Date:

2014-09

By:

Guglielmo Barone (Bank of Italy)
Sauro Mocetti (Bank of Italy)

URL:

http://d.repec.org/n?u=RePEc:bdi:wptemi:td_973_14&r=soc

The relationship between inequality and trust has attracted the interest of many scholars who have found a negative relationship between the two variables. However, the causal link from inequality to trust is far from being identified and the existing empirical evidence admittedly remains weak, as the omitted variable bias, reverse causation and/or measurement error might be at work. In this paper, we reconsider the country-level evidence to address this issue. First, we exploit the panel dimension of the data, thus controlling for any country unobservable time-invariant variables. Second, we provide instrumental variable estimates using the predicted exposure to technological change as an exogenous driver of inequality. According to our findings, income inequality significantly and negatively affects generalised trust. However, this result only holds for developed countries. We also explore new insights on the effects of different dimensions of inequality, exploiting measures of both static inequality – such as the Gini index and top income shares – and dynamic inequality – proxied by intergenerational income mobility.

Keywords:

trust, inequality, top incomes, intergenerational mobility

JEL:

D31 O15 Z13

Date:

2014-10

By:

Sergio Currarini
Elena Fumagalli,
Fabrizio Panebianco

URL:

http://d.repec.org/n?u=RePEc:lec:leecon:14/13&r=soc

We study linear quadratic games played on a network where strategies are complements between neighbors and substitutes between agents at distance-two. We provide micro-founded problems where this pattern of interaction is due to a local congestion effect. Equilibrium behavior systematically differs from a model of peer effects only. First, the ranking of equilibrium actions may not follow that of network centralities, with large behavior prevailing at the periphery of the network. Second, network density affects aggregate behavior in a non-monotonic way. Third, segregating agents according to their preferences has a non-monotonic effect on the polarization of behavior. We relate these patterns to evidence from smoking networks, industrial districts and ethnically fragmented societies. We conclude by discussing the implications for the identification of peer effects.

Keywords:

Games on Networks, Peer Effects, Key-player, Centrality, Congestion.

JEL:

C7 D85 I1 H23

Date:

2014

By:

Jesús Peiró-Palomino (Department of Economics, University Jaume I, Castellón, Spain)

URL:

http://d.repec.org/n?u=RePEc:jau:wpaper:2014/17&r=soc

After two decades of academic debate on the social capital-growth nexus, discussion still remains open. Most of the literature so far, however, has followed the one-size-its-all approach, neglecting that the great disparities across geographical units might have implications in this relationship. This article analyzes the role of two social capital indicators on the growth of 237 European regions in the period 1995–2007 by implementing a set of both parametric and non- parametric regressions. Whereas the former impose a linear functional form for the parameters, the latter relax this assumption providing a flexible frame in which the functional form is given by the data. The technique also permits introducing parameter heterogeneity in the analysis by estimating individual regional effects. The results from the parametric analysis show that the sign and the magnitude of the effects hinge upon the indicator considered. In contrast, results from the nonparametric regressions suggest that, while both indicators are significant growth predictors, the effect departs from linearity. Moreover, not all regions benefit from social capital with the same intensity. The most notable difference lies in regions from Central and Eastern Europe countries, where social capital is mostly negative. Other regional conditions such as initial income levels, investment rates or the stock of human capital show a more limited influence.

Keywords:

Economic growth, European regions, nonparametric regression, social capital

JEL:

C14 R11 Z13

Date:

2014-01-01

By:

Partha Dasgupta (University of Cambridge and University of Manchester)
Dale Southerton (University of Manchester)
Alistair Ulph (University of Manchester)
David Ulph (University of St Andrews)

URL:

http://d.repec.org/n?u=RePEc:san:wpecon:1407&r=soc

In this paper we summarise some of our recent work on consumer behaviour, drawing on recent developments in behavioural economics, in which consumers are embedded in a social context, so their behaviour is shaped by their interactions with other consumers. For the purpose of this paper we also allow consumption to cause environmental damage. Analysing the social context of consumption naturally lends itself to the use of game theoretic tools, and indicates that we seek to develop links between economics and sociology rather than economics and psychology, which has been the more predominant field for work in behavioural economics. We shall be concerned with three sets of issues: conspicuous consumption, consumption norms and altruistic behaviour. Our aim is to show that building links between sociological and economic approaches to the study of consumer behaviour can lead to significant and surprising implications for conventional economic policy prescriptions, especially with respect to environmental policy.

