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The Relevance of Social Norms for Economic Efficiency: Theory and its Empirical Test

  • Anil Alpman


    (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

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    This paper proposes a new theory of social norms that explores the relation between individuals' income, time allocation decisions, and consumption choices on the one hand, and the determinants of individuals' decision to conform or not to social norms on the other. It is shown that rational consumers may obey inefficient social norms, which in turn would slow economic development. An empirical test of the model is performed for different categories of countries using the World Values Survey, a voluminous cross-country micro dataset. The results yield the gain and the cost of disobeying inefficient social norms, the latter of which can be used as an indicator of social pressure regarding conformity.

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    Paper provided by HAL in its series Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) with number halshs-00824880.

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    Date of creation: Apr 2013
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    Publication status: Published in Documents de travail du Centre d'Economie de la Sorbonne 2013.38R - ISSN : 1955-611X - Version ré.. 2013
    Handle: RePEc:hal:cesptp:halshs-00824880
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    1. George A. Akerlof & Rachel E. Kranton, 2000. "Economics and Identity," The Quarterly Journal of Economics, Oxford University Press, vol. 115(3), pages 715-753.
    2. Elster, Jon, 1989. "Social Norms and Economic Theory," Journal of Economic Perspectives, American Economic Association, vol. 3(4), pages 99-117, Fall.
    3. George A. Akerlof, 1980. "A Theory of Social Custom, of which Unemployment may be One Consequence," The Quarterly Journal of Economics, Oxford University Press, vol. 94(4), pages 749-775.
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