WK 12. 1 Reading Capital, Household, welfare, and Poverty in Indonesia

In this blog I am writing about the social capital, household welfare, and poverty in Indonesia. While there are many definitions and interpretations of the concept of social capital, there is a growing consensus that ‘social capital stands for the ability of actors to secure benefits by virtue of membership in social networks or other social structures. The analysis in this paper is limit to social capital at the micro level, which means, individuals and households, and at the meso level (community).  The limited resources available did not make possible a sampling framework such that the studies would be representative of the countries at the national level. Instead three of four areas were selected in each country, which represent different economic, social and institutional environments. In the case of Indonesia, the collected data cover the rural areas of three provinces: Jambi, Jawa Tengah, and Nusa Tenggara. These are tropical forest areas which was only recently colonized and is still an agricultural frontier zone. It is characterized by low population density and its socio-economic indicators are close to Indonesian averages or slightly below. So, social capital affects household welfare but there can also be reverse causality: richer households could have a higher demand for memberships in associations and have more time to participate (although the opportunity cost of their time is also higher).

What I find interesting is that this study of Indonesia is found compelling empirical evidence that local social capital, defined as household membership in local associations, that makes a significant contribution to household welfare, over and above that stemming from human capital and other household assets. The use of household-level data to make this case and to quantify the impact of social capital is novel in the literature on social capital.

To our knowledge, do think that this is also a study which quantifies the effects of different dimensions of social capital and of different types of associations?

Hanane Ben Abdeslam

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