Social Capital and Risk-Taking Behavior

Sherman Folland describes the tradeoff between risk-taking and gains in social capital.

Sherman Folland[1]

This chapter (Ch 11) describes the tradeoff between risk-taking (through smoking, consumption of elicit drugs, and alcohol) and gains in social capital (through reduced stress) provided these are substitutes. You reduce mortality risks when you have more to lose. Four equations and two graphs explain the theory, and reviews of empirical studies suggest the reality of this relationship. Unusual exceptions may arise if the risky choices are viewed as complements to social capital by the individuals: such as rock climbing, kite surfing, and the like, which are often undertaken with friends. Though no empirical studies were found on these, and they don’t appear to alter the effects of the aggregates.

The data on cigarette smoking, the very worst effects on mortality of risk-taking, shows that social capital increases such as additions to family and responsibilities to others clearly reduce smoking. Smoking of marijuana appears simply to have no effect on mortality. But while social capital tends to reduce deaths from elicit drugs, the results are somewhat mixed, the effect on cocaine and similar drugs is negatively correlated with social capital, though this relation is reversed for heroin. Community social capital tends to lead to reductions in average alcohol consumption, though for individual social capital additions for males tends to increase drinking.

Conclusions:

Policies that would reduce community mortality rates, such as government regulations and taxes which limit these behaviors, or even more limited regulations combined with medical or other provisions together with therapies. City planners are aware that proving better community social capital, such as parks, pools, sports, safe walking and so on, while they offer social capital, that substitutes for risk-taking involving “bads”, also involve costs that cause tradeoffs with city services.

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[1] Sherman Folland, Emeritus Professor, Department of Economics, Oakland University, Michigan, USA.

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