Social capital: An analysis of factors influencing investment

This paper investigates how individual and community characteristics affect individual social capital investment behavior. We assume a representative individual maximizes her net benefits from social capital by choosing the amount of social capital investment in each period of her lifecycle. The model parameters are estimated by fitting the model to observed data using computational techniques. Simulations determine how perturbations to individual and community characteristics affect individual social capital behavior. The results suggest that social capital investment occurs irrespective of future benefits, personal characteristics affect the level and variance of investment, and institutions matter in determining social capital investment behavior.