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

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Abstract

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

Suggested Citation

  • Anil Alpman, 2013. "The Relevance of Social Norms for Economic Efficiency: Theory and its Empirical Test," Documents de travail du Centre d'Economie de la Sorbonne 13038r, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne, revised Aug 2013.
  • Handle: RePEc:mse:cesdoc:13038r
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    References listed on IDEAS

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    1. Udry, Christopher, 1996. "Gender, Agricultural Production, and the Theory of the Household," Journal of Political Economy, University of Chicago Press, vol. 104(5), pages 1010-1046, October.
    2. George A. Akerlof & Rachel E. Kranton, 2000. "Economics and Identity," The Quarterly Journal of Economics, Oxford University Press, vol. 115(3), pages 715-753.
    3. Douglass C. North, 2005. "Introduction to Understanding the Process of Economic Change," Introductory Chapters,in: Understanding the Process of Economic Change Princeton University Press.
    4. 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.
    5. Elster, Jon, 1989. "Social Norms and Economic Theory," Journal of Economic Perspectives, American Economic Association, vol. 3(4), pages 99-117, Fall.
    6. Elster, Jon, 1996. "Rationality and the Emotions," Economic Journal, Royal Economic Society, vol. 106(438), pages 1386-1397, September.
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    More about this item

    Keywords

    Social norms; social interactions; consumer behavior; household production; economic development; social pressure indicator;

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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