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Social Capital And Poverty Reduction: Toward A Mature Paradigm

  • Robison, Lindon J.
  • Siles, Marcelo E.
  • Schmid, A. Allan

Introduction The purposes of this paper are: (1) to introduce the social capital paradigm; (2) to present evidence that social capital has an important role in poverty reduction; and (3) to suggest several policy prescriptions for building and using social capital to reduce poverty. The social capital paradigm includes social capital, networks, socio-emotional goods, attachment values, institutions, and power. Social capital is a person or group's sympathy for others. Social capital resides in sympathetic relationships that can be described using networks. One reason to value social capital is because it can produce economic benefits and if neglected, economic disadvantages. Another reason to value social capital is because it can be used to produce socio-emotional goods. Sometimes socio-emotional goods become embedded in objects. When this occurs, the meaning and value of the object change. The change in the value of an object produced by embedded socio-emotional goods is the object's attachment value. Individuals exchange both physical and socio-emotional goods. Institutions are the rules that order and give meaning to exchanges. Institutions with high attachment values are more likely to be observed than those whose compliance depends on economic incentives or threats. Finally, power, the ability to influence others, depends on one's resources, including one's social capital. In most personalized transactions, persons exchange both socio-emotional goods and physical goods and services. Moreover, the relative amounts of socio-emotional goods and physical goods and services exchanged will alter the levels and terms of trade when measured in physical units. Since one's ability to include socio-emotional goods in exchanges for physical goods and services depends on one's social capital, the terms and levels of exchange of physical goods and services will be influenced by the transacting party's social capital. Those with high levels of social capital will have advantages over those who lack social capital because they can exchange both socio-emotional goods and physical goods and services. Furthermore, since social capital alters the terms and levels of trade and the terms and levels of trade influence the distribution of incomes derived from trades, then social capital also has an important influence on the distribution of household income and poverty. Some evidence suggests that the distribution of social capital in networks and the distribution of household incomes are connected.

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Paper provided by Michigan State University, Department of Agricultural, Food, and Resource Economics in its series Agricultural Economic Report Series with number 10941.

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Date of creation: 2002
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Handle: RePEc:ags:midaae:10941
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  1. Jonathan Isham, 2002. "The Effect of Social Capital on Fertiliser Adoption: Evidence from Rural Tanzania," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 11(1), pages 39-60, March.
  2. Lindon J. Robison & Robert J. Myers & Marcelo E. Siles, 2002. "Social Capital and the Terms of Trade for Farmland," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 24(1), pages 44-58.
  3. Collard, David, 1975. "Edgeworth's Propositions on Altruism," Economic Journal, Royal Economic Society, vol. 85(338), pages 355-60, June.
  4. Sally, David, 2001. "On sympathy and games," Journal of Economic Behavior & Organization, Elsevier, vol. 44(1), pages 1-30, January.
  5. Lindon Robison & A. Allan Schmid & Marcelo Siles, 2002. "Is Social Capital Really Capital?," Review of Social Economy, Taylor & Francis Journals, vol. 60(1), pages 1-21.
  6. Jon Elster, 1998. "Emotions and Economic Theory," Journal of Economic Literature, American Economic Association, vol. 36(1), pages 47-74, March.
  7. Becker, Gary S, 1974. "A Theory of Social Interactions," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1063-93, Nov.-Dec..
  8. Neil Bruce & Michael Waldman, 1986. "The Rotten-Kid Theorem Meets the Samaritan's Dilemma," Working Papers 650, Queen's University, Department of Economics.
  9. Rotemberg, Julio J, 1994. "Human Relations in the Workplace," Journal of Political Economy, University of Chicago Press, vol. 102(4), pages 684-717, August.
  10. Kahneman, Daniel & Knetsch, Jack L & Thaler, Richard H, 1990. "Experimental Tests of the Endowment Effect and the Coase Theorem," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1325-48, December.
  11. Gregory M. Perry & Lindon J. Robison, 2001. "Evaluating the Influence of Personal Relationships on Land Sale Prices: A Case Study in Oregon," Land Economics, University of Wisconsin Press, vol. 77(3), pages 385-398.
  12. Robison, Lindon J. & Hanson, Steven D., 1995. "Social Capital And Economic Cooperation," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 27(01), July.
  13. Robison, Lindon J. & Siles, Marcelo E. & Bokemeier, Janet L. & Beveridge, David & Fimmen, Michael & Grummon, Phyllis T. & Fimmen, Carol, 2000. "Social Capital And Household Income Distributions: Evidence From Michigan And Illinois," Agricultural Economic Report Series 10943, Michigan State University, Department of Agricultural, Food, and Resource Economics.
  14. Swinton, Scott M., 2000. "More Social Capital, Less Erosion: Evidence From Peru'S Altiplano," 2000 Annual meeting, July 30-August 2, Tampa, FL 21853, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  15. Robison, Lindon J. & Schmid, A. Allan & Barry, Peter J., 2002. "The Role of Social Capital in the Industrialization of the Food System," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 31(1), April.
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