Social Capital in the Creation of Human Capital
Author(s): James S. Coleman
Source: American Journal of Sociology , 1988, Vol. 94, Supplement: Organizations and
Institutions: Sociological and Economic Approaches to the Analysis of Social Structure
(1988), pp. S95-S120
Published by: The University of Chicago Press
Stable URL: https://www.jstor.org/stable/2780243
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Social Capital in the Creation
of Human Capital'
James S. Coleman
University of Chicago
In this paper, the concept of social capital is introduced and illustrated,
its forms are described, the social structural conditions
under which it arises are examined, and it is used in an analysis ol
dropouts from high school. Use of the concept of social capital is
part of a general theoretical strategy discussed in the paper: taking
rational action as a starting point but rejecting the extreme individualistic
premises that often accompany it. The conception of social
capital as a resource for action is one way of introducing social
structure into the rational action paradigm. Three forms of social
capital are examined: obligations and expectations, information
channels, and social norms. The role of closure in the social structure
in facilitating the first and third of these forms of social capital
is described. An analysis of the effect of the lack of social capital
available to high school sophomores on dropping out of school before
graduation is carried out. The effect of social capital within the
family and in the community outside the family is examined.
There are two broad intellectual streams in the description and explanation
of social action. One, characteristic of the work of most sociologists,
sees the actor as socialized and action as governed by social norms, rules,
and obligations. The principal virtues of this intellectual stream lie in its
ability to describe action in social context and to explain the way action is
shaped, constrained, and redirected by the social context.
The other intellectual stream, characteristic of the work of most economists,
sees the actor as having goals independently arrived at, as acting
independently, and as wholly self-interested. Its principal virtue lies in
having a principle of action, that of maximizing utility. This principle of
action, together with a single empirical generalization (declining marginal
utility) has generated the extensive growth of neoclassical economic the-
1 I thank Mark Granovetter, Susan Shapiro, and Christopher Winship for criticisms of
an earlier draft, which aided greatly in revision. Requests for reprints should be sent to
James S. Coleman, Department of Sociology, University of Chicago, Chicago, Illinois
60637.
? 1988 by The University of Chicago. All rights reserved.
0002-9602/89/9407-0010$1.50
AJS Volume 94 Supplement S95-S120 S95
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American Journal of Sociology
ory, as well as the growth of political philosophy of several varieties:
utilitarianism, contractarianism, and natural rights.2
In earlier works (Coleman 1986a, 1986b), I have argued for and engaged
in the development of a theoretical orientation in sociology that
includes components from both these intellectual streams. It accepts the
principle of rational or purposive action and attempts to show how that
principle, in conjunction with particular social contexts, can account not
only for the actions of individuals in particular contexts but also for the
development of social organization. In the present paper, I introduce a
conceptual tool for use in this theoretical enterprise: social capital. As
background for introducing this concept, it is useful to see some of the
criticisms of and attempts to modify the two intellectual streams.
CRITICISMS AND REVISIONS
Both these intellectual streams have serious defects. The sociological
stream has what may be a fatal flaw as a theoretical enterprise: the actor
has no "engine of action." The actor is shaped by the environment, but
there are no internal springs of action that give the actor a purpose or
direction. The very conception of action as wholly a product of the environment
has led sociologists themselves to criticize this intellectual
stream, as in Dennis Wrong's (1961) "The Oversocialized Conception of
Man in Modern Sociology."
The economic stream, on the other hand, flies in the face of empirical
reality: persons' actions are shaped, redirected, constrained by the social
context; norms, interpersonal trust, social networks, and social organization
are important in the functioning not only of the society but also of the
economy.
