In this issue we feature 10 current papers on the theme of social capital:

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1. Trust in banks - Zuzana FUNGACOVA; Iftekhar HASAN; Laurent WEILL
2. To trust is good, but to control is better: how investors discipline financial advisors’ activity - Riccardo Calcagno; Maela Giofré; Maria Cesira Urzì-Brancati
3. The Economic Consequences of Social Network Structure - Matthew O. Jackson; Brian Rogers; Yves Zenou
4. Diversity and Social Capital Within the Workplace: Evidence from Britain - Thomas Breda; Alan Manning
5. Cities and the Structure of Social Interactions: Evidence from Mobile Phone Data - Konstantin Büchel und Maximilian von Ehrlich
6. Social Preference and Governance: A Case Study in India - Dinda, Soumyananda
7. Social Media Use and Children’s Wellbeing - Emily McDool; Phillip Powell; Jennifer Roberts; Karl Taylor
8. "Many a slip between the cup and the lip": The effect of default-based nudges on prosocial behavior and attitudes - Gaudeul, Alexia; Kaczmarek, Magdalena Claudia
9. How fully do people exploit their bargaining position? The effects of bargaining institution and the 50–50 norm - Nejat Anbarci; Nick Feltovich
10. Social ties for labor market access - Lessons from the migration of East German inventors - Dorner, Matthias; Harhoff, Dietmar; Hinz, Tina; Hoisl, Karin; Bender, Stefan

 1. Trust in banks

    Zuzana FUNGACOVA (Bank of Finland)

    Iftekhar HASAN (Fordham University and Bank of Finland)

    Laurent WEILL (LaRGE Research Center, Université de Strasbourg)  Trust in banks is considered essential for an effective financial system, yet  little is known about what determines trust in banks. Only a handful of  single-country studies discuss the topic, so this paper aims to fill the gap  by providing a cross-country analysis on the level and determinants of trust  in banks. Using World Values Survey data covering 52 countries during the  period 2010–2014, we observe large cross-country differences in trust in  banks and confirm the influence of several sociodemographic indicators. Our  main findings include: women tend to trust banks more than men; trust in  banks tends to increase with income, but decrease with age and education;  access to television enhances trust, while internet access erodes trust; and  religious, political, and economic values may affect trust in banks. Notably,  religious individuals tend to put greater trust in banks, but differences are  observed across denominations. The holding of pro-market economic views is  also associated with greater trust in banks.

    JEL: G21 O16 Z1

URL: http://d.repec.org/n?u=RePEc:lar:wpaper:2016-09&r=soc

 2. To trust is good, but to control is better: how investors discipline financial advisors’ activity

    Riccardo Calcagno (EMYLON Business School and CeRPñCollegio Carlo Alberto)

    Maela Giofré (University of Turin)

    Maria Cesira Urzì-Brancati (International Longevity Centre - UK)  Using a survey of clients from one of the largest Italian banks, we  investigate whether investors exert some form of control over the quality of  the recommendations they receive, and if so which one. We find that investors  with low level of trust seek financial counselling, but decide autonomously.

 Within this subgroup of investors, those with high self-assessed financial  competence are more likely to control the quality of the advice. We also  observe that their test-based degree of financial literacy affects the way  they discipline the advisors. Investors with high financial literacy monitor  the advisor’s activity by themselves. Instead, investors with low financial  literacy are more likely to search for a second expert’s opinion which  confirms the recommendations previously received, as for credence services.

 Our findings suggest that access to different financial institutions is  beneficial especially for investors with poor financial literacy.

URL: http://d.repec.org/n?u=RePEc:crp:wpaper:157&r=soc

 3. The Economic Consequences of Social Network Structure

    Matthew O. Jackson

    Brian Rogers

    Yves Zenou

 We survey the literature on the economic consequences of the structure of  social networks. We develop a taxonomy of ‘macro’ and ‘micro’ characteristics  of social inter-action networks and discuss both the theoretical and  empirical findings concerning the role of those characteristics in determining  learning, diffusion, decisions, and resulting behaviors. We also discuss the  challenges of accounting for the endogeneity of networks in assessing the  relationship between the patterns of interactions and behaviors.

    Keywords: Social networks, social economics, homophily, diffusion, social learning, contagion, centrality measures, endogeneity, network formation.

