Satu KähkönenThe World Bank
Forthcoming in Economic Development and Cultural ChangeUsing data from community-based water services in Sri Lanka and India, this paper shows first that: (a) improved household health and reduced water collection times are associated with better service design and construction: (b) well-designed services involve more community members in the design process and final decision-making about service type; and (c) well-constructed services have effective mechanisms to monitor household contributions to construction. The paper then shows that these service-level institutions are endogenously determined: in communities with higher levels of social capital--in particular, with more active community groups and associations--design participation is more likely to be high and monitoring mechanisms are more likely to be in place. This suggests a way to place an economic value on this form of social capital in the context of water projects: as the net present value of the marginal increase in health associated with active civic associations. These results suggest that designers and supervisors of community-based water projects need to pay attention to the prevailing levels of social capital as one of the factors that will influence performance. When targeting a range of communities, the allocation of investment resources for water services programs may need to be adjusted to take into account the lack of this form of social capital in some villages: possible adjustments include increased investments in social mobilization efforts (for example, through the strengthening of local organizations) and in more direct supervision to oversee system performance.
This introduction to the book discusses the reasons for the expansion of economic thinking into the other social sciences, and argues that an integrated concept of economics and social sciences is not only possible but is indispensable. This is because there is no other way to do justice to the integrated lives of individuals and their choices in trading off objectives in the traditional domains of different disciplines, and no other way to understand all the options for (and implications of) human ambition. Thomas Carlyle's attitude to economics as the ‘dismal science’ is then outlined. The chapter goes on to discuss the content of each of the ten succeeding chapters in detail, under five main headings: broader theories of the firm and the state; the structure of incentives in the modern welfare state; ethnic conflict, discrimination, and coordination in social groups; the state versus the market; and theory, ideology, and cumulative research.
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