A number of authors from both traditions have recognized these
difficulties and have attempted to impart some of the insights and orientations
of the one intellectual stream to the other. In economics, Yoram
Ben-Porath (1980) has developed ideas concerning the functioning of
what he calls the "F-connection" in exchange systems. The F-connection
is families, friends, and firms, and Ben-Porath, drawing on literature in
anthropology and sociology as well as economics, shows the way these
forms of social organization affect economic exchange. Oliver Williamson
has, in a number of publications (e.g., 1975, 1981), examined the conditions
under which economic activity is organized in different institutional
forms, that is, within firms or in markets. There is a whole body of work
in economics, the "new institutional economics," that attempts to show,
2 For a discussion of the importance of the empirical generalization to economics, see
Black, Coats, and Goodwin (1973).
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Social Capital
within neoclassical economic theory, both the conditions under which
particular economic institutions arise and the effects of these institutions
(i.e., of social organization) on the functioning of the system.
There have been recent attempts by sociologists to examine the way
social organization affects the functioning of economic activity. Baker
(1983) has shown how, even in the highly rationalized market of the
Chicago Options Exchange, relations among floor traders develop, are
maintained, and affect their trades. More generally, Granovetter (1985)
has engaged in a broad attack on the "undersocialized concept of man"
that characterizes economists' analysis of economic activity. Granovetter
first criticizes much of the new institutional economics as crudely functionalist
because the existence of an economic institution is often explained
merely by the functions it performs for the economic system. He
argues that, even in the new institutional economics, there is a failure to
recognize the importance of concrete personal relations and networks of
relations-what he calls "embeddedness"-in generating trust, in establishing
expectations, and in creating and enforcing norms.
Granovetter's idea of embeddedness may be seen as an attempt to
introduce into the analysis of economic systems social organization and
social relations not merely as a structure that springs into place to fulfill
an economic function, but as a structure with history and continuity that
give it an independent effect on the functioning of economic systems.
All this work, both by economists and by sociologists, has constituted a
revisionist analysis of the functioning of economic systems. Broadly, it
can be said to maintain the conception of rational action but to superimpose
on it social and institutional organization-either endogenously
generated, as in the functionalist explanations of some of the new institutional
economists, or as exogenous factors, as in the more proximatecausally
oriented work of some sociologists.
My aim is somewhat different. It is to import the economists' principle
of rational action for use in the analysis of social systems proper, including
but not limited to economic systems, and to do so without discarding
social organization in the process. The concept of social capital is a tool to
aid in this. In this paper, I introduce the concept in some generality, and
then examine its usefulness in a particular context, that of education.
SOCIAL CAPITAL
Elements for these two intellectual traditions cannot be brought together
in a pastiche. It is necessary to begin with a conceptually coherent framework
from one and introduce elements from the other without destroying
that coherence.
I see two major deficiencies in earlier work that introduced "exchange
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American Journal of Sociology
theory" into sociology, despite the pathbreaking character of this work.
One was the limitation to microsocial relations, which abandons the principal
virtue of economic theory, its ability to make the micro-macro transition
from pair relations to system. This was evident both in Homans's
(1961) work and in Blau's (1964) work. The other was the attempt to
introduce principles in an ad hoc fashion, such as "distributive justice"
(Homans 1964, p. 241) or the "norm of reciprocity" (Gouldner 1960). The
former deficiency limits the theory's usefulness, and the latter creates a
pastiche.
If we begin with a theory of rational action, in which each actor has
control over certain resources and interests in certain resources and
events, then social capital constitutes a particular kind of resource available
to an actor.
Social capital is defined by its function. It is not a single entity but a
variety of different entities, with two elements in common: they all consist
of some aspect of social structures, and they facilitate certain actions of
actors-whether persons or corporate actors-within the structure. Like
other forms of capital, social capital is productive, making possible the
achievement of certain ends that in its absence would not be possible.
Like physical capital and human capital, social capital is not completely
fungible but may be specific to certain activities. A given form of social
capital that is valuable in facilitating certain actions may be useless or
even harmful for others.