    JEL: D85 C72 L14 Z13

URL: http://d.repec.org/n?u=RePEc:mos:moswps:2016-45&r=soc

 4. Diversity and Social Capital Within the Workplace: Evidence from Britain

    Thomas Breda

    Alan Manning

 This paper uses the British Workplace Employee Relations Survey to  investigate the impact of gender and ethnic diversity on workers' level of  trust in managers and the extent of identity with the values and objectives  of the firm - dimensions of what we might call social capital within the  workplace. These are both factors that one might expect to make firms more  co-operative and, hence, productive. In contrast to much of the existing  literature we pay particular attention to the estimation of causal effects,  using an instrumental variable strategy. We find evidence that both women and  minorities have higher levels of workplace trust and identity as individuals.

 But we also find evidence that a higher female share in the plant is  associated with higher trust and identity (stronger for trust than identity)  and that a higher minority share is associated lower trust and identity  (stronger for identity than trust). However, in line with much of the  literature, these results are not always significantly different from zero  and they are sensitive to specification.

    Keywords: trust, identity, diversity, workplace

    JEL: M5

URL: http://d.repec.org/n?u=RePEc:cep:cepdps:dp1460&r=soc

 5. Cities and the Structure of Social Interactions: Evidence from Mobile Phone Data

    Konstantin Büchel und Maximilian von Ehrlich  Social interactions are considered pivotal to urban agglomeration forces.

 This study employs a unique dataset on mobile phone calls to examine how  social interactions differ across cities and peripheral areas. We first show  that geographical distance is highly detrimental to interpersonal exchange.

 We then reveal that individuals residing in high-density locations do not  benefit from larger social networks, but from a more efficient structure in  terms of higher matching quality and lower clustering. These results are  derived from two complementary approaches: Based on a link Formation model,  we examine how geographical distance, network overlap, and sociodemographic  (dis)similarities impact the likelihood that two agents interact. We further  decompose the effects from individual, location, and time specific  determinants on micro-level network measures by exploiting information on  mobile phone users who change their place of residence.

    Keywords: Social Interactions; Agglomeration Externalities; Network Analysis; Sorting

    JEL: R1 R23 Z13 D85

URL: http://d.repec.org/n?u=RePEc:ube:dpvwib:dp1608&r=soc

 6. Social Preference and Governance: A Case Study in India

    Dinda, Soumyananda

 This study investigates the relationship between social choice and fiscal  performance in India since 1991. Social choice is simple measurement in  public affair activities like participating in election. Vote turnover in a  democracy is taken to measure trust on institution. Social trust is  considered as a proxy of social capital. Truly, the percentage vote turnover  is the measurement of the level of citizens’ chance to express their  preferences, which certainly help to increase governmental responsibility and  accountability and thereby government performance. Here, the government is  forced to be responsive to citizens’ preferences and the underlying social  contract rule, which leads to a higher level of fiscal discipline. Using  principal component analysis we construct social capital index that captures  both structural and cultural aspects. Fiscal institution in India becomes  weak in the post reform era. Group of politicians are much more interest  about their local or regional issues than national issues even they are not  interested to formulate regional development policy through discussion in the  Parliament of India. Here higher value of social index indicates higher level  of social trust as proxy of higher social capital. High social capital  inversely affects the fiscal performance.

    Keywords: Social Preference, Trust, Social Capital, Vote Turnover, Institution, Performance of Government, Fiscal Performance

    JEL: D7 H0 H3 O1 O2 Z1 Z18

URL: http://d.repec.org/n?u=RePEc:pra:mprapa:75828&r=soc

 7. Social Media Use and Children’s Wellbeing

    Emily McDool (Department of Economics, University of Sheffield)

    Phillip Powell (Department of Economics, University of Sheffield)

    Jennifer Roberts (Department of Economics, University of Sheffield)

    Karl Taylor (Department of Economics, University of Sheffield)  Childhood circumstances and behaviours have been shown to have important  persistent effects in later life. One aspect of childhood that has changed  dramatically in the past decade, and is causing concern among policy makers  and other bodies responsible for safeguarding children, is the advent of  social media, or online social networking. This research explores the effect  of children’s digital social networking on their subjective wellbeing. We use  a large representative sample of 10-15 year olds over the period 2010 to 2014  from the UK Household Longitudinal Study, and estimate the effect of time  spent chatting on social websites on a number of outcomes which reflect how  these children feel about different aspects of their life, specifically:

 school work; appearance; family; friends; school attended; and life as a  whole. We deal with the potential endogeneity of social networking via an  instrumental variables approach using information on broadband speeds and  mobile phone signal strength published by Ofcom. Our results suggest that  spending more time on social networks reduces the satisfaction that children  feel with all aspects of their lives, except for their friendships; and that  girls suffer more adverse effects than boys. As well as addressing policy  makers’ concerns about the effects of digital technology on children, this  work also contributes to wider debates about the socioeconomic consequences  of the internet and digital technologies more generally, a debate which to  date has largely been based on evidence from outside of the UK.

