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Cents and Sociability: Household Income and Social Capital in Rural Tanzania

  • Narayan, Deepa
  • Pritchett, Lant

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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Article provided by University of Chicago Press in its journal Economic Development and Cultural Change.

Volume (Year): 47 (1999)
Issue (Month): 4 (July)
Pages: 871-97

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Handle: RePEc:ucp:ecdecc:v:47:y:1999:i:4:p:871-97
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  1. 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.
  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. Foster, Andrew D & Rosenzweig, Mark R, 1995. "Learning by Doing and Learning from Others: Human Capital and Technical Change in Agriculture," Journal of Political Economy, University of Chicago Press, vol. 103(6), pages 1176-1209, December.
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  5. George J. Borjas, 1994. "Ethnicity, Neighborhoods, and Human Capital Externalities," NBER Working Papers 4912, National Bureau of Economic Research, Inc.
  6. 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.
  7. Besley, T. & Case, A., 1994. "Diffusion as a Learning Process: Evidence from HYV Cotton," Papers 174, Princeton, Woodrow Wilson School - Development Studies.
  8. Alberto Alesina & Reza Baqir & William Easterly, 1999. "Public Goods And Ethnic Divisions," The Quarterly Journal of Economics, MIT Press, vol. 114(4), pages 1243-1284, November.
  9. 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.
  10. Jonathan Morduch, 1995. "Income Smoothing and Consumption Smoothing," Harvard Institute of Economic Research Working Papers 1727, Harvard - Institute of Economic Research.
  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. 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.
  13. Deepa Narayan, 1995. "Designing Community Based Development," World Bank Other Operational Studies 11662, The World Bank.
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