Economics Of Social Capital And Health, The: A Conceptual And Empirical Roadmap

A Conceptual and Empirical Roadmap

Sherman Folland, Lorenzo Rocco

• Publisher: WSPC
• Year: 2013
• eBook ISBN: 9789814583046
• Topic: Scienze biologiche
• Subtopic: Scienza generale

This book defines the field of social capital and health. Over the last two decades, there has been a recognition of the importance of social capital (usually defined as ties in the community, attachment to the community, and participation in community activities) and its impact on the health of those in that community. The purpose of this book is to show the growth in the field of social capital and health and to expose readers to a variety of approaches in order to think about and model the question of how health can be improved by investments in community social capital as well as by individual social capital.

An outstanding set of papers will be presented by authors from the United States, as well as from Europe and Asia. These papers are cutting-edge and explore the mechanisms through which social capital affects health. The papers also present the most recent empirical work and discuss the policy implications of their findings. Without a doubt, this will be a landmark book which will make the study of social capital and its impact on health a major area of research in the coming decade.

Contents:

• Introduction to the Economics of Social Capital and Health (Sherman Folland and Lorenzo Rocco)
• What is Social Capital and How Does It Work to Improve Health? (Sherman Folland)
• How Do We Invest in Social Capital? And Exploration of an Economic Model of Social Capital and Health (Sherman Folland, Oddvar Kaarbøe and Kamrul Islam)
• Social Capital: An Economics Perspective (Audrey Laporte)
• How Does Social Capital Arise in Populations? (Sherman Folland and Tor Iversen)
• Measures of Social Capital (Richard M Scheffler and Yumna Bahgat)
• The Empirics of Social Capital and Health (Lorenzo Rocco and Elena Fumagalli)
• Social Capital and Health in Low- and Middle-Income Countries (José Anchorena, Lucas Ronconi and Sachiko Ozawa)
• Social Capital and Smoking (Lorenzo Rocco and Beatrice d'Hombres)
• Policy Implications (Eline Aas)

Readership: Students and professionals interested in health economics.

Chapter 1

Introduction to the Economics of Social Capital and Health

Sherman Folland and Lorenzo Rocco

Research on social capital strongly suggests that social interaction benefits society substantially. Its association with good health has attracted health economists to explore how this relationship arises and to develop econometric tests of social capital effects. The present book explores how and what health economists can contribute to this multidisciplinary undertaking. Our efforts are meant to complement what has gone before in the fields of economics, sociology, epidemiology, and others.

As papers from economist Glenn Loury (1977), sociologist James Coleman (1988), sociologist Pierre Bourdieu (1985), political scientist Robert Putnam (2000, 1995), and epidemiologist Ichiro Kawachi (1999) demonstrate, social capital came into being as an interdisciplinary branch of study. Among these writers, Putnam and Kawachi sought and found beneficial associations of social capital with health, and health economists now energetically pursue research on this relationship. The purpose of this book is to add value to this inheritance, to build on it, and to extend it using the tools of economics. We welcome the contributions of economists and researchers from other disciplines, and we hope that we offer a quick start for those unfamiliar with the subject. The chapters develop independently and can be read in any order.

Can economic analysis contribute to social capital research? Our answer is clearly positive, because economics emphasizes training and experience in model building and econometrics, areas that need development in social capital and health research. The potential gains are twofold: (1) A better understanding of how the elements of social capital interact with the rest of the economy; and (2) better coefficient estimates for the effects of social capital. The present volume is organized into two areas: theory and empirics.

The economists who have become intrigued with social capital include many of our most noted scholars. Gary Becker and Kevin Murphy (2000) developed a theory of decision making that is influenced by the purchasing choices of social majorities. George Akerlof (1998) studied the effects of marriage bonds on unhealthful behaviors. Edward Glaeser, David Laibson, and Bruce Sacerdote (2002) developed a dynamic model of social capital that predicts the lifecycle of memberships in social clubs. The social impact of income inequality is the theme of Joseph Stiglitz’s 2012 book, “The Price of Inequality: How Today’s Divided Society Endangers Our Future.” Econometric criticisms and analysis of existing work by Steven Durlauf (2002) inspired health economic studies to develop means by which to identify the effects of social capital. Finally, the central role of trust in social capital research owes much to the insights of Kenneth Arrow (1975).

What are the Potential Benefits?

