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Externalities of social capital : the role of values, norms and networks

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  • Butter, Frank A.G. den

    (Vrije Universiteit Amsterdam, Faculteit der Economische Wetenschappen en Econometrie (Free University Amsterdam, Faculty of Economics Sciences, Business Administration and Economitrics)

  • Mosch, Robert H.J.

Abstract

The economic perspective on values and norms shows that they may bring about externalities for the society as a whole. This possibility of market failure provides a good reason for the government to follow closely the developments in values and norms, and the resulting behaviour in communities and networks. It justifies the initiative of Prime Minister Balkenende to organise the debate on these matters in the Netherlands (and, under the Dutch EU-presidency, in Europe). Networks can be associated both with positive (Putnam type) and with negative (Olson type) externalities. This paper discusses the various influences of values, norms and networks on socio-economic welfare and provides empirical evidence on these relationships. The focus of our own empirical analysis is on the Netherlands. Trust as part of social capital, and the role that values, norms and networks play as co- ordination mechanism, form important aspects both in the theoretical and in the empirical analysis. It appears that there has been no obvious decrease in these aspects of social capital in the Netherlands. It contrasts the findings of Putnam for the US.

Suggested Citation

  • Butter, Frank A.G. den & Mosch, Robert H.J., 2004. "Externalities of social capital : the role of values, norms and networks," Serie Research Memoranda 0010, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
    • Handle: RePEc:vua:wpaper:2004-10
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    References listed on IDEAS

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    1. Zak, Paul J & Knack, Stephen, 2001. "Trust and Growth," Economic Journal, Royal Economic Society, vol. 111(470), pages 295-321, April.
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    3. Knack, Stephen, 2003. "Groups, Growth and Trust: Cross-Country Evidence on the Olson and Putnam Hypotheses," Public Choice, Springer, vol. 117(3-4), pages 341-355, December.
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    Cited by:

    1. Andrés Rodríguez-Pose & Viola Berlepsch, 2014. "Social Capital and Individual Happiness in Europe," Journal of Happiness Studies, Springer, vol. 15(2), pages 357-386, April.

    More about this item

    Keywords

    social capital; values and norms; trust; networks; market failure;

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • H19 - Public Economics - - Structure and Scope of Government - - - Other

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