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The Relevance of Social Norms for Economic Efficiency: Theory and its Empirical Test

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Abstract

This paper proposes a new formulation of the theory of social norms. The theoretical model explores the interrelation between individuals' income, time-use and consumption decisions on the one hand, and the determinants of their decision to conform or not to social norms on the other. It is shown that rational consumers will obey inefficient social norms, which in turn will slow economic development. An empirical test of the model is performed for different categories of countries using a voluminous cross-country micro dataset. The results yield the gain and the cost of disobeying inefficient social norms, the latter of which can be used as a freedom indicator regarding social pressure

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  • Anil Alpman, 2013. "The Relevance of Social Norms for Economic Efficiency: Theory and its Empirical Test," Documents de travail du Centre d'Economie de la Sorbonne 13038, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    • Handle: RePEc:mse:cesdoc:13038
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    1. George A. Akerlof & Rachel E. Kranton, 2000. "Economics and Identity," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 115(3), pages 715-753.
    2. Bicchieri,Cristina, 2006. "The Grammar of Society," Cambridge Books, Cambridge University Press, number 9780521574907, September.
    3. George A. Akerlof, 1980. "A Theory of Social Custom, of which Unemployment may be One Consequence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 94(4), pages 749-775.
    4. Elster, Jon, 1989. "Social Norms and Economic Theory," Journal of Economic Perspectives, American Economic Association, vol. 3(4), pages 99-117, Fall.
    5. Zwarteveen, M. Z., 1996. "A plot of one's own: gender relations and irrigated land allocation policies in Burkina Faso," IWMI Research Reports H019079, International Water Management Institute.
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    More about this item

    Keywords

    Consumer theory; social norms; social interactions; household production model; economic efficiency;
    All these keywords.

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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