Social network structure and the trade-off between social utility and economic performance

• Published in: Social networks 2018-10, Vol.55, p.31-46
• Main Authors: Growiec, Katarzyna, Growiec, Jakub, Kamiński, Bogumił
• Format: Article
• Language: English
• Subjects: Attachment; Cliques; Computational multi-agent model; Economic conditions; Economic models; Economic performance; Economic structure; Economic theory; Families & family life; Individual differences; Social capital; Social network structure; Social networks; Social trust; Socioeconomic factors; Willingness to cooperate
• ISSN: 0378-8733; 1879-2111
• DOI: 10.1016/j.socnet.2018.05.002

•Our computational multi-agent model captures the impacts of social network structure.•The mechanism works through individuals’ social trust and willingness to cooperate.•Results include aggregative comparative statics and individual-level correlations.•We identify a trade-off between aggregate social utility and economic performance.•In dense networks and trustful societies, the trade-off is present also individually. We put forward a computational multi-agent model capturing the impact of social network structure on individuals’ social trust, willingness to cooperate, social utility and economic performance. Social network structure is modeled as four distinct social capital dimensions: degree, centrality, bridging and bonding social capital. Model setup draws from socio-economic theory and empirical findings based on our novel survey dataset. Results include aggregate-level comparative statics and individual-level correlations. We find, inter alia, that societies that either are better connected, exhibit a lower frequency of local cliques, or have a smaller share of family-based cliques, record relatively better aggregate economic performance. As long as family ties are sufficiently valuable, there is a trade-off between aggregate social utility and economic performance, and small world networks are then socially optimal. We also find that in dense networks and trustful societies, there is a trade-off between individual social utility and economic performance; otherwise both outcomes are positively correlated in the cross section.