirregabiria, Victor; Gu, Jiaying; Luo, Yao; Mira, Pedro Solbes

This paper presents a dynamic structural model to evaluate economic and public health effects of the diffusion of COVID-19, as well as the impact of factual and counterfactual public policies. Our framework combines a SIR epidemiological model of virus diffusion with a structural game of network production and social interactions. The economy comprises three types of geographic locations: homes, workplaces, and consumption places. Each individual has her own set of locations where she develops her life. The combination of these sets for all the individuals determines the economy's production and social network. Every day, individuals choose to work and consume either outside (with physical interaction with other people) or remotely (from home, without physical interactions). Working (and consuming) outside is more productive and generates stronger complementarities (positive externality). However, in the presence of a virus, working outside facilitates infection and the diffusion of the virus (negative externality). Individuals are forward-looking. We characterize an equilibrium of the dynamic network game and present an algorithm for its computation. We describe the estimation of the parameters of the model combining several sources of data on COVID-19 in Ontario, Canada: daily epidemiological data; hourly electricity consumption data; and daily cell phone data on individuals' mobility. We use the model to evaluate the health and economic impact of several counterfactual public policies: subsidies for working at home; testing policies; herd immunity; and changes in the network structure. These policies generate substantial differences in the propagation of the virus and its economic impact. JEL: C57 C73 I18 L14 L23 Keywords: COVID-19; Disease-Specific Public Health Interventions; dynamics; Production and social networks; Production externalities; Virus diffusion Date: 2020–05 URL: http://d.repec.org/n?u=RePEc:cpr:ceprdp:14750&r=soc 12. Local Social Interaction and Urban Equilibria Emmanuelle Augeraud-Veron (GREThA, UMR 5113, University of Bordeaux, France); Francisco Marhuenda (University Carlos III, UC3M, Madrid, Spain); Pierre M. Picard (CREA, Université du Luxembourg) In this paper we investigate the effect of local interaction in a simple urban eco- nomics model. Agents interact with others if and only if their interaction benefit outweights their travel cost and therefore meet others only within finite geographic windows. We show that two or more cites may co-exist at the equilibrium provided that they are sufficiently distant. For any interaction surplus function, there exists a unique spatial equilibrium on not too large city supports. The population density within a city is determined by a second order advance-delay differential equation, whose solutions are fully characterized for linear interaction surplus functions. Nu- merical analyses show that more localized interactions yield flatter population den- sity and land rents over larger extents of the city support. They do not give support to the idea that multiple subcenters can be caused by small and finite geographic windows of interaction. JEL: R12 Keywords: social interaction, cities, spatial equilibrium. Date: 2019 URL: http://d.repec.org/n?u=RePEc:luc:wpaper:19-17&r=soc

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This nep-soc issue is ©2020 by Fabio Sabatini. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice. General information on the NEP project can be found at http://nep.repec.org. For comments please write to the director of NEP, Marco Novarese at <director at nep.repec.org>. Put “NEP” in the subject, otherwise your mail may be rejected. NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.