Working Paper: CEPR ID: DP7757
Authors: Luigi Guiso; Paola Sapienza; Luigi Zingales
Abstract: This chapter reviews the recent debate about the role of social capital in economics. We argue that all the difficulties this concept has encountered in economics are due to a vague and excessively broad definition. For this reason, we restrict social capital to the set of values and beliefs that help cooperation - which for clarity we label civic capital. We argue that this definition differentiates social capital from human capital and satisfies the properties of the standard notion of capital. We then argue that civic capital can explain why differences in economic performance persist over centuries and discuss how the effect of civic capital can be distinguished empirically from other variables that affect economic performance and its persistence, including institutions and geography.
Keywords: development; social capital; trust
JEL Codes: O43
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| civic capital (H54) | economic performance (P17) |
| initial conditions of civic capital (P17) | sustained economic advantages over time (P17) |