Social Capital: Measurement and Consequences

This paper starts with a discussion of definitions of social capital, then turns to issues in measurement, and finally, presents some evidence on the consequences of social capital. In the last five years, I have been working exclusively on some specific and perhaps unique problems about social capital in the United States, so all of my examples are going to be drawn from the United States experience. I don’t want to be interpreted as saying these trends are common to all OECD countries. It is just that the United States has been the main focus of my research for the past five years. There are, among those of us who work in the area, some marginal differences in terms of exactly how we would define social capital, but Michael Woolcock correctly says in his paper that among the people who are working in this field, there has been a visible convergence, definitionally, toward something like the definition he offers. The central idea of social capital, in my view, is that networks and the associated norms of reciprocity have value. They have value for the people who are in them, and they have, at least in some instances, demonstrable externalities, so that there are both public and private faces of social capital. I am focussing largely on the external returns, the public returns to social capital, but I think that is not at all inconsistent with the idea that there are also private returns. The same is no doubt true in the area of human capital, i.e. there are simultaneously public and private returns. In the great debate of the two Cambridges about "capital", the focus of much of the discussion was on whether physical capital was homogeneous enough to be susceptible to aggregate measurement. There is room for similar debates about human and social capital. Obviously there are many different forms of physical capital. For instance, both an egg-beater and an aircraft carrier enter into the American national accounts as little bits of physical capital, and yet they are not interchangeable. Try fixing your morning omelette with an aircraft carrier, or try attacking the Serbs with an eggbeater. The same thing is true about social capital. Social capital is certainly far from homogeneous.