Unformatted text preview: Social Networks They found that local government efﬁcacy in Italy higher in regions with
higher social capital. Demise of social capital in modern US, i.e., “bowling
Think of social capital as a set of nodes that can be connected by links. Social capital speciﬁcally is a measure of the number of links. “Social”, because it is embodied in the links between individuals, “capital”, because it
increases income without being consumed in use of doing so.
Social capital is typically proxied by the measures of “associational activities,” – i.e., being a member of ethnic, religious or civic group etc.
Some societies are more polarised along ethnic or income dimensions. The
hypothesis (which is always up for testing) is that less close-knit the society,
less social capital it possess. Does this affect policy choices in
(i) public good provision and
(ii) economic performance.
Channels of Effect
Strand 1: The free rider story
Less ethnic diversity leads to less polarisation and thus, more
social capital, better information ﬂow and more cooperation.
Problems with collective action:
– greater supply of public goods
– commons less tragic
– information as a public good, i.e., technology diffusion or learning from
Strand 2: Asymmetric information story
Less ethnic diversity leads to less polarisation and thus, more social
capital, better information ﬂow and more cooperation.
Less ethnic diversity – less polarisation – more social capital – better information ﬂow Development Economics, LSE Summer School 2007 207 ...
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