THE BLACK BOX OF CULTURAL TRANSMISSION An empirical analysis of the evolution of social capital.

Abstract

Social capital have gained wide acceptance within the economic discourse in recent decades. Researchers have argued that social capital and culture influence a wide range of economic and political outcomes. This thesis aims to contribute to the understanding of the evolutionary aspect of social capital. I define social capital as a set of beliefs and values that fosters cooperation and develop an applied theoretical framework. I claim that values and beliefs interact and reinforce each other though inter- and intragenerational transmission, social norms, and economic incentives leading to a two way micro-macro relationship and the existence of multiple equilibria of social capital. Empirically I replicate and expand the empirical work of Nunn and Wantchekon on the African slave trade. The estimated result suggest that the causal effect between ethnic slave trade exposure and individual trust today is indeed a product of such an evoutionary process of social captial. The decomposition of the causal effect of the slave trade to an external and internal ceteris paribus effect shows that the external micro-macro channel is by far the most important channel of causality.

Social capital have gained wide acceptance within the economic discourse in recent decades. Researchers have argued that social capital and culture influence a wide range of economic and political outcomes. This thesis aims to contribute to the understanding of the evolutionary aspect of social capital. I define social capital as a set of beliefs and values that fosters cooperation and develop an applied theoretical framework. I claim that values and beliefs interact and reinforce each other though inter- and intragenerational transmission, social norms, and economic incentives leading to a two way micro-macro relationship and the existence of multiple equilibria of social capital. Empirically I replicate and expand the empirical work of Nunn and Wantchekon on the African slave trade. The estimated result suggest that the causal effect between ethnic slave trade exposure and individual trust today is indeed a product of such an evoutionary process of social captial. The decomposition of the causal effect of the slave trade to an external and internal ceteris paribus effect shows that the external micro-macro channel is by far the most important channel of causality.