social capital – Pertinent Observations

Size, diversity and social capital

Starting off with a “global” statement, life is full of tradeoffs.

When we listen to stories as kids, we think of “battles between good and evil”. When we watch sport, there is “our side and their side”. From stories, we are usually conditioned to “battles” where one side is superior to the other, and there is a clear “favourite” to root for.

Real life is not so simple. A lot of times, you have battles between two sides that are both bad (a lot of elections, for example). And frequently you come across situations where there are two “good” things of which you can only have one (and so the tradeoffs). One of the more famous of these is the “impossible trinity” of international economics.

In a completely different context (which I’m writing about today), two desirable things that are a tradeoff are diversity and social capital. The general theory is that the more diverse a society gets, the lower is the social capital (google is impossible in providing good links on this, so maybe ask ChatGPT).

The theory here goes that you fundamentally trust people like you and mistrust people who are not like you. The more homogeneous a society is, the more there are “people like you”, and so the more you trust. And if everyone trusts one another much more, there is more social capital.

A recent conversation and observations makes me wonder if social capital is also related to size. More specifically I’m thinking of size as in number of people in an institution.

One observation we had when we went for our reunion last week is that the campus is a lot quieter than in our time, and that a lot more rules are followed in letter rather than just in spirit (no, not that kind, but I’m talking about rules about that also).

For example, the basketball hoop in L^2 has been removed. While we pitched up a net and played tsepak in BEFG Square (where we always played it), current students informed us that they can’t play there because playing there is now banned. Students mostly hung out in their wings rather than in the common areas. After our first evening there we assumed all the students were out on holiday, while it turned out only the first years had a term break then.

I still remember my first night in IIMB (in 2004). I stayed in G Block, on one side of the aforementioned BEFG square. A bunch of people were playing Tsepak until late in the night, which meant I didn’t get good sleep (and for the rest of the week we had our “orientation” which meant I couldn’t sleep well then either). A few days later I just joined these people in playing Tsepak and making noise. “If you can’t stop them, join them”, was a perfect way to go about things back in the day.

What I remember is that, with a batch size of ~200, our social capital was pretty good. While there were some students who occasionally displayed elevated levels of conscience, we largely stuck by one another and tolerated one another (and, of course, massively trolled one another). Disagreements and fights always happened, but were largely resolved among us by dialogue, rather than inviting external parties.

With a much bigger batch size now, though, from what we were told, it appears it is not so simple to resolve things using dialogue and mediation. And people frequently take to inviting external parties. And the expected result (crane-mongoose effect) happens.

That some people want to study when others want to play now means that the former complain against the latter, with playing within the hostel being banned. Some people want to enforce the rules on spirits, and they bring in external parties, and the law is invoked in letter rather than spirit.

When social capital dwindles, in some ways, the minority rule comes into play – when there is a small but vocal minority that wants things a certain way, that becomes the way for everyone else as well. (With high social capital, the majority might be able to convince the minority that they need to be more tolerant)

Yet again, this is not a one way street. You can also argue that when social capital is too high, the minorities can tend to get oppressed (since their views don’t count any more), and so a high social capital society cannot be inclusive.

And so yeah, the Baazigar principle is there everywhere. To get something, you need to give up something. To get a more inclusive class, you need to be less majoritarian, and that means less fun on the average. When you have lots of intolerant minorities (a consequence of diversity), those “intolerant rules” get applied on everyone, and the overall payoff reduces.

A few random thoughts to end:

It’s not just the class size, it’s also the fees. We paid ~ ?300,000 over 2 years as tuition fees. Many of us (who sat for campus placements) made almost twice that (post taxes) in our first year of graduation.
Students nowadays pay ~ ?2,500,000 , so they are a lot more conscious about getting their money’s worth. And being able to study.
In general, cultures change over time, so coming back after 15 years and complaining that “things aren’t the way they used to be” isn’t very nice. So yeah, this blogpost can get classified in the “not so nice” category I guess (not like I’ve ever been known for niceness)
I wonder how much changed during the pandemic, when students were off campus for nearly a year, and had severely curtailed interactions even once they were back. With a 2 year course, it only takes 1 batch to “break culture”, making the culture far more malleable. So again I’m wrong to complain.
All that said, it’s my duty to pontificate and so I’ll continue to write like this

Social Capital and Caste

Conventional wisdom is that social capitalin India is low because of our historical caste system. By placing people in a rigid hierarchy, and giving some people privileges over others just because of the families they were born into, the caste system prevented people from cooperating as well as they would in a more equitable society – that is what conventional wisdom says.

However, a point that we cannot miss is that despite the caste system placing a hierarchy on people, people from different castes did regularly cooperate and trade with each other. In fact, with caste being tied to hereditary professions, people had little choice but to regularly interact and trade with people from other castes. And this inevitably created social capital.

