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Cents and sociability : household income and social capital in rural Tanzania

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  • Narayan, Deepa
  • Pritchett, Lant

Abstract

The authors construct a measure of"social capital"in rural Tanzania, using data from the Tanzania Social Capital and Poverty Survey (SCPS), a large-scale survey that asked individuals about the extent and characteristics of their associational activity and their trust in various institutions and individuals. They match this measure of social capital with data on household income in the same villages (both from the SCPS and from an earlier household survey, the Human Resources Development Survey). In doing so, they show that"social capital"is indeed both capital (in that it raises incomes) and social (in that household incomes depend on village, not just household, social capital). The magnitude of social capital's effect on incomes is impressive: a one standard deviation increase in village social capital increases a household proxy for income by at least 20 to 30 percent. This is as great an impact as an equivalent increase in nonfarming assets, or a tripling of the level of education. Data from the two surveys make it possible to identify some of the proximate channels through which social capital affects incomes: better publicly provided services, more community activity, greater use of modern agricultural inputs, and greater use of credit in agriculture.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 1796.

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Date of creation: 30 Jun 1997
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Handle: RePEc:wbk:wbrwps:1796

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Keywords: Economic Theory&Research; Capital Markets and Capital Flows; Health Economics&Finance; Decentralization; Social Capital; Economic Theory&Research; Health Economics&Finance; Inequality; Poverty Assessment; Social Capital;

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  1. Mark Rosenzweig & Andrew D. Foster, . "Learning by Doing and Learning from Others: Human Capital and Technical Change in Agriculture," Home Pages _068, University of Pennsylvania.
  2. La Porta, Rafael, et al, 1997. "Trust in Large Organizations," American Economic Review, American Economic Association, vol. 87(2), pages 333-38, May.
  3. Anne C. Case & Lawrence F. Katz, 1991. "The Company You Keep: The Effects of Family and Neighborhood on Disadvantaged Youths," NBER Working Papers 3705, National Bureau of Economic Research, Inc.
  4. Isham, Jonathan & Narayan, Deepa & Pritchett, Lant, 1995. "Does Participation Improve Performance? Establishing Causality with Subjective Data," World Bank Economic Review, World Bank Group, vol. 9(2), pages 175-200, May.
  5. Alesina, Alberto & Baqir, Reza & Easterly, William, 1999. "Public goods and ethnic divisions," Policy Research Working Paper Series 2108, The World Bank.
  6. Jonathan Morduch, 1995. "Income Smoothing and Consumption Smoothing," Harvard Institute of Economic Research Working Papers 1727, Harvard - Institute of Economic Research.
  7. Timothy Besley & Anne Case, 1994. "Diffusion as a Learning Process: Evidence from HYV Cotton," Working Papers 228, Princeton University, Woodrow Wilson School of Public and International Affairs, Research Program in Development Studies..
  8. Binswanger, Hans P. & Khandker, Shahidur R. & Rosenzweig, Mark R., 1993. "How infrastructure and financial institutions affect agricultural output and investment in India," Journal of Development Economics, Elsevier, vol. 41(2), pages 337-366, August.
  9. George J. Borjas, 1994. "Ethnicity, Neighborhoods, and Human Capital Externalities," NBER Working Papers 4912, National Bureau of Economic Research, Inc.
  10. Greif, Avner, 1993. "Contract Enforceability and Economic Institutions in Early Trade: the Maghribi Traders' Coalition," American Economic Review, American Economic Association, vol. 83(3), pages 525-48, June.
  11. Easterly, William & Levine, Ross, 1997. "Africa's Growth Tragedy: Policies and Ethnic Divisions," The Quarterly Journal of Economics, MIT Press, vol. 112(4), pages 1203-50, November.
  12. Deepa Narayan, 1995. "Designing Community Based Development," World Bank Other Operational Studies 11662, The World Bank.
  13. Knack, Stephen & Keefer, Philip, 1997. "Does Social Capital Have an Economic Payoff? A Cross-Country Investigation," The Quarterly Journal of Economics, MIT Press, vol. 112(4), pages 1251-88, November.
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