Measuring Social Capital

1. Measuring Social Capital Michael J. Gilligan, New York University

2. Social Capital: Definitions • “institutions, relationships, attitudes, and values that govern interactions among people and contribute to economic and social development” (Grootvaert and Bastelaer, 2002). • They divide social capital into three categories: • “Structural” membership in associations and networks • “Cognitive” trust and adherence to norms • “Collective action” • We are mainly interested in three behaviors/attitudes: • Trust • Trustworthiness • Obligation, i.e. willingness to contribute to joint community endeavors

3. Implications for Conflict Prevention and Development • Trust: crucial for cost-effective self enforcement of contracts and peace agreements • Obligation: Compliance with social norms: non-violence, compromise, fairness • Obligation: contributions to public goods • Obligation: Respect for legitimate sources of authority

4. A Few Findings (among many) • Putnam (1993) shows that local governments in Italy are more efficient where there is greater civic engagement. • Knack and Keefer (1997) demonstrate that increases in country-level trust lead to large increases in the country’s economic growth. • La Porta et. al. (1997) establish a strong positive link between trust and judicial efficiency and a strong negative link between trust and corruption.

5. Implications • Because social capital is linked to development and post conflict peace the World Bank and other international actors have many programs to foster the growth of social capital • Community-based DDR • Community-driven development programs • A focus on local capacity in peacekeeping efforts • “Local ownership” of development and peacebuilding programs

6. Measuring Social Capital • These are very difficult concepts to measure • In many cases they are not observed directly • Indicators differ greatly across different cultures • Three sorts of measures can be employed” • Observational • Survey • Behavioral

7. Familiarization • Community Tours • Interviews with local leaders • Focus groups • Including locals on the team is crucial

8. Community Observation • Focus group discussion • Crime reports • School attendance • Upkeep of public spaces • Use of public space • Participation at public events—very context dependent, so be careful!

9. Surveys • Collective Action • Community clean-ups, road building, church raising etc. • Cooperatives: financial, child care, agricultural, fishing, etc. • Peaceful political activities, for example lobbying of central government

10. Surveys • Community associations • List of those that are active • Activities • Membership: both individual level and total

11. Surveys • Attitudinal questions • Is this a good place to raise children? • I am proud of my community • Local community leaders are honest/indifferent/corrupt • And many others

12. Behavioral activities • Community observation and surveys can fail to uncover true individual social attitudes. • Behavioral group activities can be better measures because they isolate and incentivize the precise attitudes and behavior we need to measure. • These are referred to as “games” in the academic literature, but that name understates their seriousness as an effective tool for measuring social capital

13. Behavioral games • Four important games are: • Risk game • Altruism game • Trust game • Public goods game • Our main interest is in trust and public goods games, but we also need to conduct risk and altruism games to control for risk attitudes and altruism

14. Game Instruction

15. Physical Set up

16. Lottery • Measures subjects’ attitudes toward risk • It is important to control for this attitude because behavior that appears to be trust may really be risk acceptance

17. Example from Nepal

18. Nepal Lottery Choices Lottery Freq. Percent Cum. ------------+----------------------------------- 1 | 50 39.06 39.06 2 | 28 21.88 60.94 3 | 21 16.41 77.34 4 | 12 9.38 86.72 5 | 17 13.28 100.00 ------------+----------------------------------- Total | 128 100.00

19. Altruism Game • Subjects were given a sum of money • In Nepal 40 NPR in 5 NPR notes • Subjects are asked how much they wanted to contribute to a local needy family • The identity of the family is not revealed

21. Altruism Game: Amount SentExample from Nepal

22. Trust Game • Subjects are randomly assigned to one of two roles: sender or receiver • Both types are given initial endowment of money • Senders decide how much of their endowment to send to the receiver • We triple that amount and give it to the receiver • The receiver decides how much of this total to return to the sender • All players and types are anonymous • Nash: send zero, return zero • Social optimum: send full endowment, return whatever

23. Trust • Different than “trustworthiness” (Glaeser et. al) • Confounded with risk aversion (Schechter 2006) • Confounded by feelings of altruism and fairness (Cox 2002) • Confounded with patience (de Oliviera et. al 2010)

24. Public Goods Game • All subjects play simultaneously • Each player is given two cards, one with an “X” and one blank • For each “X” card turned in in the first round all players receive an amount of money, say 4NPR • Turning in an “X” card in the second round earns the player that turned it in a larger amount, say 20 NPR • Nash: keep “X” card • Social optimum: everyone turns in “X” card

25. Example from Nepal:Does exposure to Conflict Affect Social Capital? • Victimization may lead to lack of trust • Difficult circumstances may force communities to work together • If the former a vicious cycle could result • An answer is important for transitional programming. • Blattman (2009) and Voors et. al. (2009) using different measures have found a positive link between conflict exposure and social capital

26. Trust: Amount sent

27. Trust: Percent returned

28. Effect of Conflict on Trust Variable | Coef. Std. Err. T-stat ---------------------------------------------------------------------- Dictator sent .1457 .029 5.09 Log income -.532 .213 -2.49 Log Family Mem. .619 .465 1.33 Conflict area 1.257 .722 1.74 Constant 7.297 2.738 2.67 N = 93 Standard error are clustered on village

29. Effect of Conflict onTrustworthiness Variable Coef. Std. Err. T-stat ---------------------------------------------------------------------- Sender sent 1.053 .246 4.28 Log income -.0187 .213 -0.09 Log Family Mem. 1.674 1.979 0.85 Dictator sent .254 .0749 3.39 Conflict Area 1.172 1.095 1.07 Constant -5.216 3.863 -1.35 N = 88 Standard errors clustered on village

30. Public goods and Conflict Variable Coef. Std. Err. Z-stat -------------------------------------------------------------------------- Log income 0.185 0.102 1.82 Log Family Mem. -0.471 0.186 -2.53 Conflict Area -0.527 0.270 -1.95 Constant -1.673 1.125 -1.49 N = 178 Standard errors clustered on village

31. Summary of findings • Conflict is associated with… (1) A greater willingness to provide public goods (2) Higher levels of trust (3) But not higher levels of trustworthiness.

32. Conclusion • Social capital is an important component of post-conflict stability and economic development • Many development programs are designed to foster the growth social capital • The extent to which these programs accomplish this goal is an important evaluative criterion of these programs • Social capital is measurable by observational survey and behavioral measures