This study measures the relative importance of selfishness and social capital motives using resource allocation data collected in hypothetical surveys and non-hypothetical experiments. Social capital motives allow an agent's well-being to be influenced by his sympathetic relationships with others. The assumption that selfishness can explain nearly all resource allocations is rejected.

Social capital is a person or group's sympathy or sense of obligation for another person or group. The objects of sympathetic feelings have social capital. Those holding sympathetic feelings for others provide social capital. Because social capital providers internalize the consequences of their choices on the objects of their social capital, they trade with each other on different terms and at different levels than would occur in arm's length transactions, all other things equal. Furthermore, changes in the distribution of social capital alter the terms and level of trade which in turn alter the distribution of income. This paper demonstrates mathematically the connection between changes in social capital and income distributions and then tests empirically the influence of social capital on household income distributions in the 50 U.S. states for the census years 1980, 1990, and 2000. The mathematical and empirical findings of this paper support the proposition that social capital measured by social capital indicator variables have important influences on the distribution of household incomes. (C) 2011 Elsevier Inc. All rights reserved.

Introduction The purposes of this paper are: (1) to introduce the social capital paradigm; (2) to present evidence that social capital has an important role in poverty reduction; and (3) to suggest several policy prescriptions for building and using social capital to reduce poverty. The social capital paradigm includes social capital, networks, socio-emotional goods, attachment values, institutions, and power. Social capital is a person or group's sympathy for others. Social capital resides in sympathetic relationships that can be described using networks. One reason to value social capital is because it can produce economic benefits and if neglected, economic disadvantages. Another reason to value social capital is because it can be used to produce socio-emotional goods. Sometimes socio-emotional goods become embedded in objects. When this occurs, the meaning and value of the object change. The change in the value of an object produced by embedded socio-emotional goods is the object's attachment value. Individuals exchange both physical and socio-emotional goods. Institutions are the rules that order and give meaning to exchanges. Institutions with high attachment values are more likely to be observed than those whose compliance depends on economic incentives or threats. Finally, power, the ability to influence others, depends on one's resources, including one's social capital. In most personalized transactions, persons exchange both socio-emotional goods and physical goods and services. Moreover, the relative amounts of socio-emotional goods and physical goods and services exchanged will alter the levels and terms of trade when measured in physical units. Since one's ability to include socio-emotional goods in exchanges for physical goods and services depends on one's social capital, the terms and levels of exchange of physical goods and services will be influenced by the transacting party's social capital. Those with high levels of social capital will have advantages over those who lack social capital because they can exchange both socio-emotional goods and physical goods and services. Furthermore, since social capital alters the terms and levels of trade and the terms and levels of trade influence the distribution of incomes derived from trades, then social capital also has an important influence on the distribution of household income and poverty. Some evidence suggests that the distribution of social capital in networks and the distribution of household incomes are connected.

Social capital is a person or group's sympathy for or sense of obligation to another person or group. This article introduces social capital into a neoclassical model of farmland exchange and shows how relationships alter the terms of trade. Empirical evidence from a survey of farmers shows that the type of relationship farmland sellers have with farmland buyers has a statistically significant and economically important effect on the minimum-sell price for farmland. Compared to the minimum-sell price when selling to a total stranger in an arm's-length transaction, farmland sellers discount prices to friendly neighbors and relatives and require a premium from unfriendly neighbors and influential people in the community.

Social capital has emerged as a paradigm capable of bridging across various social science disciplines. However, its adoption by social scientists from different disciplines has led to multiple and often conflicting definitions. Besides conflicting definitions, some social scientists have argued that social capital lacks the properties of capital and should be called something other than capital. This paper resolves many of the problems created by conflicting definitions by pointing out that the differences have arisen primarily because scientists have included in the definition expressions of its possible uses, where it resides, and how its service capacity can be changed. This paper argues that these applications of social capital should not be included in its definition. This paper also defends the social capital paradigm against the claim that it lacks capital-like properties by pointing out that social capital, when defined as sympathy, has many important capital-like properties including transformation capacity, durability, flexibility, substitutability, opportunities for decay (maintenance), reliability, ability to create other capital forms, and investment (disinvestment) opportunities. Finally, this paper compares social capital to other forms of capital including cultural capital and human capital.

This paper summarizes the current state of the social capital paradigm from the viewpoint of the authors. The paper presents and defends a social capital definition based on sympathetic relationships. The paper also summarizes an expanded set of rational preferences that depend on social capital. Then, the paper describes the origin of social capital and its economic consequences, and introduces the concept of socio-emotional goods. Socio-emotional goods may attach themselves to physical goods and services. When this happens, physical goods and services are exchanged on terms different than those values established in an arm's-length market or in exchanges between strangers. It is possible to invest in social capital and this paper reviews several opportunities for social capital investment. Moving from a micro to a macro focus in the study of social capital directs the paper's focus from informal to formal institutions. Finally, the paper summarizes agreed-on social capital principles that suggest that the social capital paradigm is maturing. Key Words: earned kernels, inherited kernels, institutions and networks, social capital, socio-emotional goods

Social capital is a resource increasingly recognized as having important economic and social consequences. Robison and Siles (1999) examined some of these consequences at the U.S. state level and this study extends their efforts. Their 1999 study found important connections between the distributions of social capital and the distributions of household incomes. This study asks if the relationships between social capital and household incomes discovered at the state level are also present at the community level.

This paper asked if changes in social capital influence the level and disparity of household income in the United States. Social capital is defined in this paper as one's sympathy (antipathy) for others and one's idealized self. Changes in social capital are expected to produce the following economic consequences. First, increases in social capital are expected to alter the terms of trade and to increase the likelihood of trades between friends and family. Second, increases in social capital are expected to increase an economic agent's concerns for the external consequences of his or her choices, internalizing what otherwise would be considered externalities. Third, increases in social capital between firms are expected to increase the likelihood that they will act in their collective interest. Fourth, increases in social capital are expected to increase the opportunities for specialization and the likelihood of trade. Finally, increases in social capital are expected to raise the average level of income and reduce the disparity of income. This paper empirically tested the relationship between changes in social capital indicator variables and changes in the average and coefficient of variation (CVs) of household income. State CVs and averages of household income were calculated for all 50 states and for different races/ethnic groups using the U.S. Census data for 1980 and 1990. Social capital indicator variables selected to measure changes in social capital included measures of family integrity including the percentages of households headed by a single female with children; educational achievement variables including high school graduation rates; crime rate variables including litigation rates; and labor force participation rates. The social capital indicator variables appeared to be significantly correlated with each other. However, in 1980, the percentages of households headed by a single female with children was not significantly related to the birth rates of single teens. By 1990, however, a strong correlation was found between the percentages of households headed by a single female with children and the birth rate of single teens. Income inequality among U.S. households measured using CVs increased between 1980 and 1990 in all 50 states. The largest increase in CVs was among white households. The smallest increase in CVs was among Asian households. The states with the largest increase in the ratio of 1990 and 1980 CVs were Arizona, Wyoming, Maine, Vermont, and Texas. Half of the states reported decreases in real household income between 1980 and 1990. Those states with the largest percentage decrease in real income were Wyoming, Alaska, Montana, Louisiana, and West Virginia. The largest percentage increase in real income was reported by Connecticut, New Jersey, Rhode Island, and Massachusetts. State CVs and averages of household income were regressed on four factors or subsets of social capital indicator variables. The four factors used to predict CVs and averages of household income were generally statistically significant. The findings of this report support the conclusion that changes in social capital have a significant effect on the disparity and level of household income.