Social Distance, Cooperation and Other Regarding Preferences: A New Approach Based on the Theory of Relational Goods

The paper is divided in six sections. In the second section we provide a short survey of the literature on relational goods. In the third section we describe the experimental design of the two experiments presented in Becchetti et al. (2007) and Becchetti, Degli Antoni and Faillo (2009) (hereafter also B2007 and B2009). In the fourth section we discuss the hypotheses on the effect of relational goods on players’ behaviour in the two experiments. In the fifth section we discuss the main findings. The sixth section concludes.

Revisiting the economy by taking into account the different dimensions of well-being

In standard economic models benevolent governments are the unique actors in charge to tackle the problem of reconciling individual with social wellbeing in presence of negative externalities and insufficient provision of public goods. Some promising practices of grassroot economics suggest however that, even a minoritarian share of concerned individuals and socially responsible corporations which internalise externalities, significantly enhance the opportunities of promoting "sustainable happiness" harmonising creation of economic, social and environmental value.well-being; sustainable happiness; role; ethical and solidarity initiatives

Voting with the Wallet

The vote with the wallet is a new, emerging feature of economic participation and democracy in the globally-integrated market economy. This expression identifies the pivotal role that responsible consumption and investment can play in addressing social and environmental emergencies which have been aggravated by the asymmetry of power between domestic institutions and global corporations. In this paper, we examine (both in general and by using examples drawn from the financial and non-financial sectors) how ÒvotingÓ for producers which are at the forefront of a three-sided efficiency which reconciles the creation of economic value with social and environmental responsibility, may generate contagion effects by triggering ethical imitation of traditional profit-maximizing actors, thereby enhancing the production of positive social and environmental externalities. Within this new framework policies which reduce the search and information costs of voting with the wallet may help socioeconomic systems to exploit the bottom-up market forces of other-regarding preferences, thereby enhancing opportunities to achieve well-being with reduced top-down government interventionsocial responsibility, other regarding preferences.

When Consumption Generates Social Capital: Creating Room for Manoeuvre for Pro-Poor Policies

Economic interactions are often accused of being neutral, or even of generating adverse effects, not only on the social fabric but also on a factor (social capital) which is regarded as the foundation of both socio-economic activity and prosperity. In this paper we document how a particular form of economic interaction (affiliation of marginalised producers to a first level association and to the fair trade import channel) has indeed positive effects on a specific type of social capital. Our findings on a sample of Kenyan farmers show that years of affiliation to Fair Trade significantly affect the participation in elections and the trust placed in trade unions, political parties and the government, net of the impact of other controls and after accounting for the selection bias effect. This implies that consumers buying fair trade products contribute to reinforce both social cohesion and the institutions in countries in which these variables are fundamental in creating room for manoeuvre for pro-poor (equity plus growth) policies.Fair trade, social capital, impact study

What are we learning from the life satisfaction literature?

The recent availability of cross-sectional and longitudinal survey data on life satisfaction in a large number of countries gives us the opportunity to verify empirically (and not just to assume)what matters for individuals and what economists and policymakers should take into account when trying to promote personal and societal wellbeing. The wide array of econometric findings available in this booming literature display evidence, generally robust to different cultural backgrounds, on the effects of some important happiness drivers (income, unemployment, marital status) which can be co*nsidered “quasi stylized facts” of happiness. If economic policies, for many obvious reasons, cannot maximize self declared life satisfaction as such, we are nonetheless learning a lot from these contributions. In particular, results on the relevance and the risk of crowding out of relational goods, on the revisited inflation/unemployment trade off and, more in general, on the measurement of the shadow value of non market goods obtained with life satisfaction estimates, are conveying relevant information about individual preferences and what is behind utility functions. Such findings suggest us to move beyond anthropological reductionism toward behavioral complexity and to refocus target indicators of economic policies in order to minimize the distance between economic development and human wellbeing.life satisfaction, shadow value of non market goods, unemployment/inflation

Is Fair Trade Honey Sweeter? An empirical analysis on the effect of affiliation on productivity

We evaluate the impact of affiliation to Fair Trade on a sample of Chilean honey producers. Evidence from standard regressions and propensity score matching shows that affiliated farmers have higher productivity (income from honey per worked hour) than the control sample. We show that the productivity effect is partially explained by the superior capacity of affiliated workers to exploit economies of scale. Additional results on the effects of affiliation on training, cooperation and advances on payments suggest that affiliation contributed both to, and independently from, the economies of scale effect.Fair Trade, economies of scale, productivity.

Virtuous interactions in removing exclusion

We devise a retrospective panel data approach to evaluate the effects of fair trade affiliation on the schooling decisions of a sample of Thai organic rice producers across the past 20 years. We find that the probability of school enrolment in families with more than two children is significantly affected by affiliation years. The finding is robust when dealing with endogeneity and heterogeneity issues in the estimate. The nonpositive preaffiliation performance documents that our result is not affected by selection bias and that fair trade affiliation generates a significant break in the schooling decisions of affiliated households.child schooling; market access; fair trade

Virtuous interactions in removing exclusion: The link between foreign market access and access to education

We devise a retrospective panel data approach to evaluate the effects of fair trade affiliation on the schooling decisions of a sample of Thai organic rice producers across the past 20 years. We find that the probability of school enrolment in families with more than two children is significantly affected by affiliation years. The finding is robust when dealing with endogeneity and heterogeneity issues in the estimate. The non-positive preaffiliation performance documents that our result is not affected by selection bias and that fair trade affiliation generates a significant break in the schooling decisions of affiliated households.child schooling, market access, fair trade.

The money-happiness relationship in transition countries: evidence from Albania

With an empirical analysis on a panel of individuals living in a transition country (Albania) we document that the impact of money on happiness does not depend only on the pecuniary outcome but also from aspirations and conditions leading to its determination. Additional factors which matter are the self perceived economic status and the share earned from remittances (and, more weakly, from social assistance). By looking at different sides of the phenomenon we find that these factors affect levels, changes in income and the probability of “being frustrated achievers”. Finally, differently from what happens in developed countries, higher income levels are negatively and not positively correlated with the probability of frustrated achievement supporting the hypothesis that individuals in transition countries are not in the upper side of a concave happiness-income relationship.life satisfaction, remittances, economic status

Microfinance and happiness

Microfinance institutions are used to claim that their impact goes beyond money since rescuing from exclusion uncollateralized poor borrowers significantly affects their dignity, self-esteem, social recognition and, through it, life satisfaction. Our paper aims to verify indirectly this claim by evaluating whether access to microfinance loans has significant impact on life satisfaction beyond its indirect impact via income changes. Our empirical findings on a sample of poor borrowers in the suburbs of Buenos Aires show that, after controlling for survivorship bias, the number of credit cycles has a significant and positive effect on life satisfaction.microfinance; happiness; impact study