Unlike other forms of capital, social capital inheres in the structure of
relations between actors and among actors. It is not lodged either in the
actors themselves or in physical implements of production. Because purposive
organizations can be actors ("corporate actors") just as persons
can, relations among corporate actors can constitute social capital for
them as well (with perhaps the best-known example being the sharing of
information that allows price-fixing in an industry). However, in the
present paper, the examples and area of application to which I will direct
attention concern social capital as a resource for persons.
Before I state more precisely what social capital consists of, it is useful
to give several examples that illustrate some of its different forms.
1. Wholesale diamond markets exhibit a property that to an outsider is
remarkable. In the process of negotiating a sale, a merchant will hand
over to another merchant a bag of stones for the latter to examine in
private at his leisure, with no formal insurance that the latter will not
substitute one or more inferior stones or a paste replica. The merchandise
may be worth thousands, or hundreds of thousands, of dollars. Such free
exchange of stones for inspection is important to the functioning of this
market. In its absence, the market would operate in a much more cumbersome,
much less efficient fashion.
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Social Capital
Inspection shows certain attributes of the social structure. A given
merchant community is ordinarily very close, both in the frequency of
interaction and in ethnic and family ties. The wholesale diamond market
in New York City, for example, is Jewish, with a high degree of intermarriage,
living in the same community in Brooklyn, and going to the same
synagogues. It is essentially a closed community.
Observation of the wholesale diamond market indicates that these close
ties, through family, community, and religious affiliation, provide the
insurance that is necessary to facilitate the transactions in the market. If
any member of this community defected through substituting other stones
or through stealing stones in his temporary possession, he would lose
family, religious, and community ties. The strength of these ties makes
possible transactions in which trustworthiness is taken for granted and
trade can occur with ease. In the absence of these ties, elaborate and
expensive bonding and insurance devices would be necessary-or else the
transactions could not take place.
2. The International Herald Tribune of June 21-22, 1986, contained
an article on page 1 about South Korean student radical activists. It
describes the development of such activism: "Radical thought is passed
on in clandestine 'study circles,' groups of students who may come from
the same high school or hometown or church. These study circles . . .
serve as the basic organizational unit for demonstrations and other protests.
To avoid detection, members of different groups never meet, but
communicate through an appointed representative."
This description of the basis of organization of this activism illustrates
social capital of two kinds. The "same high school or hometown or
church" provides social relations on which the "study circles" are later
built. The study circles themselves constitute a form of social capital-a
cellular form of organization that appears especially valuable for facilitating
opposition in any political system intolerant of dissent. Even where
political dissent is tolerated, certain activities are not, whether the activities
are politically motivated terrorism or simple crime. The organization
that makes possible these activities is an especially potent form of social
capital.
3. A mother of six children, who recently moved with husband and
children from suburban Detroit to Jerusalem, described as one reason for
doing so the greater freedom her young children had in Jerusalem. She
felt safe in letting her eight year old take the six year old across town to
school on the city bus and felt her children to be safe in playing without
supervision in a city park, neither of which she felt able to do where she
lived before.
The reason for this difference can be described as a difference in social
capital available in Jerusalem and suburban Detroit. In Jerusalem, the
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American Journal of Sociology
normative structure ensures that unattended children will be "looked
after" by adults in the vicinity, while no such normative structure exists
in most metropolitan areas of the United States. One can say that families
have available to them in Jerusalem social capital that does not exist in
metropolitan areas of the United States.
4. In the Kahn El Khalili market of Cairo, the boundaries between
merchants are difficult for an outsider to discover. The owner of a shop
that specializes in leather will, when queried about where one can find a
certain kind of jewelry, turn out to sell that as well-or, what appears to
be nearly the same thing, to have a close associate who sells it, to whom
he will immediately take the customer. Or he will instantly become a
money changer, although he is not a money changer, merely by turning to
his colleague a few shops down. For some activities, such as bringing a
customer to a friend's store, there are commissions; for others, such as
money changing, merely the creation of obligations. Family relations are
important in the market, as is the stability of proprietorship. The whole
market is so infused with relations of the sort I have described that it can
be seen as an organization, no less so than a department store. Alternatively,
one can see the market as consisting of a set of individual merchants,
each having an extensive body of social capital on which to draw,
through the relationships of the market.
