In this issue we feature 7 current papers on the theme of social capital, chosen by Fabio Sabatini (Università degli Studi di Roma “La Sapienza”):

1. The Wage Premium of Communist Party Membership: Evidence from China Plamen Nikolov; Hongjian Wang; Kevin Acker

2. Deviant or Wrong? The Effects of Norm Information on the Efficacy of Punishment Cristina Bicchieri; Eugen Dimant; Erte Xiao

3. Trustworthiness in the financial industry Andrej Gill; Matthias Heinz; Heiner Schumacher; Matthias Sutter

4. Trust in financial institutions: A survey Carin van der Cruijsen; Jakob de Haan; Ria Roerink

5. Public discourse and socially responsible market behavior Björn Bartling; Vanessa Valero; Roberto A. Weber; Lan Yao

6. Neighborhoods, Networks, and Delivery Methods Barili, E.; Bertoli, P.; Grembi, V.

7. Identity and Redistribution: Theory and Evidence. Sanjit Dhami; Emma Manifold; Ali al-Nowaihi

1. The Wage Premium of Communist Party Membership: Evidence from China Plamen Nikolov; Hongjian Wang; Kevin Acker

Social status and political connections could confer large economic benefits to an individual. Previous studies focused on China examine the relationship between Communist party membership and earnings and find a positive correlation. However, this correlation may be partly or totally spurious, thereby generating upwards-biased estimates of the importance of political party membership. Using data from three surveys spanning more than three decades, we estimate the causal effect of Chinese party membership on monthly earnings in in China. We find that, on average, membership in the Communist party of China increases monthly earnings and we find evidence that the wage premium has grown in recent years. We explore for potential mechanisms and we find suggestive evidence that improvements in one's social network, acquisition of job-related qualifications and improvement in one's social rank and life satisfaction likely play an important role. (JEL D31, J31, P2) Date: 2020–07 URL: http://d.repec.org/n?u=RePEc:arx:papers:2007.13549&r=soc

2. Deviant or Wrong? The Effects of Norm Information on the Efficacy of Punishment Cristina Bicchieri (University of Pennsylvania); Eugen Dimant (University of Pennsylvania; CESifo, Munich); Erte Xiao (Monash University)

A stream of research examining the effect of punishment on conformity indicates that punishment can backfire and lead to suboptimal social outcomes. We examine whether this effect is due to a lack of perceived legitimacy of rule enforcement, enabling agents to justify selfish behavior. We address the question of punishment legitimacy by shedding light upon the importance of social norms and their interplay with punishment. People are often presented with incomplete norm information: either about what most others do (empirical) or what most others deem appropriate (normative). We show that in isolation, neither punishment nor empirical/normative information increase prosocial behavior. In turn, we find that prosociality significantly increases when normative information and punishment are combined, but only when compliance is relatively cheap. When compliance is more expensive, we find that the combination of punishment and empirical information about others' conformity can have detrimental effects. In additional experiments, we explain how this negative effect is due, at least for some individuals, to punishment not being perceived as justified. Our results have important implications for researchers and practitioners alike. JEL: C91 D03 D73 H26 Keywords: Conformity, Punishment, Social Norms, Trust Date: 2020–08 URL: http://d.repec.org/n?u=RePEc:ajk:ajkdps:023&r=soc

3. Trustworthiness in the financial industry Andrej Gill (University of Mainz); Matthias Heinz (University of Cologne, ECONtribute, Max Planck Institute for Research on Collective Goods, Bonn, and CEPR); Heiner Schumacher (KU Leuven, and University of Innsbruck); Matthias Sutter (Max Planck Institute for Research on Collective Goods, Bonn, University of Cologne, ECONtribute, IZA Bonn, CESifo Munich and University of Innsbruck)

The financial industry has been struggling with widespread misconduct and public mistrust. Here we argue that the lack of trust into the financial industry may stem from the selection of subjects with little, if any, trustworthiness into the financial industry. We identify the social preferences of business and economics students, and follow up on their first job placements. We find that during college, students who want to start their career in the financial industry are substantially less trustworthy. Most importantly, actual job placements several years later confirm this association. The job market in the financial industry does not screen out less trustworthy subjects. If anything the opposite seems to be the case: Even among students who are highly motivated to work in finance after graduation, those who actually start their career in finance are significantly less trustworthy than those who work elsewhere. JEL: C91 G20 M51 Keywords: Trustworthiness, Financial Industry, Selection, Social Preferences, Experiment Date: 2020–08 URL: http://d.repec.org/n?u=RePEc:ajk:ajkdps:022&r=soc

