Disentangling Social Capital: Lab-in-The-Field Evidence on Coordination, Networks and Cooperation

Although social capital has been considered of the utmost importance for development it remains a complex and elusive concept. Different dimensions of social capital form part of the puzzle: cooperation is an individual other-regarding preference; social norms stem from beliefs about others' behavior; and the formation of such beliefs is mediated by attributes of the social network. To disentangle social capital we conduct an artefactual field experiment with 714 households at the inset of a Conditional Cash Transfer program in an urban context. To our knowledge this is the first paper that disentangles cooperation from coordination by conducting a minimum effort coordination game with Pareto ranked equilibria. Willingness to cooperate is teased out using a public goods game. By controlling for the density of network information we capture the role of connections, which is the third element of the mixture. We also look at the relation between our experimental data and traditional survey measures of social capital. Our identification strategy allows us to assess whether exposure to the program could be helping individuals overcome strategic uncertainty and select the most efficient equilibrium in the coordination game. The regressions suggest that the program helps overcome the coordination failure through different channels. In particular, the evidence suggests there is a spillover effect of the monetary incentive as it facilitates a social norm, which itself allows individuals to overcome the coordination failure. We rule out confounding factors such as individual socio-economic characteristics, social capital accumulation, willingness to cooperate and connectivity.