The examples above have shown the value of social capital for a number
of outcomes, both economic and noneconomic. There are, however,
certain properties of social capital that are important for understanding
how it comes into being and how it is employed in the creation of human
capital. First, a comparison with human capital, and then an examination
of different forms of social capital, will be helpful for seeing these.
HUMAN CAPITAL AND SOCIAL CAPITAL
Probably the most important and most original development in the economics
of education in the past 30 years has been the idea that the concept
of physical capital as embodied in tools, machines, and other productive
equipment can be extended to include human capital as well (see Schultz
1961; Becker 1964). Just as physical capital is created by changes in
materials to form tools that facilitate production, human capital is created
by changes in persons that bring about skills and capabilities that make
them able to act in new ways.
Social capital, however, comes about through changes in the relations
among persons that facilitate action. If physical capital is wholly tangible,
being embodied in observable material form, and human capital is less
tangible, being embodied in the skills and knowledge acquired by an
individual, social capital is less tangible yet, for it exists in the relations
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Social Capital
among persons. Just as physical capital and human capital facilitate productive
activity, social capital does as well. For example, a group within
which there is extensive trustworthiness and extensive trust is able to
accomplish much more than a comparable group without that trustworthiness
and trust.
FORMS OF SOCIAL CAPITAL
The value of the concept of social capital lies first in the fact that it
identifies certain aspects of social structure by their functions, just as the
concept "chair" identifies certain physical objects by their function, despite
differences in form, appearance, and construction. The function
identified by the concept of "social capital" is the value of these aspects of
social structure to actors as resources that they can use to achieve their
interests.
By identifying this function of certain aspects of social structure, the
concept of social capital constitutes both an aid in accounting for different
outcomes at the level of individual actors and an aid toward making the
micro-to-macro transitions without elaborating the social structural details
through which this occurs. For example, in characterizing the clandestine
study circles of South Korean radical students as constituting
social capital that these students can use in their revolutionary activities,
we assert that the groups constitute a resource that aids in moving from
individual protest to organized revolt. If, in a theory of revolt, a resource
that accomplishes this task is held to be necessary, then these study circles
are grouped together with those organizational structures, having very
different origins, that have fulfilled the same function for individuals with
revolutionary goals in other contexts, such as the Comite's d'action lyce'en
of the French student revolt of 1968 or the workers' cells in tsarist Russia
described and advocated by Lenin ([1902] 1973).
It is true, of course, that for other purposes one wants to investigate the
details of such organizational resources, to understand the elements that
are critical to their usefulness as resources for such a purpose, and to
examine how they came into being in a particular case. But the concept of
social capital allows taking such resources and showing the way they can
be combined with other resources to produce different system-level behavior
or, in other cases, different outcomes for individuals. Although,
for these purposes, social capital constitutes an unanalyzed concept, it
signals to the analyst and to the reader that something of value has been
produced for those actors who have this resource available and that the
value depends on social organization. It then becomes a second stage in
the analysis to unpack the concept, to discover what components of social
organization contribute to the value produced.
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American Journal of Sociology
In previous work, Lin (1988) and De Graf and Flap (1988), from a
perspective of methodological individualism similar to that used in this
paper, have shown how informal social resources are used instrumentally
in achieving occupational mobility in the United States and, to a lesser
extent, in West Germany and the Netherlands. Lin focused on social ties,
especially "weak" ties, in this role. Here, I want to examine a variety of
resources, all of which constitute social capital for actors.
Before examining empirically the value of social capital in the creation
of human capital, I will go more deeply into an examination of just what
it is about social relations that can constitute useful capital resources for
individuals.
Obligations, Expectations, and Trustworthiness of Structures
If A does something for B and trusts B to reciprocate in the future, this
establishes an expectation in A and an obligation on the part of B. This
obligation can be conceived as a credit slip held by A for performance by
B. If A holds a large number of these credit slips, for a number of persons
with whom A has relations, then the analogy to financial capital is direct.