Keywords:

consumer behaviour, social context, environmental policy, game theory, competitive consumption, consumption norms, altruism, moral behaviour, Kantian calculus

JEL:

D1 D6 H2 Q5 Z1

Date:

2014-10

By:

Panayiotis Nicolaides

URL:

http://d.repec.org/n?u=RePEc:tax:taxpap:0046&r=soc

This paper presents an evolutionary theory of public good provision. The framework analyses the relationship between endogenous tax compliance norms, formed by the interactions of rationally-bounded individuals in a network, and the quality of institutions that collect taxes and distribute the public good to the individuals. Conditions for the level of public good utility are derived and illustrated on the "Public Good Provision Hypersurface"; a two-dimensional manifold that describes the relationship between norms, institutional quality and public good provision. I show that the effectiveness of the government to collect taxes increases the determinacy of public good provision but does not ensure its maximisation, which depends also on the level of wasteful government expenditure. If the government is ineffective in performing audits, the welfare from public good provision becomes subject to social norms. Lastly, a condition is derived at which social norms of tax compliance can act as a substitute for enforcement and can result in the maximisation of public good utility.

Keywords:

Taxation; Tax compliance; Social norms Public goods, Government waste

JEL:

H26 H41 C73

Date:

2014-10-15

By:

Sandra Rothenberger
Koen Tackx

URL:

http://d.repec.org/n?u=RePEc:sol:wpaper:2013/176348&r=soc

In this article we investigate the impact of personal and organizational trust on the financial performance of companies over a period of time. The effect of trust on various economic and managerial transactions is being researched extensively over the last two decades but previous research did not led to empirical proof that the overall trust level of a company actually increases the financial profitability of firms over a longer period of time. Drawing on a sample of 291 German industrial firms over a period of six years we observe that both personal and organizational trust have a positive influence on the return on assets of a firm. Furthermore we proof that trust is driving profitability in certain conditions and environments differently. By analysing the relationship and characteristics between trust and profitability, this study brings a concrete illustration of what was implicitly known by many scholars and has important implications for future research and management practice.

Keywords:

Trust; Knowledge Intensity; Performance; Return on Assets (ROA); Structural Equation Modeling (SEM); Environmental Uncertainty

JEL:

D02 D80 M20p

Date:

2014

By:

Dhillon, Amrita (King's College London)
Peeters, Ronald (Maastricht University)
Yuksel, Ayse Muge (Maastricht University)

URL:

http://d.repec.org/n?u=RePEc:cge:wacage:206&r=soc

The use of social networks in the workplace has been documented by many authors, although the reasons for their widespread prevalence are less well known. In this paper we present evidence based on a combined eld-laboratory experiment that social networks are used by employers to reduce worker moral hazard. The worker chooses an eort level given a xed wage under dierent settings of social proximity. Social proximity is captured using actual Facebook friendship information revealed anonymously to subjects once they have been recruited. Since employers themselves do not have access to social connections, they delegate the decision to referrers who can select among workers with dierent degrees of social proximity to themselves. We show that employers choose referrals over anonymous hiring about 80% of the time. In keeping with our predictions, referrers also choose workers with a greater social proximity to themselves and workers who are closer to referrers indeed pay back more to the referrer. The advantage of the lab setting is that we can isolate moral hazard and directed altruism as the main driving forces for these results.

Keywords:

Eciency wage contracts, Moral hazard, Dictator game, Referrals, Altruism, Reciprocity, Directed altruism, Social proximity, Facebook, Experiment, Social networks, Strength of ties, Spot market.

