Social Capital as Good Culture

Guiso, Luigi; Sapienza, Paola; Zingales, Luigi

doi:10.2139/ssrn.1077672

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Social Capital as Good Culture

35 Pages Posted: 24 Dec 2007 Last revised: 17 Jan 2008

See all articles by Luigi Guiso

Luigi Guiso

Einaudi Institute for Economics and Finance (EIEF); Einaudi Institute for Economics and Finance

Paola Sapienza

Northwestern University - Kellogg School of Management - Department of Finance; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Luigi Zingales

University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)

There are 3 versions of this paper

Date Written: December 1, 2007

Abstract

To explain the extremely long-term persistence (more than 500 years) of positive historical experiences of cooperation (Putnam 1993), we model the intergenerational transmission of priors about the trustworthiness of others. We show that this transmission tends to be biased toward excessively conservative priors. As a result, societies can be trapped in a low-trust equilibrium. In this context, a temporary shock to the return to trusting can have a permanent effect on the level of trust. We validate the model by testing its predictions on the World Values Survey data and the German Socio Economic Panel. We also present some anecdotal evidence that differences in priors across regions are reflected in the spirit of the novels that originate from those regions.

Keywords: social capital, culture, trust

JEL Classification: E00, P26, Z1

Suggested Citation: Suggested Citation

Guiso, Luigi and Guiso, Luigi and Sapienza, Paola and Zingales, Luigi, Social Capital as Good Culture (December 1, 2007). Available at SSRN: https://ssrn.com/abstract=1077672 or http://dx.doi.org/10.2139/ssrn.1077672