Social Connections, Networks, and Social Capital Erosion: Evidence from Surveys and Field Experiments

Measuring trust, a cognitive social capital that can significantly affect cooperation among individuals and groups to take collective actions for joint benefits, is an important empirical research. This study aimed to understand the determinants of social capital with specific focus on the effect of individuals' bonding social capital and bridging social capital. It explored the methods of measuring trust and identified the determining factors affecting trust/trustworthiness among village members in southwestern China's Yunnan province. A survey was done on 600 farmers in 30 administrative villages. A trust game was conducted using the respondents as subjects of the experiments, 300 playing the role of senders and 300 playing the role of receivers. Results showed that education level could positively and significantly predict both players' behaviors. The percentage of expenditure on gift exchange in the sender's total family expenditure and trust measured were robust to the model's specifications and could almost predict the sender's behavior. Meanwhile, there was no significant evidence the surveyed trust could predict the receiver's behavior. The village's openness to the market and outside world also negatively and significantly predicted both players' behaviors. It showed that the receiver's family participation in closed versus opened networks had an opposite impact on receiver's behavior. Hence, social connection variables could play more important roles than individual demographic characteristics in interactions that involve social capital. However, social capital could be eroded when the villages become more open to the outside world and when informal institutions are gradually substituted by modern formal institutions.