Putting it differently, the result of the caste system was an unequal but stable society, and this stability led to reasonably good social capital (history might be biased given it was written by people from certain castes, but we don’t see many instances of caste riots or clashes from over 200 years ago). You can think of it as a stable society with “handicaps”, where some people were privileged over others (in fact, there was a hierarchy of privilege), to the extent that it was okay for some people to abuse others in various ways.

Over the last 150 years or so, the caste system has been (rightly) challenged, and we are seeing various movements towards a more equal society. One side effect of this has been that the (unequal) equilibrium that had existed has been disturbed, leading to caste-based antagonism and a fall in social capital.

We are in the process of moving from one (unequal) equilibrium to another (more equal) equilibrium, but until we get there, existing beliefs and biases will continue to be challenged, which means some sets of people will continue to be suspicious of others, and there will be mistrust and thus low social capital.

Originally posted at Pragati Express

Caste, socialism and social capital

Some new research by Dan Ariely (of Predictably Irrational fame) and co shows some interesting correlation between a socialist/communist upbringing and attitude towards lying (The Economist reports this research under the headline “Lying Commies“). While I’m not particularly convinced about the research methodology (sample of 250 respondents under a simulated environment – but then most behavioural research suffers from this problem) I find this research interesting since it supports another hypothesis that my wife and I came up with a few days ago – that India’s low social capital is a consequence of the caste system.

I’ve long maintained that the Indian caste system is perhaps the earliest example of a socialist economy. Assuming that reproductive rates across different castes were similar (there is no reason to believe otherwise) what the caste system ensured was that the relative supply of labour across different occupations remained constant even in small geographical areas, and consequently the relative prices of goods remained broadly constant. We can thus think of the caste system as an instance of a socialist model where each one’s profession is determined at birth, and relative prices are fixed. I will go as far to say that there is no better example of a planned economy than the ancient Indian caste system.

One of the inherent problems of Indian society is the lack of social capital. To use my co-INI blogger Nitin Pai’s framework, Indians value Swaartha (self-interest) over Paraartha (interest of others) to an extent that is far beyond the optimal level. The hypothesis goes that there is an optimal mix of Swaartha and Paraartha that should enter one’s objective function while making decisions in everyday life. For example, do you allow the other car to pass before you so that you avoid the traffic jam or do you rush ahead just because there is space in front of your car? Do you over-graze the commons just because it is there or do you consume it in moderation so that others have something to consume, too? A society with a high degree of social capital gives a higher weight to Paraartha in these objective functions, and people in such societies cooperate more and collectively take decisions that make more sense at the societal level.

Now, societies where life is tough (due to geographical or environmental factors) generally face a higher degree of social capital than those where life is easier. One way to experience this would be to drive from Punjab to Himachal Pradesh. On the wide roads of the Punjab plains, it is dog-eats-dog on the road – people overspeed, overtake like crazy and don’t give too much consideration to others on the road. Once you enter the hills of Himachal Pradesh, though, the whole equation changes. Here, a confrontational paradigm doesn’t get you too far – the narrow roads and winding curves mean that drivers need to cooperate more in order to get their way. Social capital in such societies is naturally higher.

Social capital is sticky in one way – if a particular generation in a particular location has high social capital, it is extremely likely that the preceding generation also had high social capital. The reverse, however, is not necessarily true – social capital can sometimes be destroyed in double quick time (think, for example, of the Lebanese Civil War between 1975 and 1990). Thus, the fact that social capital in India today is low could either be because it was always low, or because there was a particular event that destroyed social capital. Since it is unlikely that there was one event which destroyed social capital in the entire country, it seems more likely that social capital in India has always been low.

Social capital is important in a society where there are no rules – if you have a traffic signal at an intersection, for example, the lights will ensure that there is no jam. However, in the absence of rules (or lights) high degree of cooperation is necessary between drivers in order to lead to higher throughput from the signal. One way of combating a society with low social capital is to have lots of rules – these rules rather than social conventions can then drive the society. The converse is also true – in a highly rule based society there is no real need for social capital, and thus social capital can wear off down the generations.

As explained earlier, the caste system meant that the ancient and medieval Indian society was highly planned and rule based. Complex caste rules ensured that there was a rule for any possible social occurrence which might otherwise require cooperation. A brahmin’s cart and a shudra’s cart on the same one-lane path? There was a rule regarding right of way. Two people reaching the river at the same time to bathe? A rule governed who might swim upstream. And so forth.

My hypothesis is that the rule-based society ancient India had due to the caste system meant that there wasn’t much need for social capital. And thus India has never been a high social capital country (except of course for tracts such as Himachal Pradesh where life has been difficult). To put it another way, we see that a socialist economy from the past ages has led to consistently low social capital.

Which is not that far off from what Ariely et al say in their paper.