Date:

2014-10

By:

Jordi Brandts (Institutd'AnalisiEconomica(CSIC))
Ayça Ebru Giritligil (Murat Sertel Center for Advanced Economic Studies)
Roberto A. Weber (Department of Economics, University of Zurich)

URL:

http://d.repec.org/n?u=RePEc:beb:wpbels:201403&r=soc

In many areas of social life individuals receive information about a particular issue of interest from multiple sources. When these sources are connected through a network then proper aggregation of this information by an individual involves taking into account the structure of this network. The inability to aggregate properly may lead to various types of distortions. In our experiment a number of agents all want to find out the value of a particular parameter unknown to all. Agents receive private signals about the parameter and agents can communicate their estimates of the parameter repeatedly through a network, the structure of which is known by all players. We present results from experiments with four different networks. We find that the information of agents who have more outgoing links in a network gets more weight in the information aggregation of the other agents than it optimally should. Our results are consistent with the model of “persuasion bias” of De Marzo et al. (2003) and at odds with an alternative heuristic according to which the most influential agents are those with more incoming links.

Date:

2014-02

By:

Annalisa Caloffi
Federica Rossi
Margherita Russo

URL:

http://d.repec.org/n?u=RePEc:mod:dembwp:0030&r=soc

Greater understanding of what factors promote the formation of innovation networks and their successful performance would help policymakers improve the design of policy interventions aimed at funding R&D projects to be carried out by networks of innovators. In this paper, we focus on the organizations that can play the role of intermediaries in the networks, facilitating the involvement of other participants and promoting communication and knowledge flows within the network. Based on an original empirical dataset, capturing the relationships between organizations involved in a set of publicly-funded programmes in support of innovation networks, we have tried to identify what are the main features of different types of intermediaries based on an analysis of their positions within networks of relationships. We have observed that agents that occupy broker positions – linking agents that are not connected to each other – are more likely to be found in technologically turbulent environments, while the agents that occupy intercohesive positions – bridging cohesive communities of network agents – operate in more stable contexts. Intermediaries in general are more likely to be local governments. However, besides this, it is not possible to clearly identify organizations that, by nature, are more likely to be either brokers or intercohesive agents: different innovation networks may require different organizations to mediate relationships between the other participants.

Keywords:

Innovation policy, innovation networks, social network analysis, intermediaries, brokers, intercohesion

JEL:

D85 O31 O32 O38

Date:

2014-10

By:

Goytom Abraha Kahsay (Department of Food and Resource Economics, University of Copenhagen)
Laura Mørch Andersen (Department of Food and Resource Economics, University of Copenhagen)
Lars Gårn Hansen (Department of Food and Resource Economics, University of Copenhagen)

URL:

http://d.repec.org/n?u=RePEc:foi:wpaper:2014_09&r=soc

In this paper, we propose a reputation-signalling model of demand for consumer goods containing pro-social characteristics such as a ‘fair trade’ or ‘organic’ certification. We show that reputation signalling can reverse price reactions resembling the crowding-out of pre-existing motives for pro-social behavior seen in situations of volunteering and charitable giving. Finally, using a unique combination of questionnaire and purchase panel data, we present evidence of such reputation-driven reversal of price reactions in the Danish market for organic milk.

Keywords:

net-crowding out; reversed price reactions; pro-social reputation; reputation signalling; consumer goods

JEL:

D03 D11 D12 D64 D82 D51

Date:

2014-10

By:

Pawlowski, Tim
Schüttoff, Ute
Downward, Paul
Lechner, Michael

URL:

http://d.repec.org/n?u=RePEc:usg:econwp:2014:33&r=soc

Previous research in developed countries suggests that sports participation can positively influence child development. We use panel data of a cohort of 658 children in Peru to test this relationship in a less developed country where conditions for child development are worse. To identify the causal effect of children’s sport participation we exploit the panel structure of our data together with using propensity score matching. Our findings suggest that participation in a sports group has positive impacts on two of the key factors that are identified in the literature as central to child development, i.e. subjective health and social capital.

