TITLE:
Social Capital, Relational Goods, and Terms and Level of Exchange
AUTHORS:
Lindon J. Robison, Trey Malone, Jeffrey O. Oliver, Valentia Bali, Richard E. Winder
KEYWORDS:
Social Capital, Relational Goods, Social Motivations, Terms and Level of Exchange
JOURNAL NAME:
Modern Economy,
Vol.11 No.7,
July
16,
2020
ABSTRACT: A growing body of literature emphasizes the
influence of social relationships of sympathy/empathy, trust, and regard—social capital, on the terms and level of economic
transactions. This paper aims to clarify the relationship between social
motivations and economic decision-making. Using primary data on the motives for
4180 economic transactions, this study supports the notion that economic
transactions often depend on social relationship related motives, which are
often neglected in traditional economic analysis. Relative to commodity
transactions such as the purchase of gasoline motivated mostly by
own-consumption considerations, relational goods transactions such as getting a
haircut, voting, and recycling depend more on social capital related motives.
The evidence from this study suggests that neoclassical economic models fit
well when describing exchanges of commodities in a monetary market transaction
but might be misleading when applied to economic transactions where selfish
motives play a less significant role in the exchange. Furthermore, our evidence
provides additional support to the notion that motives vary across exchange
activities in a manner consistent with the nature of the transaction.