Was Banfield right? New insights from a nationwide laboratory experiment

 A. Aassve, P. Conzo, F. Mattioli 2021 - Journal of Regional Science

Was Banfield right? This is one of the most disputed questions in the debate since it has become central in the economic literature on social capital of the last six decades.

Indeed, since the pioneering study by Banfield, the NorthSouth gap in Italian social capital has been considered by international scholars as an example of how cultural diversity within a country can generate different developmental outcomes.

Most studies have recently tried to test such a phenomenon but in general they seem to suffer from some limitations, such as external validity of results, measurement error and omitted factors.

In a recent article, Was Banfield right? New insights from a nation-wide laboratory experiment , in the Journal of Regional Science, Arnstein Aassve, Pierluigi Conzo, and Francesco Mattioli exploit an online labexperiment to assess socialcapital patterns in Italy. It is based on the TRUSTLAB project, a multi-country survey experiment launched by OECD, of which the authors have coordinated the implementation for the Italian sample.

Their principal innovation is that, different from previous lab-experiments, the sample is representative at the national level. Moreover, the authors do not inform participants about the geographic origins of their counterparts. This simple but effective feature of the experiment design allows the authors to assess the NorthSouth gap in universal, as opposed to parochial, behavior.

Let us take a step back: what is the argument here according to the literature?

According to the results discussed in Banfield’s The Moral Basis of a Backward Society in 1958 and the following studies, social capital is scarce in the South because social interactions were mainly guided by the need for satisfying the narrow interest of the family. As a result, trust and cooperation with people that were outside the family turned out to be lower compared to the North.

These patterns have been shown by many other scholars to be strongly correlated with the poor economic performance of the South. Since the two areas share the same religion, language and formal institutions, according to some scholars, diversified institutional arrangements in the Middle Ages persistently affected the formation of selfefficacy beliefs and entrepreneurial spirit, which are at the base of a culture of cooperation and, hence, economic growth, thus originating the divide.

Making use of experiments, such as moneyincentivized games conducted both in the field and in the lab, some studies have recently confirmed evidence of the NorthSouth gap in social capital.

In this paper, instead, the authors revisit the issue and run a new nationwide representative laboratory experiment, from which both attitudinal and behavioral measures of social capital are elicited and compared across the five Italian macroareas. This Italian sample comes from the Trustlab project, which was started in 2016 by the OECD with the aim of acquiring internationally comparable and nationally representative data on social preferences through survey and experimental games. For Italy, data collection occurred in October and November 2017. The Italian sample is complemented by measures of the Big Five personality traits along with other sociodemographic and economic characteristics. This allows to check whether personality differences can explain the geographical variation in social capital. Unlike previous experiments, Trustlab respondents do not receive any information on the geographic origins of the other participants.

The study produces three novel results.

First, a gap between the South and the rest of Italy emerges only in experimental trustworthiness, while no systematic differences are found in the vast majority of the other socialcapital dimensions. These include engagement in voluntary work activities, unconditional and conditional cooperation in groupinteractions, expectations about others' trustworthiness, altruism, and risk aversion.

Second, the NorthSouth gap in trustworthiness widens when the amount at stake is high, that is, when the opportunity cost associated to returning money (i.e., the trustor's transfer) increases Southerners reciprocate less than Northerners.

Third, the observed gap in trustworthiness is not accounted for by the endogenous migration from the South to the North, or by differences in betrayal aversion and in the strength of family ties. The data show, instead, that it is inherited from parents: having a parent from the South is associated with lower trustworthiness, yet this effect is moderated by residing in the North.

Overall, this paper provides rather different results from those in previous studies, which have found a persistent NorthSouth divide in social capital. However, the authors’ findings based on generalized prosociality complement those of previous experiments that focus on local pro-sociality, that is, where the identity of narrowly defined groups (county or region) is made salient. In this experiment, Italians living in different macro-areas do not seem to react in a systematically different way to the same incentives. If anything, they show a different behavior only in one specific dimension of social capital, namely reciprocity, and only under specific circumstances, that is when the uncooperative strategy becomes more tempting.

To conclude: Banfield is not right today, or at least not completely. Results suggest that Southerners and Northerners do not systematically differ in generalized prosocial preferences. Only trustworthiness is higher among Northerners, while they are statistically similar to Southerners in many other economic preferences such as cooperation, trust, expected trustworthiness, altruism, and risk tolerance. The eventual gap in trustworthiness stems from the lower reciprocity of Southerners in response to large transfers, and it is characterized by the intergenerational transmission of norms.

Implications for policy implementation follow: when aiming at equalizing regional outcomes by increasing social capital policymakers should perhaps promote those activities that build broader identities than one's own county or region. Moreover, they should target a specific component of social capital, namely reciprocity, while perhaps also addressing more compelling gaps elsewhere such as humancapital differentials.

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