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Social Network Structure and The Trade-Off Between Social Utility and Economic Performance

Author

Listed:
  • Katarzyna Growiec
  • Jakub Growiec
  • Bogumil Kaminski

Abstract

Based on a novel computational multi-agent model, we identify the keymechanisms allowing the social network structure, summarized by four key socialcapital dimensions (network degree, centrality, bridging and bonding social capital), to affect individuals' social trust, willingness to cooperate, social utility and economicperformance. We then trace how the individual-level outcomes aggregate up to thesociety level. Model setup draws from socio-economic theory and empirical findings based on our novel survey dataset. Results include aggregate-level comparative staticsand individual-level correlations. We find, inter alia, that societies that either arebetter connected, exhibit a lower frequency of local cliques, or have a smaller share offamily-based cliques, record relatively better economic performance. As long as familyties are sufficiently valuable, there is a trade-off between aggregate social utility andeconomic performance, and small world networks are then socially optimal.

Suggested Citation

  • Katarzyna Growiec & Jakub Growiec & Bogumil Kaminski, 2017. "Social Network Structure and The Trade-Off Between Social Utility and Economic Performance," Working Papers 2017-026, Warsaw School of Economics, Collegium of Economic Analysis.
  • Handle: RePEc:sgh:kaewps:2017026
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    File URL: http://kolegia.sgh.waw.pl/pl/KAE/Documents/WorkingPapersKAE/WPKAE_2016_026.pdf
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    References listed on IDEAS

    as
    1. Katarzyna Growiec & Jakub Growiec & Bogumil Kaminski, 2017. "Mapping the Dimensions of Social Capital," Working Papers 2016-025, Warsaw School of Economics, Collegium of Economic Analysis.
    2. Sabatini, Fabio, 2009. "Social capital as social networks: A new framework for measurement and an empirical analysis of its determinants and consequences," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 38(3), pages 429-442, June.
    3. Ambrose Leung & Cheryl Kier & Tak Fung & Linda Fung & Robert Sproule, 2011. "Searching for Happiness: The Importance of Social Capital," Journal of Happiness Studies, Springer, vol. 12(3), pages 443-462, June.
    4. Christian Kroll, 2011. "Different Things Make Different People Happy: Examining Social Capital and Subjective Well-Being by Gender and Parental Status," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 104(1), pages 157-177, October.
    5. Katarzyna Growiec & Jakub Growiec, 2014. "Trusting Only Whom You Know, Knowing Only Whom You Trust: The Joint Impact of Social Capital and Trust on Happiness in CEE Countries," Journal of Happiness Studies, Springer, vol. 15(5), pages 1015-1040, October.
    6. Kleijnen, Jack P. C. & Sargent, Robert G., 2000. "A methodology for fitting and validating metamodels in simulation," European Journal of Operational Research, Elsevier, vol. 120(1), pages 14-29, January.
    7. Growiec, Jakub & Growiec, Katarzyna, 2007. "Social Capital, Well-Being, and Earnings: Theory and Evidence from Poland," MPRA Paper 7071, University Library of Munich, Germany.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    social network structure; social trust; willingness to cooperate; economicperformance; computational multi-agent model;

    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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