These credit slips constitute a large body of credit that A can call in if
necessary-unless, of course, the placement of trust has been unwise, and
these are bad debts that will not be repaid.
In some social structures, it is said that "people are always doing things
for each other." There are a large number of these credit slips outstanding,
often on both sides of a relation (for these credit slips appear often not
to be completely fungible across areas of activity, so that credit slips of B
held by A and those of A held by B are not fully used to cancel each other
out). The El Khalili market in Cairo, described earlier, constitutes an
extreme case of such a social structure. In other social structures where
individuals are more self-sufficient and depend on each other less, there
are fewer of these credit slips outstanding at any time.
This form of social capital depends on two elements: trustworthiness of
the social environment, which means that obligations will be repaid, and
the actual extent of obligations held. Social structures differ in both these
dimensions, and actors within the same structure differ in the second. A
case that illustrates the value of the trustworthiness of the environment is
that of the rotating-credit associations of Southeast Asia and elsewhere.
These associations are groups of friends and neighbors who typically meet
monthly, each person contributing to a central fund that is then given to
one of the members (through bidding or by lot), until, after a number of
months, each of the n persons has made n contributions and received one
payout. As Geertz (1962) points out, these associations serve as efficient
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Social Capital
institutions for amassing savings for small capital expenditures, an important
aid to economic development.
But without a high degree of trustworthiness among the members of
the group, the institution could not exist-for a person who receives a
payout early in the sequence of meetings could abscond and leave the
others with a loss. For example, one could not imagine a rotating-credit
association operating successfully in urban areas marked by a high degree
of social disorganization-or, in other words, by a lack of social capital.
Differences in social structures in both dimensions may arise for a
variety of reasons. There are differences in the actual needs that persons
have for help, in the existence of other sources of aid (such as government
welfare services), in the degree of affluence (which reduces aid needed
from others), in cultural differences in the tendency to lend aid and ask
for aid (see Banfield 1967) in the closure of social networks, in the logistics
of social contacts (see Festinger, Schachter, and Back 1963), and other
factors. Whatever the source, however, individuals in social structures
with high levels of obligations outstanding at any time have more social
capital on which they can draw. The density of outstanding obligations
means, in effect, that the overall usefulness of the tangible resources of
that social structure is amplified by their availability to others when
needed.
Individual actors in a social system also differ in the number of credit
slips outstanding on which they can draw at any time. The most extreme
examples are in hierarchically structured extended family settings, in
which a patriarch (or "godfather") holds an extraordinarily large set of
obligations that he can call in at any time to get what he wants done.
Near this extreme are villages in traditional settings that are highly
stratified, with certain wealthy families who, because of their wealth,
have built up extensive credits that they can call in at any time.
Similarly, in political settings such as a legislature, a legislator in a
position with extra resources (such as the Speaker of the House of Representatives
or the Majority Leader of the Senate in the U.S. Congress) can,
by effective use of resources, build up a set of obligations from other
legislators that makes it possible to get legislation passed that would
otherwise be stymied. This concentration of obligations constitutes social
capital that is useful not only for this powerful legislator but useful also in
getting an increased level of action on the part of a legislature. Thus,
those members of legislatures among whom such credits are extensive
should be more powerful than those without extensive credits and debits
because they can use the credits to produce bloc voting on many issues. It
is well recognized, for example, that in the U.S. Senate, some senators are
members of what is called "the Senate Club," while others are not. This
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American Journal of Sociology
in effect means that some senators are embedded in the system of credits
and debits, while others, outside the "Club," are not. It is also well
recognized that those in the Club are more powerful than those outside it.
