NEP-SOC 2023-11-27, nine papers

In this issue we feature 6 current papers on the theme of social capital, chosen by Fabio Sabatini (Università degli Studi di Roma “La Sapienza”):

1. Identifying Network Ties from Panel Data: Theory and an application to tax competition By Imran Rasul; Pedro Souza; Aureo de Paula
2. Trust in times of AI By Francesco Bogliacino; Paolo Buonanno; Francesco Fallucchi; Marcello Puca
3. Trust and social preferences in times of acute health crisis * By Fortuna Casoria; Fabio Galeotti; Marie Claire Villeval
4. Nudging to inform: Priming and social norms to facilitate waste composting By Alix Rouillé
5. Social Capital and Mortgages By Xudong An; Sadok El Ghoul; Omrane Guedhami; Ross Levine; Raluca Roman
6. The Societal Costs of Inflation and Unemployment By Popova, Olga; See, Sarah Grace; Nikolova, Milena; Otrachshenko, Vladimir
7. Scars of war By Felipe Carozzi; Edward W. Pinchbeck; Luca Repetto
8. Behavioural spillovers unpacked: estimating the side effects of social norm nudges By Picard, Julien; Banerjee, Sanchayan
9. Recession Experiences during Early Adulthood Shape Prosocial Attitudes Later in Life By Bietenbeck, Jan; Sunde, Uwe; Thiemann, Petra

1. Identifying Network Ties from Panel Data: Theory and an application to tax competition

   By:	Imran Rasul; Pedro Souza; Aureo de Paula
   Abstract:	Social interactions determine many economic behaviors, but information on social ties does not exist in most publicly available and widely used datasets. We present results on the identification of social networks from observational panel data that contains no information on social ties between agents. In the context of a canonical social interactions model, we provide sufficient conditions under which the social interactions matrix, endogenous and exogenous social effect parameters are all globally identified. While this result is relevant across different estimation strategies, we then describe how high-dimensional estimation techniques can be used to estimate the interactions model based on the Adaptive Elastic Net Generalized Method of Moments. We employ the method to study tax competition across US states. We find that the identified social interactions matrix implies tax competition differs markedly from the common assumption of competition between geographically neighboring states, providing further insights for the long-standing debate on the relative roles of factor mobility and yardstick competition in driving tax setting behavior across states. Most broadly, our identification and application show that the analysis of social interactions can be extended to economic realms where no network data exists. JEL Codes: C31, D85, H71.
   Date:	2023–10–18
   URL:	http://d.repec.org/n?u=RePEc:cep:poidwp:081&r=soc

2. Trust in times of AI

   By:	Francesco Bogliacino (Università di Bergamo); Paolo Buonanno (Università di Bergamo); Francesco Fallucchi (Università di Bergamo); Marcello Puca (Università di Bergamo, CSEF and Webster University Geneva)
   Abstract:	In an online, pre-registered experiment, we explore the impact of AI mediated communication within the context of a Trust Game with unverifiable actions. We compare a baseline treatment, where no communication is allowed, to treatments where participants can use free-form communication or have the additional option of using ChatGPT-generated promises, which were assessed in a companion experiment. We confirm previous observations that communication bolsters trust and trustworthiness. In the AI treatment, trustworthiness sees the most significant increase, yet trust levels decline for those who opt not to write a message. AI-generated promises become more frequent but garner less trust. Consequently, the overall trust and efficiency levels in the AI treatment align with that of human communication. Contrary to our assumptions, less trustworthy individuals do not show a higher propensity to delegate messages to ChatGPT.
   Keywords:	Artificial Intelligence, Trust Game, ChatGPT, Experiment.
   JEL:	C93 D83 D84 D91
   Date:	2023–10–24
   URL:	http://d.repec.org/n?u=RePEc:sef:csefwp:689&r=soc

