Social Capital: A Roadmap of Theoretical and Empirical Contributions and Limitations

Abstract

The general idea of social capital is that relationships matter. In this sense, the trust, cooperation and reciprocity involved in these relationships can have a positive impact on the wealth of society by reducing transaction costs, facilitating collective actions, and lowering opportunistic behavior. This work sheds light on the different theoretical and empirical problems that a scholar is likely to face in dealing with social capital research and analysis. We propose a critical roadmap of the social capital theories and applications for a general audience, nonusers included, with particular attention to the works of political and social economists. We provide a critical debate on the different definitions and measures produced, the theoretical frameworks developed, and the empirical techniques adopted so far in the analysis of the impact of social capital on socio-economic outcomes. We turn to the limitations of these techniques and suggest some basic strategies to reduce the magnitude of these limitations.

Keywords:

• methodological issues
• poverty
• regional economics
• social capital
• social network
• structural dimensions
• trust

JEL Classification Codes:

• C18
• E20
• L14
• O10
• R11
• Z13

Notes

¹ According to some authors (e.g., Christoforou 2013; Fine 2010), Bourdieu's perception of social capital is discarded in the relevant literature because of his opposition to rational choice theory, which is dominant in economics and the social sciences in general.

² For Bourdieu ([1983] 1986), the following holds: (i) economic capital is accumulated labor, appropriated on a private basis by agents or groups, convertible into money, and institutionalized as property rights; (ii) cultural capital includes long-lasting dispositions of mind and body, cultural goods (books, instruments, machines), and educational qualifications; (iii) social capital refers to network relations and social obligations that entitles group members to a kind of credit, be it economic, cultural or social; and finally (iv) symbolic capital is legitimate capital, collectively recognized credit, which legitimizes the ownership and distribution of the other forms of capital.

³ However, Brian Uzzi (1997) shows that embeddedness made by two agents can be transferred to a third agent. In a way, this is like transferring the ownership of social capital.

⁴ In cross-section regression analyses with aggregate data, the selection of the sample might crucially affect policy implications. For example, it has been found that the negative relationship between ethnolinguistic diversity and growth is significant only for Sub-Saharan Africa (Brock and Durlauf 2001; Easterly and Levine 1997). The main question then is whether grouping countries, such as US and Japan, with developing countries in the same sample is an advisable strategy for general policy implication.

Additional information

Notes on contributors

Luca Andriani

Luca Andriani is a lecturer of economics in the Department of Management at Birkbeck College University of London. Asimina Christoforou is an adjunct professor at Athens University of Economics and Business. The authors are thankful to John Driffill, Martin Paldam, Klaus Nielsen, Thanos Fragkandreas, and participants of IIPPE’s Fifth International Conference (Naples, Italy, September 16-18, 2014) for their useful comments. They would also like to express their gratitude to this journal, and to all authors in this symposium for their invaluable contribution. They also acknowledge the financial support of the Economics and Social Research Council (award PTA-031-2006-00459).