Economists may appreciate the opportunity to use their economic skills to benefit the course of interdisciplinary analysis, perhaps to clarify the complexity of the models, and to improve the sophistication of the statistical analysis. The social capital hypothesis suggests that social capital’s benefits for the community may be substantial, perhaps radically so, but strong claims require strong evidence. As with other scientists, part of our commitment is to “blow the whistle” on the hypothesis should the results prove consistently negative, but a solid case appears to be developing in support of the public energy and resources necessary to improve a community’s social capital.

What are the benefits to the community? Some communities, states, countries, and regions practice higher levels of social interaction than others, and we often also find in these areas higher levels of the “good” social outcomes, such as health, whether measured by self-reports, diagnostics, or mortality rates. These associations are also found at the individual level. Recently econometrics to determine the direction of the social capital effects has tended to find the relationship to be bidirectional: Increased increments of social capital improve health, and health increments tend to improve social participation. A simple question — do you find that other people can be trusted? — is closely associated with health and other beneficial social outcomes.

What is the best possible result? Inner-city and similar poverty areas, many of which have elevated crime, poor treatment of children, poor education outcomes, and poor health indicators, are unlikely lack only per capita income; income inequality and weak social capital may work as contributing and (possibly) controllable factors. The social capital and health hypothesis connects intrinsically to the thinking of every social observer who has sought to enhance the speed of community improvement.

This Book and Its Contributions

We first introduce the inherited theory. While economists often prefer to define social capital as a social network, a review of its intellectual history explains how the phrase came to have a more heterogeneous composition.

The literature typically depicts four pathways by which social capital affects health: Providing and sharing information, providing emotional support, instilling a sense of responsibility to others and to oneself, and generating organizations to promote community health resources.

During the current early stages of theory development related to social capital, researchers gather the elements that are associated with or interfere with its production. For example, social capital may interact with consumer goods that are good or bad for health. If social capital has an opportunity cost, then its effects will be felt through budget constraints. Social participation affects everything else in complex ways, and we must understand these pathways in order to realize the promise of social capital.

A clear and convincing theory of social capital production and of its interaction with other socio-economic dimensions is necessary in order to proceed into empirical analysis. Any empirical analysis requires assumptions and its results are only as valid as these assumptions, and the ability to make credible assumptions depends on the availability of a sound theory. Nevertheless, whatever the stage reached in the comprehension of a phenomenon, the empirical analysis allows hypotheses and predictions of the theory to be tested and provides feedback, which stimulates further progress.

The current empirical evidence suggests that a causal beneficial effect of social capital on individual health is quite strong. However, the credibility of these results depends on hypotheses about what determines individual and/or community social capital and how social capital interacts with education, employment, income, and even well-being and happiness. The circular relationship between social capital and health that has been suggested by several contributions implies that the mechanisms of social capital accumulation are more complex than previously thought and that future theoretical models should take this feature into account.

While the researcher is allowed to abstract one or a few relationships from the context and assume a particular causal path between two variables in theoretical work, this is not possible in empirical analysis. Instead, the empirical researcher must find appropriate settings or procedures to keep the complexity of the real world under control, which is a major challenge whose success depends on more or less stringent assumptions. For this reason empirical research is often subject to criticism. Controlling whatever is outside the relationship under scrutiny is the task of the identification of the structural parameters,¹ the heart of the empirical analysis. Traditional econometrics provides some useful tools with which to achieve identification, a number of which are discussed in this book. The most recent contributions achieve identification of the effect of social capital on health by adopting a technique known as instrumental variables (IV). However, the validity of these contributions rests on strong hypotheses. The large majority of early analysis looked at correlations or associations between social capital and health. Estimating associations requires fewer assumptions and might provide indications about the structural parameters, but it does not usually achieve identification. For this reason, correlations could be misleading and might lead to incorrect conclusions.

In the most recent literature in empirical economics, a great emphasis has been laid on so-called natural experiments, situations that have occurred in the real world, sometimes very localized, where exogenous and unexpected shocks randomly hit some individuals and spare others. When these shocks induce variations in one dimension of interest and leave all other dimensions unchanged, the ideal conditions that would exist only in an imaginary “social laboratory” are reproduced, and identification is easily obtained. The quest for natural experiments also promises significant advances in the empirical analysis on social capital and health.