3. Trust and social preferences in times of acute health crisis *

   By:	Fortuna Casoria (CEREN - Centre de Recherche sur l'ENtreprise [Dijon] - BSB - Burgundy School of Business (BSB) - Ecole Supérieure de Commerce de Dijon Bourgogne (ESC)); Fabio Galeotti; Marie Claire Villeval (GATE Lyon Saint-Étienne - Groupe d'Analyse et de Théorie Economique Lyon - Saint-Etienne - UL2 - Université Lumière - Lyon 2 - UJM - Université Jean Monnet - Saint-Étienne - CNRS - Centre National de la Recherche Scientifique)
   Abstract:	We combined a natural experiment (the occurrence of the COVID-19 pandemic in 2020) with the tools of laboratory experiments to study whether and how an unprecedented shock on social interactions (the introduction and abrogation of a nationwide lockdown) affected the evolution of individuals' social preferences, and willingness to trust others. In a longitudinal online incentivized experiment during the first lockdown in France, we elicited the same participants' preferences for prosociality, trust and trustworthiness every week for three months. Despite the exposure to long-lasting social distancing, prosocial preferences and the willingness to reciprocate the trust of others remained stable during the whole period under study. In contrast, the lockdown had an immediate negative effect on trust, which remained at lower levels til after the lifting of such measures but recovered its initial level nine months later. The decline in trust was mainly driven by individuals who experienced financial hardship, a lack of outward exposure, and higher anxiety during the lockdown.
   Keywords:	Social preferences, Trust, Trustworthiness, Pandemic, COVID-19, Social distancing
   Date:	2023–02–05
   URL:	http://d.repec.org/n?u=RePEc:hal:journl:hal-03974756&r=soc

4. Nudging to inform: Priming and social norms to facilitate waste composting

   By:	Alix Rouillé (PhD student, CEPS, ENS Paris-Saclay)
   Abstract:	The combination of social norms and nudges has proven to be a powerful tool for inciting people to adopt pro-environmental behaviors. In this study, we implemented nudges that promote pro-environmental behavior still not explored by behavioral economics: waste composting. In particular, we designed priming and social norm nudges to incite people looking for information about waste composting possibilities. We set up a field experiment with a two-fold purpose. First, remove the barriers towards collective composting in Lyon by using posters related to priming theory with QR Codes that redirect directly to the website of a local association dedicated to environmental actions. Second, these posters created new social norm mechanisms. Since composting is still practiced by only a minority of people in France, the standard way of combining nudges and social norms is insufficient in this context. Here, we focus on descriptive and injunctive norms with local dimensions. These new norms aimed to make the nudge more efficient by increasing the number of scans. We observed that the scans of the posters allowed for a significant increase in the visits to the website over several months, thus improving information about collective waste composting. Although no significant differences were found between social norms treatments, these results show that the QR Code is a promising tool for implementing nudges.
   Keywords:	Nudge, composting, priming, social norms, QR Code
   JEL:	C93 D91 Q53
   Date:	2023–10
   URL:	http://d.repec.org/n?u=RePEc:fae:wpaper:2023.11&r=soc

5. Social Capital and Mortgages

   By:	Xudong An; Sadok El Ghoul; Omrane Guedhami; Ross Levine; Raluca Roman
   Abstract:	Using comprehensive mortgage-level data, we discover that the social capital of the community in which households live positively influences the likelihood of the approval of their mortgage applications, the terms of approved mortgages, and the subsequent performance of those mortgages. The results hold when conditioning on extensive household and community characteristics and a battery of fixed effects, including individual effects, data permitting, and when employing instrumental variables and propensity score matching to address identification and selection concerns. Concerning causal mechanisms, evidence suggests that social capital enhances lender screening and monitoring of borrowers and increases the social costs to borrowers of defaulting on their debts.
   Keywords:	consumer credit; mortgage approval; screening; loan performance; social capital; interpersonal connections; trust; banks; fintech
   JEL:	G01 G28 D10 D12 E58
   Date:	2023–10–12
   URL:	http://d.repec.org/n?u=RePEc:fip:fedpwp:97148&r=soc

