Social Capital, Relational Goods, and Terms and Level of Exchange

A growing body of literature emphasizes the\r\ninfluence of social relationships of sympathy/empathy, trust, and regard—social capital, on the terms and level of economic\r\ntransactions. This paper aims to clarify the relationship between social\r\nmotivations and economic decision-making. Using primary data on the motives for\r\n4180 economic transactions, this study supports the notion that economic\r\ntransactions often depend on social relationship related motives, which are\r\noften neglected in traditional economic analysis. Relative to commodity\r\ntransactions such as the purchase of gasoline motivated mostly by\r\nown-consumption considerations, relational goods transactions such as getting a\r\nhaircut, voting, and recycling depend more on social capital related motives.\r\nThe evidence from this study suggests that neoclassical economic models fit\r\nwell when describing exchanges of commodities in a monetary market transaction\r\nbut might be misleading when applied to economic transactions where selfish\r\nmotives play a less significant role in the exchange. Furthermore, our evidence\r\nprovides additional support to the notion that motives vary across exchange\r\nactivities in a manner consistent with the nature of the transaction.