Monday, 24 June 2013

dark side of social capital

Nico Voigtländer, Shanker Satyanath and I have a new working paper about the "dark side" of social capital. Slate's formidable Ray Fisman (when not writing crystal-clear prose, he moonlights as Lambert family professor at Columbia Business School) has picked up the story here.

Here is the abstract:
Social capital – a dense network of associations facilitating cooperation within a community – typically leads to positive political and economic outcomes, as demonstrated by a large literature following Putnam. A growing literature emphasizes the potentially “dark side” of social capital. This paper examines the role of social capital in the downfall of democracy in interwar Germany by analyzing Nazi party entry rates in a cross-section of towns and cities. Before the Nazi Party’s triumphs at the ballot box, it built an extensive organizational structure, becoming a mass movement with nearly a million members by early 1933. We show that dense networks of civic associations such as bowling clubs, animal breeder associations, or choirs facilitated the rise of the Nazi Party. The effects are large: Towns with one standard deviation higher association density saw at least one-third faster growth in the strength of the Nazi Party. IV results based on 19th century measures of social capital reinforce our conclusions. In addition, all types of associations – veteran associations and non-military clubs, “bridging” and “bonding” associations – positively predict NS party entry. These results suggest that social capital in Weimar Germany aided the rise of the Nazi movement that ultimately destroyed Germany’s first democracy.
The paper will be out as an NBER wp soon; in the meantime, here is a copy on SSRN

Wednesday, 5 June 2013

cool paper of the week

I was in Lisbon last week, for a conference on Political Economy. Danila Serra presented what I thought was one of the most interesting papers. She asks what it takes for people to be good - not to cheat, etc. In many cases, good behavior can be induced if people's actions are observable. It turns out that this effect is not independent of the culture that people come from - students in their experiment from a high rule of law country responded big-time to being observed by others, while students from low-rule-of-law places just didn't care... The paper is here and the abstract is:

We experimentally investigate the extent to which social observability of one’s actions and
the possibility of social non-monetary judgment affect the decision to engage in rule breaking
behavior. We consider three rule breaking scenarios — theft, bribery and embezzlement — in the absence of any formal enforcement mechanism. By involving a student sample characterized
by cultural heterogeneity due to immigration of ancestors to the US, we are able to investigate
whether the effectiveness of informal social enforcement mechanisms is conditional on the
cultural background of the decision-maker. A total of 52 countries are represented in our
sample, ranging from Low Rule of Law countries such as Liberia and Nigeria to High Rule
of Law countries such as Sweden and Norway. Our data provide evidence that people with
different cultural backgrounds do respond differently to increased social observability of their
actions. In particular, while subjects that identify culturally with a High Rule of Law country
respond to social obervability and judgment by lowering their propensities to engage in rule
breaking, subjects that identify with Low Rule of Law countries do not. Our findings suggest
that development policies that rely purely on social judgment to enforce behavior may not
work with Low Rule of Law populations.

intern time

Congratulations to current ITFD student Juan Jose Cortina, who will be working at the World Bank as an intern this summer...