Keywords:

Social capital, Human capital, Well-being, Health, Group participation, Sports

JEL:

C14 D12 I21 J24

Date:

2014-02-03

By:

Marc Daube (University of St Andrews)
David Ulph (University of St Andrews)

URL:

http://d.repec.org/n?u=RePEc:san:wpecon:1409&r=soc

Free-riding is often associated with self-interested behaviour. However if there is a global mixed pollutant, free-riding will arise if individuals calculate that their emissions are negligible relative to the total, so total emissions and hence any damage that they and others suffer will be unaffected by whatever consumption choice they make. In this context consumer behaviour and the optimal environmental tax are independent of the degree of altruism. For behaviour to change, individuals need to make their decisions in a different way. We propose a new theory of moral behaviour whereby individuals recognise that they will be worse off by not acting in their own self-interest, and balance this cost off against the hypothetical moral value of adopting a Kantian form of behaviour, that is by calculating the consequences of their action by asking what would happen if everyone else acted in the same way as they did. We show that: (a) if individuals behave this way, then altruism matters and the greater the degree of altruism the more individuals cut back their consumption of a ’dirty’ good; (b) nevertheless the optimal environmental tax is exactly the same as that emerging from classical analysis where individuals act in self-interested fashion.

Keywords:

Altruism; Climate Change; Environmental Economics; Environmental Tax; Externalities; Moral Behaviour; Pro-Social Behaviour; Public Goods

JEL:

Q5 Q58 D11

Date:

2014-07

By:

Gautam Rao

URL:

http://d.repec.org/n?u=RePEc:qsh:wpaper:183756&r=soc

I exploit a natural experiment in India to identify how mixing rich and poor students in schools affects social preferences and behaviors. A policy change in 2007 forced many private schools in Delhi to meet a quota of poor children in admissions. This led to a sharp increase in the presence of poor children in new cohorts in those schools, but not in older cohorts or in other schools. Exploiting this variation, and using a combination of field and lab experiments, administrative data and test scores, I study impacts on three classes of outcomes: (i) prosocial behavior, (ii) social interactions and discrimination, and (iii) academic outcomes. First, I find that having poor classmates makes wealthy students more prosocial and generous. They become more likely to volunteer for a charity at school, more generous towards both rich and poor students in dictator games, and choose more equitable distributions of payoffs in the lab. Second, having poor classmates makes wealthy students discriminate less against poor children, measured by their teammate choice in an incentivized sports contest. Consistent with this, they become more willing to socialize with poor children outside school. Third, I find marginally significant negative effects on test scores in English, but no effect on Hindi or Math. Overall, I conclude that mixing in schools had substantial positive effects on the social behaviors of wealthy students, at the cost of negative but arguably modest impacts on academic achievement. To shed light on mechanisms, I exploit idiosyncratic assignment of students to study groups and find that the effects on social behaviors are largely driven by personal interactions between wealthy and poor students, rather than by changes in teacher behavior or curriculum.

Date:

2015

By:

Agnès Festré (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR7321 - Université Nice Sophia Antipolis (UNS))
Garrouste Pierre (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR7321 - Université Nice Sophia Antipolis (UNS))

URL:

http://d.repec.org/n?u=RePEc:hal:journl:hal-01069807&r=soc

In this contribution, we investigate the effects of observation-only and observation with feedback from a third-party, in a one-shot dictator game (DG). In addition to a baseline condition (DG), a third-party anonymous subject is introduced who either silently observes or observes and gives feedback by choosing one of seven messages consisting of varying degrees of (dis)satisfaction. We found that observation coupled with feedback significantly increases dictators' propositions, while no significant effect is found for observation-only. We conclude that regard by others matters only if it is linked to social factors such as communication. This complements the literature that argues that altruistic behavior is instrumental in serving other selfish (or non-purely altruistic) ends such as self-reputation or social approval. This experiment contributes to the growing literature aimed at decreasing the artificiality of DG designs, by increasing their practicability and external validity

Keywords:

social psychology; game theory; communication; beliefs; observation; altruistic behavior