Information Channels
An important form of social capital is the potential for information that
inheres in social relations. Information is important in providing a basis
for action. But acquisition of information is costly. At a minimum, it
requires attention, which is always in scarce supply. One means by which
information can be acquired is by use of social relations that are maintained
for other purposes. Katz and Lazarsfeld (1955) showed how this
operated for women in several areas of life in a midwestern city around
1950. They showed that a woman with an interest in being in fashion, but
no interest in being on the leading edge of fashion, used friends who she
knew kept up with fashion as sources of information. Similarly, a person
who is not greatly interested in current events but who is interested in
being informed about important developments can save the time of reading
a newspaper by depending on spouse or friends who pay attention to
such matters. A social scientist who is interested in being up-to-date on
research in related fields can make use of everyday interactions with
colleagues to do so, but only in a university in which most colleagues keep
up-to-date.
All these are examples of social relations that constitute a form of social
capital that provides information that facilitates action. The relations in
this case are not valuable for the "credit slips" they provide in the form of
obligations that one holds for others' performances or for the trustworthiness
of the other party but merely for the information they provide.
Norms and Effective Sanctions
When a norm exists and is effective, it constitutes a powerful, though
sometimes fragile, form of social capital. Effective norms that inhibit
crime make it possible to walk freely outside at night in a city and enable
old persons to leave their houses without fear for their safety. Norms in a
community that support and provide effective rewards for high achievement
in school greatly facilitate the school's task.
A prescriptive norm within a collectivity that constitutes an especially
important form of social capital is the norm that one should forgo selfinterest
and act in the interests of the collectivity. A norm of this sort,
reinforced by social support, status, honor, and other rewards, is the
social capital that builds young nations (and then dissipates as they grow
older), strengthens families by leading family members to act selflessly in
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Social Capital
"the family's" interest, facilitates the development of nascent social movements
through a small group of dedicated, inward-looking, and mutually
rewarding members, and in general leads persons to work for the public
good. In some of these cases, the norms are internalized; in others, they
are largely supported through external rewards for selfless actions and
disapproval for selfish actions. But, whether supported by internal or
external sanctions, norms of this sort are important in overcoming the
public goods problem that exists in collectivities.
As all these examples suggest, effective norms can constitute a powerful
form of social capital. This social capital, however, like the forms
described earlier, not only facilitates certain actions; it constrains others.
A community with strong and effective norms about young persons' behavior
can keep them from "having a good time." Norms that make it
possible to walk alone at night also constrain the activities of criminals
(and in some cases of noncriminals as well). Even prescriptive norms that
reward certain actions, like the norm in a community that says that a boy
who is a good athlete should go out for football, are in effect directing
energy away from other activities. Effective norms in an area can reduce
innovativeness in an area, not only deviant actions that harm others but
also deviant actions that can benefit everyone. (See Merton [1968,
pp. 195-203] for a discussion of how this can come about.)
SOCIAL STRUCTURE THAT FACILITATES SOCIAL CAPITAL
All social relations and social structures facilitate some forms of social
capital; actors establish relations purposefully and continue them when
they continue to provide benefits. Certain kinds of social structure, however,
are especially important in facilitating some forms of social capital.
Closure of Social Networks
One property of social relations on which effective norms depend is what
I will call closure. In general, one can say that a necessary but not
sufficient condition for the emergence of effective norms is action that
imposes external effects on others (see Ullmann-Margalit 1977; Coleman
1987). Norms arise as attempts to limit negative external effects or encourage
positive ones. But, in many social structures where these conditions
exist, norms do not come into existence. The reason is what can be
described as lack of closure of the social structure. Figure 1 illustrates
why. In an open structure like that of figure la, actor A, having relations
with actors B and C, can carry out actions that impose negative externalities
on B or C or both. Since they have no relations with one another,
but with others instead (D and E), then they cannot combine forces to
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American Journal of Sociology
D E
B C B C
A A
(a) (b)
FIG. 1.-Network without (a) and with (b) closure
sanction A in order to constrain the actions. Unless either B or C alone is
sufficiently harmed and sufficiently powerful vis-a-vis A to sanction
alone, A's actions can continue unabated. In a structure with closure, like
that of figure lb, B and C can combine to provide a collective sanction, or
either can reward the other for sanctioning A. (See Merry [1984] for
examples of the way gossip, which depends on closure of the social structure,
is used as a collective sanction.)
