Disentangling Social Capital: Lab-in-The-Field Evidence on Coordination, Networks and Cooperation

Abstract

Although social capital has been considered of the utmost importance for development and poverty alleviation by governments and NGOs, it remains a complex and elusive concept. Different dimensions of social capital form part of the puzzle: cooperation is an individual other-regarding preference; social norms stem from beliefs about others’ behavior; and individual connections arising in networks allow us to build such beliefs.To disentangle social capital we conducted an artefactual field experiment at the inset of a Conditional Cash Transfer program in an urban context within a developing country. The first challenge is to disentangle the cooperation element from the coordination one. To our knowledge this is the first time this is achieved; we do so by conducting a minimum effort coordination game with Pareto ranked equilibria. Willingness to cooperate is teased out using a public goods game. By controlling for the density of network information we capture the role of connections, which is the third element of the mixture. We contrast our findings with traditional survey measures of social capital we also gather such as voting behavior, trust and membership in associations.Our identification strategy allows us to assess whether exposure to the program could help individuals to overcome strategic uncertainty and achieve the most efficient equilibrium in the coordination game. We provide experimental evidence on the positive role of a monetary incentive on the existence of a social norm that allows individuals to overcome a coordination failure. We rule out confounding factors as individual socio-economic characteristics, social capital accumulation, willingness to cooperate and connectivity.The effort choice is given by how connected the individual is and other members’ socio-economic characteristics. We estimate a structural choice model of the individual decision to coordinate, which highlights the role of beliefs about others’ behavior: high effort is only sustained under high beliefs. The regressions suggest that the CCT program helps overcome the coordination failure through different channels, and the structural model points to the beliefs channel.