Cooperative Behavior, Social Capital and Development: Evidence from the Mekong River Delta in Vietnam

In developing communities, good governance has become imperative to both responses to the emerging climate change problems and rural development. Getting good governance requires improvements in all dimensions of the public sector, e.g., democratic government, empowerment of the poor, access to market and participatory development. The good governance agenda, largely defined by international development communities, however, can overwhelm the developing countries? weak and imperfect institutions. Advocating good governance, thus, has been facing the question of what governance practices are applicable to the developing communities? contexts. This research report examines two governance practices that are potentially suitable for developing countries? institutions: social capital and nudging, i.e. using social influences, for development. The present research report consists of two self-contained papers. The first paper examines the role of social influence in voluntary contributions to public goods. The second paper investigates the role of farmers? social capital in the adaptation to climate change. The first focus of the present research report is about how institutions affect cooperative behavior. Elinor Ostrom and co-authors have carefully investigated the effects of different institutional settings for the abilities of local societies, in particular in developing countries, to effectively handle social dilemma-type situations; see e.g. Ostrom (1990). Yet, little has been done in this area regarding the direct effects of social influence on individuals? behavior. Such effects have instead been carefully analyzed in the rapidly growing literature on charitable giving (see, e.g., Soetevent, 2005; Landry et al., 2006; Alpizar et al. 2008; Shang and Croson, 2009; Soetevent, 2011). However, the extent to which these insights are transferable to the issue of contribution to real public goods, i.e. strategic interaction settings, in a developing country context is far from obvious. In the first paper, using a threshold public good experiment in a natural setting, we examine two types of social influence: i) conditional cooperation, i.e., that people may be more willing to cooperate if others cooperate, and ii) the effects of a default alternative, i.e., that people are often found to be influenced by a default alternative presented to them in the choice situation (see, e.g., Thaler and Sunstein, 2008). We find significant and substantial effects of both kinds of social influence. For example, by either giving the subjects the additional information that one of the most common contributions by others is 100,000 dong (a relatively low contribution), or by introducing a zero contribution default alternative, the average contribution decreases by about 20% compared to the baseline case. The second paper relates social aspects of individual i.e. social capital to a development issue – adaptation to climate change in Vietnam. Chinvanno et al. (2008) report that in order to cope with the impacts of climate change, rice farmers in the Mekong River Delta in Vietnam have mainly used their own household resources and have concentrated their adaptation actions within their farm boundaries. Faced with limited financial capability, instead of investing in costly defensive efforts such as small scale irrigation, farming households have used alternative adaptation strategies such as adjusting the crop calendar or using alternative crops and seed varieties. Studies on to what extent social capital determines households? choice of these adaptation measures may have distinct policy relevance since available resources such as social capital can be used up given chronic problems of human and financial resource constraints. In the fourth paper, we construct a set of social capital indexes that cover formal and informal social networks, trust, and cooperativeness. The first three social capital indexes are based on survey responses. The measure of cooperativeness is based on actual behavior of farmers in the public good experiment presented in the first paper. We then examine how these social capital indexes are associated with farmers? choice of private adaptation to climate change. We find that, in general, social capital at the individual level does not affect farmers? behavior with respect to private adaptation. Some forms of social capital such as formal and informal institutions, however, are weakly associated with the choice of different climate change adaptation measures in farming activities.