4. Trust in financial institutions: A survey Carin van der Cruijsen; Jakob de Haan; Ria Roerink

Trust in financial institutions is widely considered important. However, a clear overview of studies on the drivers of trust is missing. We intend to fill this gap in the literature. After discussing why trust in financial institutions is important, we turn to its measurement, where we distinguish between trust in one's own institution and trust in institutions in general (narrow-scope and broad-scope trust), and discuss how these measures differ from generalized trust (i.e. trust in other people with whom there is no direct relationship). Finally, we survey the determinants of trust in financial institutions and discuss a wide range of drivers. First, trust in financial institutions depends on the economic situation: it behaves procyclically and is negatively affected by financial crises. Second, the behavior of the financial institutions matters: prudent conduct, the provision of good services and financial health have a positive effect on trust. Third, although consumer characteristics also relate to trust, many of these relationships are context-dependent. Fourth, there is a positive association between narrow-scope trust on the one hand and broad-scope trust and generalized trust on the other. Last, policy measures and supervisory actions can help prevent loss of trust. JEL: D12 D83 E58 G21 G22 Keywords: trust in financial institutions; drivers of trust in financial institutions; survey Date: 2020–08 URL: http://d.repec.org/n?u=RePEc:dnb:dnbwpp:693&r=soc

5. Public discourse and socially responsible market behavior Björn Bartling; Vanessa Valero; Roberto A. Weber; Lan Yao

We investigate the causal impact of public discourse on socially responsible market behavior. We conduct laboratory market experiments with products that differ in their production costs and social impact, and provide market actors and impacted third parties with the opportunity to discuss appropriate market behavior. Across two studies that vary characteristics of the discourse, the external impact and the participants, we find that public discourse substantially increases market social responsibility. Our findings suggest that discussions and campaigns focusing on appropriate market behavior can be powerful tools for shaping responsible norms governing market conduct and addressing inefficiencies due to market failures. JEL: C92 D62 D83 M14 Keywords: Public discourse, market failure, externalities, social responsibility, social norms, experiment, communication Date: 2020–08 URL: http://d.repec.org/n?u=RePEc:zur:econwp:359&r=soc

6. Neighborhoods, Networks, and Delivery Methods Barili, E.; Bertoli, P.; Grembi, V.

We investigate potential mechanisms of information transmission among patients when explaining territorial variations in the use of cesarean sections. Defining networks as mothers living in the same Italian municipality (average size approximately 10,000 residents), we show that a one standard deviation increase of the incidence of cesarean sections for the 12 months before the delivery date in the future mother’s municipality of residence increases the probability of her receiving the treatment by 3%. This result captures mainly network effects for Italian mothers, while it captures both network and neighborhood effects for foreign mothers. Both groups adjust for the transmission of complementary information, such as the incidence of complications due to cesarean sections. The selection of mothers across hospitals does not uniquely explain our results, which are robust to alternative sample selections. JEL: I1 I12 Keywords: cesarean sections; networks; neighborhood effects; Date: 2020–08 URL: http://d.repec.org/n?u=RePEc:yor:hectdg:20/15&r=soc

7. Identity and Redistribution: Theory and Evidence. Sanjit Dhami; Emma Manifold; Ali al-Nowaihi

We propose a theoretical model that embeds social identity concerns, as in Akerlof and Kranton (2000), with inequity averse preferences, as in Fehr and Schmidt (1999). We conduct an artefactual ultimatum game experiment with registered members of British political parties, for whom political identity is salient and redistribution is also likely to be salient. The empirical results are as follows. (1) Proposers and responders demonstrate ingroup-favoritism. (2) Proposers exhibit quantitatively stronger social identity effects relative to responders. (3) As redistributive taxes increase, average offers by proposers and the average minimum acceptable offers of responders (both as a proportion of income) decline by almost the same amount, suggesting a shared understanding that is characteristic of social norms. (4) Subjects experience less disadvantageous inequity from ingroup members relative to outgroup members. JEL: D01 D03 Keywords: social identity, political identity, prosocial behavior, ultimatum game, fiscal redistribution, entitlements Date: 2020 URL: http://d.repec.org/n?u=RePEc:ces:ceswps:_8397&r=soc

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