6. The Societal Costs of Inflation and Unemployment

   By:	Popova, Olga (Leibniz Institute for East and Southeast European Studies (IOS)); See, Sarah Grace (University of Groningen); Nikolova, Milena (University of Groningen); Otrachshenko, Vladimir (Justus Liebig University, Giessen)
   Abstract:	What are the broad societal implications of inflation and unemployment? Analyzing a dataset of over 1.9 million individuals from 156 countries via the Gallup World Poll spanning 2005 to 2021, alongside macroeconomic data at the national level, we find that both inflation and unemployment have a negative link with confidence in financial institutions. While inflation is generally unassociated with confidence in government and leadership approval, unemployment still has a strong negative association with these outcomes. While we find no gender differences in the consequences of inflation and unemployment for confidence in political and financial institutions, the associations we document are more substantial for the cohorts that are likely to bear a disproportionate burden from inflation and unemployment—the middle-aged, lower-educated, and unmarried individuals, and for those living in rural areas. Uncertainty about the country's economic performance and one's own economic situation are the primary channels behind the associations we identify. These findings hold significant implications for policymakers, Central Banks, and public discourse, necessitating targeted strategies to alleviate the social consequences of inflation and unemployment.
   Keywords:	inflation, unemployment, trust, confidence in institutions, Gallup World Poll
   JEL:	D12 D83 E31 E58
   Date:	2023–10
   URL:	http://d.repec.org/n?u=RePEc:iza:izadps:dp16541&r=soc

7. Scars of war

   By:	Felipe Carozzi; Edward W. Pinchbeck; Luca Repetto
   Abstract:	Deaths of soldiers in wartime naturally have a powerful impact on the communities from which they come. Research by Edward Pinchbeck, Felipe Carozzi and Luca Repetto reveals how losses in the first world war have reverberated through subsequent generations, shaping local memories, behaviour and social values.
   Keywords:	world war, combat motivation, conflict, civic capital, memory
   Date:	2023–10–20
   URL:	http://d.repec.org/n?u=RePEc:cep:cepcnp:667&r=soc

8. Behavioural spillovers unpacked: estimating the side effects of social norm nudges

   By:	Picard, Julien; Banerjee, Sanchayan
   Abstract:	Fighting the climate crisis requires changing many aspects of our consumption habits. Previous studies show that a first climate-friendly action can lead to another. Does deciding not to eat meat increase our willingness to do more for the environment? Can encouraging vegetarianism alter this willingness? Using an online randomised control trial, we study the side effects of a social norm nudge promoting vegetarianism on environmental donations. We develop an experimental design to estimate these side effects and a utility maximisation framework to understand their mechanisms. Using an instrumental variable, we find that choosing not to eat meat increases donations to pro-environmental charities. We use machine learning to find that the social norm nudge crowds out donations from the population segment prone to choosing vegetarian food after seeing the nudge. However, the nudge led another group to make less carbon-intensive food choices without affecting their donations. Our results suggest that whilst social norm nudges are effective on specific population segments, they can also reduce the willingness of some groups to do more.
   Keywords:	social norm; meat; climate change; behavioural spillovers; side effects
   JEL:	C30 C93 D91 Z10
   Date:	2023–09–13
   URL:	http://d.repec.org/n?u=RePEc:ehl:lserod:120566&r=soc

9. Recession Experiences during Early Adulthood Shape Prosocial Attitudes Later in Life

   By:	Bietenbeck, Jan (Lund University); Sunde, Uwe (University of Munich); Thiemann, Petra (Lund University)
   Abstract:	This paper explores whether the experience of a severe recession during early adulthood shapes individuals' prosocial attitudes. The analysis uses survey responses to experimentally validated questions that measure prosocial attitudes for approximately 65, 000 respondents in 75 countries. The identification approach exploits variation in recession experiences across 78 different birth cohorts. We find that exposure to a recession during early adulthood is associated with lower levels of prosociality later in life. The effect only emerges for experiences during impressionable years (age 18–25), mainly affects prosocial attitudes among men, and is orthogonal to the effect of experiences with democracy.
   Keywords:	prosocial attitudes, impressionable years, experience effects, cohort effects
   JEL:	D91 E30 E71
   Date:	2023–09
   URL:	http://d.repec.org/n?u=RePEc:iza:izadps:dp16490&r=soc

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