    Keywords: digital society, social media, wellbeing, children

    JEL: D60 I31 J13

URL: http://d.repec.org/n?u=RePEc:shf:wpaper:2016011&r=soc

 8. "Many a slip between the cup and the lip": The effect of default-based nudges on prosocial behavior and attitudes

    Gaudeul, Alexia

    Kaczmarek, Magdalena Claudia

 Recent evidence suggests that default based nudges i.e. alterations in the  decisional context, can have large effects on decision making and can be used  as policy interventions to improve individual and public welfare. This paper  presents the results of a controlled experiment (N = 988), designed to  evaluate not only the effectiveness of a default manipulation on decision  making, but also to explore how yielding or opposing a nudge intervention  later affects attitudes (towards the nudge and the nudger) and behavior in a  charity giving context. The results show that while the default nudge was  effective at the time of application, it was not enough to change attitudes  towards the nudged behavior as would be needed for long-term success. Indeed,  we rather find that those who adopted an action that went against the nudge  were more motivated to follow on through with this action later on than those  who went with the nudge. We furthermore show that giving people more leeway  in how to respond to a nudge improves acceptance of the nudge. We finally  discuss the practical implications of our findings in terms of the  applicability of default-based nudges as a tool for policy interventions.

    Keywords: nudging,defaults,decision making,prosocial behavior,charity giving,behavioral economics

    JEL: C9 D04 D12 D64 H41

URL: http://d.repec.org/n?u=RePEc:zbw:cegedp:297&r=soc

 9. How fully do people exploit their bargaining position? The effects of bargaining institution and the 50–50 norm

    Nejat Anbarci

    Nick Feltovich

 A recurring puzzle in bargaining experiments is that individuals  under–respond to changes in their bargaining position, compared to the  predictions of standard bargaining theories. This result has been observed in  a variety of settings, but there has been little systematic study of the  factors associated with higher or lower responsiveness.We conduct a  complete–information bargaining experiment using two institutions – the Nash  demand game (NDG) and a related unstructured bargaining game (UBG) – and with  bargaining power varied via the disagreement outcome. Importantly, in about  one–fourth of bargaining pairs, one player’s disagreement payoff is more than  half the cake size; in these cases, 50–50 splits are not individually  rational. We find that subjects are least responsive to changes in bargaining  position in the NDG with both disagreement payments below half the cake size.

 Responsiveness is higher in the UBG, and in the NDG when one disagreement  payment is more than half the cake, but in both cases it is still less than  predicted. It is only in the UBG with a disagreement payment more than half  the cake that responsiveness reaches the predicted level. Our results imply  that the extent to which actual bargaining corresponds to theoretical  predictions will depend on (1) the institutions within which bargaining takes  place, and (2) the distribution of bargaining power, in particular, whether  the 50–50 norm yields a plausible focal point. We construct and analyse a  simple model that characterises our main results.

    Keywords: Nash demand game; unstructured bargaining; real effort; equal split; experiment

    JEL: C78 C72 D81

URL: http://d.repec.org/n?u=RePEc:mos:moswps:2016-21&r=soc

10. Social ties for labor market access - Lessons from the migration of East German inventors

    Dorner, Matthias

    Harhoff, Dietmar

    Hinz, Tina

    Hoisl, Karin

    Bender, Stefan

 We study the impact of social ties on the migration of inventors from East to  West Germany, using the fall of the Iron Curtain and German reunification as  a natural experiment. We identify East German inventors via their patenting  track records prior to 1990 and their social security records in the German  labor market after reunification. Modeling inventor migration to West German  regions after 1990, we find that Western regions with stronger historically  determined social ties across the former East-West border attracted more  inventors after the fall of the Iron Curtain than regions without such ties.

 However, mobility decisions made by inventors with outstanding patenting  track records (star inventors) were not impacted by social ties. We conclude  that social ties support labor market access for migrant inventors and  determine regional choices while dependence on these ties is substantially  reduced for star performers.

    JEL: J60 O30 P20 R23

URL: http://d.repec.org/n?u=RePEc:iab:iabdpa:201641&r=soc

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