Theory Contributions

Chapter 2, “What Is Social Capital and How Does It Work to Improve Health?” by Sherman Folland, examines the history of social capital literature in order to explain the sources of the current, somewhat heterogeneous definition of the phrase. It also explains the given theory of the pathways by which social capital may affect health.

Chapter 3, “How Do We Invest in Social Capital? An Exploration of an Economic Model of Social Capital and Health,” by Sherman Folland, Oddvar Kaarbøe, and Kamrul Islam, begins with a utility maximization model with two variables and one constraint before expanding to a three-variable version. Social capital is described here as a form of leisure choice, which implies that it entails an opportunity cost, while investment refers to any exogenous public development that increases the marginal utility of social activity.

Chapter 4, “Social Capital: An Economic Perspective,” by Audrey Laporte develops the social capital concepts and devises a dynamic model of social capital and health.

In Chapter 5, Sherman Folland and Tor Iversen discuss “How Does Social Capital Arise in Populations?” drawing on the literature to describe and explain pieces of theory on how social capital relates to age, marriage and cohabiting, culture, gender, education, and income inequality.

Empirical Contributions

Empirical analysis on the link between social capital and health requires a good deal of care and attention. The main issue to be considered is the endogeneity of social capital. The purpose of this section of the book is to provide a guide for readers on the problems frequently encountered by the researchers working in this field, enriched by several applications and a chapter devoted to the policy implications.

Chapter 6, “Measures of Social Capital” by Richard M. Scheffler and Yumna Bahgat, overviews a number of conceptual definitions of social capital and discusses perhaps the best-known and most frequently criticized characteristic of social capital, its being multifaceted. The chapter also provides a critical description of the most frequently used empirical indicators of social capital and uses the World Values Survey to describe how social capital is distributed across countries.

Chapter 7, “The Empirics of Social Capital and Health” by Lorenzo Rocco and Elena Fumagalli, discusses the econometrics of social capital and health in the context of the health reduced-form model. In particular, it analyzes the problems of endogeneity that are due to reversed causation, omitted variables, and measurement errors, as well as other econometric problems associated with the simultaneous inclusion of individual and community social capital in the same regression. The chapter also summarizes the key aspects of the peer effects model and how peer effects might interact with social capital. An extensive and detailed review with a focus on the empirics of each contribution is provided to help familiarize the reader with the empirical literature along with a discussion of how the social capital measures commonly adopted in the literature relate to experimental data. The chapter concludes with a Monte Carlo simulation to illustrate the magnitude of the bias that arises when the endogeneity of social capital is not properly addressed. A number of useful datasets reporting data on both social capital and health, most of them freely available, are schematically described in the Appendix.

Chapter 8, “Social Capital and Health in Low- and Middle-Income Countries” by José Anchorena, Lucas Ronconi, and Sachiko Ozawa, asks whether the positive correlation between social capital and health observed in high-income countries also holds in low- and middle-income countries. To answer this question, the chapter reviews the empirical literature on social capital and health in developing countries, and estimates and compares associations between social capital and health for a number of developing and developed countries using a homogenous international dataset, the International Social Survey Programme (ISSP). Some results for more and less developed regions of Argentina are also presented and discussed.

In Chapter 9, “Social Capital and Smoking,” Lorenzo Rocco and Beatrice d’Hombres make a step beyond the health reduced form model to test a specific pathway previously hypothesized in the literature through which social capital influences health. This analysis tests whether social capital magnifies the impact on smoking prevalence and intensity of smoking bans in public places. A quasiexperimental setting is exploited to suggest new possibilities for the empirical work on social capital and healt...

Table of contents

• Cover Page
• Halftitle Page
• Editor Page
• Title Page
• Copyright Page
• Dedication Page
• Forward Page
• Contributions Page
• Contents
• Chapter 1: Introduction to the Economics of Social Capital and Health
• Chapter 2: What is Social Capital and How Does It Work to Improve Health?
• Chapter 3: How Do We Invest in Social Capital? An Exploration of an Economic Model of Social Capital and Health
• Chapter 4: Social Capital: An Economic Perspective
• Chapter 5: How Does Social Capital Arise in Populations?
• Chapter 6: Measures of Social Capital
• Chapter 7: The Empirics of Social Capital and Health
• Chapter 8: Social Capital and Health in Low-and Middle-Income Countries
• Chapter 9: Social Capital and Smoking
• Chapter 10: Policy Implications
• Index