In the case of norms imposed by parents on children, closure of the
structure requires a slightly more complex structure, which I will call
intergenerational closure. Intergenerational closure may be described by
a simple diagram that represents relations between parent and child and
relations outside the family. Consider the structure of two communities,
represented by figure 2. The vertical lines represent relations across generations,
between parent and child, while the horizontal lines represent
relations within a generation. The point labeled A in both figure 2a and
figure 2b represents the parent of child B, and the point labeled D represents
the parent of child C. The lines between B and C represent the
relations among children that exist within any school. Although the other
relations among children within the school are not shown here, there
exists a high degree of closure among peers, who see each other daily,
have expectations toward each other, and develop norms about each
other's behavior.
The two communities differ, however, in the presence or absence of
links among the parents of children in the school. For the school represented
by figure 2 b, there is intergenerational closure; for that represented
by figure 2a, there is not. To put it colloquially, in the lower community
represented by 2b, the parents' friends are the parents of their children's
friends. In the other, they are not.
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Social Capital
E A D E
B C
(a)
A D
B C
(b)
FIG. 2. -Network involving parents (A, D) and children (B, C) without (a) and
with (b) intergenerational closure.
The consequence of this closure is, as in the case of the wholesale
diamond market or in other similar communities, a set of effective sanctions
that can monitor and guide behavior. In the community in figure 2b,
parents A and D can discuss their children's activities and come to some
consensus about standards and about sanctions. Parent A is reinforced by
parent D in sanctioning his child's actions; beyond that, parent D constitutes
a monitor not only for his own child, C, but also for the other child,
B. Thus, the existence of intergenerational closure provides a quantity of
social capital available to each parent in raising his children-not only in
matters related to school but in other matters as well.
Closure of the social structure is important not only for the existence of
effective norms but also for another form of social capital: the trustworthiness
of social structures that allows the proliferation of obligations and
expectations. Defection from an obligation is a form of imposing a negative
externality or another. Yet, in a structure without closure, it can be
effectively sanctioned, if at all, only by the person to whom the obligation
is owed. Reputation cannot arise in an open structure, and collective
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American Journal of Sociology
sanctions that would ensure trustworthiness cannot be applied. Thus, we
may say that closure creates trustworthiness in a social structure.
Appropriable Social Organization
Voluntary organizations are brought into being to aid some purpose of
those who initiate them. In a housing project built during World War II
in an eastern city of the United States, there were many physical problems
caused by poor construction: faulty plumbing, crumbling sidewalks,
and other defects (Merton, n.d.). Residents organized to confront the
builders and to address these problems in other ways. Later, when the
problems were solved, the organization remained as available social capital
that improved the quality of life for residents. Residents had resources
available that they had seen as unavailable where they had lived before.
(For example, despite the fact that the number of teenagers in the community
was smaller, residents were more likely to express satisfaction
with the availability of teenage babysitters.)
Printers in the New York Typographical Union who were monotype
operators formed a Monotype Club as a social club (Lipset, Trow, and
Coleman 1956). Later, as employers looked for monotype operators and
as monotype operators looked for jobs, both found this organization an
effective employment referral service and appropriated the organization
for this purpose. Still later, when the Progressive Party came into power
in the New York Union, the Monotype Club served as an organizational
resource for the Independent Party as it left office. The Monotype Club
subsequently served as an important source of social capital for the Independents
to sustain the party as an organized opposition while it was out
of office.
In the example of South Korean student radicals used earlier, the study
circles were described as consisting of groups of students from the same
high school or hometown or church. Here, as in the earlier examples, an
organization that was initiated for one purpose is available for appropriation
for other purposes, constituting important social capital for the individual
members, who have available to them the organizational resources
necessary for effective opposition. These examples illustrate the general
point, that organization, once brought into existence for one set of purposes,
can also aid others, thus constituting social capital available for
use.
