Communication, home bias and social capital

<p>This dissertation consists of three essays on the effects of communication, home bias and social capital. The first study analyzes three different laboratory treatments that determine if policies that introduce and improve communication are beneficial to a market. The control treatment has no communication. Then, two different types of communication mechanisms are introduced: cheap communication, where subjects are able to lie, and truthful communication, where only honest messages may be sent. The results demonstrate that truthful communication dramatically improves subjects' ability to trade efficiently, ultimately leading to higher social surplus and lower income inequalities. Cheap communication does not produce the same results: it does not lead to changes in overall efficiency, although it lowers income inequality by decreasing seller incomes. The results have implications for the development and improvement of communication forums designed to ease and improve trading outcomes.^ The second study reports the results from a laboratory experiment on local trade in the presence of foreign comparative advantage. The treatments simulate the effects of policies designed to improve local trade by introducing two types of policies: a reduction of the attractiveness of the foreign market, and the introduction of communication (cheap or truthful) to the local market. I find that only an implementation of both policies has a significant effect on local trade and efficiency. The results have implications for the development and drive toward a stronger local economy, demonstrating that successful policies require a large amount of resources to be viable.^ In the third study, I determine whether social capital has a beneficial effect on income in the United States, and whether the magnitude of this effect varies by type of occupation using data from the General Social Survey. I find that social capital, measured by voluntary associations, is correlated with higher incomes, but that not all social capital is created equal. Specifically, fraternal, service, sport and professional memberships are correlated with higher incomes. On the other hand, school, literature and church memberships are correlated to lower incomes, while the rest do not have a statistically significant relation to individual income. Because of the endogenous nature of social capital, I use an instrumental variable to explore the causal effect of higher social capital on income. Using trust in strangers as an instrument, I find that higher levels of social capital cause a rise in individual income.</p>

Name thesis:degree_name

Doctor of Philosophy (PhD)

Level thesis:degree_level

Dissertation

Discipline thesis:degree_discipline

Agricultural Economics

Year

2015

Author dc:creator

• Raszap Skorbiansky, Sharon

Contributors dc:contributor

• Steven Y. Wu
• Kenneth A. Foster
• Jacob E. Ricker-Gilbert
• Timothy N. Cason

• Agricultural Economics
• Economics

Repository record dc:identifier

https://docs.lib.purdue.edu/open_access_dissertations/542

OAI identifier oai:identifier

oai:docs.lib.purdue.edu:open_access_dissertations-1483