It is possible to gain insight into some of the ways in which closure and
appropriable social organization provide social capital by use of a distinction
made by Max Gluckman (1967) between simplex and multiplex rela-
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Social Capital
tions.3 In the latter, persons are linked in more than one context (neighbor,
fellow worker, fellow parent, coreligionist, etc.), while in the former,
persons are linked through only one of these relations. The central property
of a multiplex relation is that it allows the resources of one relationship
to be appropriated for use in others. Sometimes, the resource is
merely information, as when two parents who see each other as neighbors
exchange information about their teenagers' activities; sometimes, it is the
obligations that one person owes a second in relationship X, which the
second person can use to constrain the actions of the first in relationship
Y. Often, it is resources in the form of other persons who have obligations
in one context that can be called on to aid when one has problems in
another context.
SOCIAL CAPITAL IN THE CREATION OF HUMAN CAPITAL
The preceding pages have been directed toward defining and illustrating
social capital in general. But there is one effect of social capital that is
especially important: its effect on the creation of human capital in the
next generation. Both social capital in the family and social capital in the
community play roles in the creation of human capital in the rising generation.
I will examine each of these in turn.
Social Capital in the Family
Ordinarily, in the examination of the effects of various factors on achievement
in school, "family background" is considered a single entity, distinguished
from schooling in its effects. But there is not merely a single
"family background"; family background is analytically separable into at
least three different components: financial capital, human capital, and
social capital. Financial capital is approximately measured by the family's
wealth or income. It provides the physical resources that can aid
achievement: a fixed place in the home for studying, materials to aid
learning, the financial resources that smooth family problems. Human
capital is approximately measured by parents' education and provides the
potential for a cognitive environment for the child that aids learning.
Social capital within the family is different from either of these. Two
examples will give a sense of what it is and how it operates.
John Stuart Mill, at an age before most children attend school, was
taught Latin and Greek by his father, James Mill, and later in childhood
3 I am especially grateful to Susan Shapiro for reminding me of Gluckman's distinction
and pointing out the relevance of it to my analysis.
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American Journal of Sociology
would discuss critically with his father and with Jeremy Bentham drafts
of his father's manuscripts. John Stuart Mill probably had no extraordinary
genetic endowments, and his father's learning was no more extensive
than that of some other men of the time. The central difference was
the time and effort spent by the father with the child on intellectual
matters.
In one public school district in the United States where texts for school
use were purchased by children's families, school authorities were
puzzled to discover that a number of Asian immigrant families purchased
two copies of each textbook needed by the child. Investigation revealed
that the family purchased the second copy for the mother to study in order
to help her child do well in school. Here is a case in which the human
capital of the parents, at least as measured traditionally by years of
schooling, is low, but the social capital in the family available for the
child's education is extremely high.
These examples illustrate the importance of social capital within the
family for a child's intellectual development. It is of course true that
children are strongly affected by the human capital possessed by their
parents. But this human capital may be irrelevant to outcomes for children
if parents are not an important part of their children's lives, if their
human capital is employed exclusively at work or elsewhere outside the
home. The social capital of the family is the relations between children
and parents (and, when families include other members, relationships
with them as well). That is, if the human capital possessed by parents is
not complemented by social capital embodied in family relations, it is
irrelevant to the child's educational growth that the parent has a great
deal, or a small amount, of human capital.4
I will not differentiate here among the forms of social capital discussed
earlier, but will attempt merely to measure the strength of the relations
between parents and child as a measure of the social capital available to
the child from the parent. Nor will I use the concept in the context of the
paradigm of rational action, as, for example, is often done in use of the
concept of human capital to examine the investments in education that a
rational person would make. A portion of the reason for this lies in a
property of much social capital not shown by most forms of capital (to
I The complementarity of human capital and social capital in the family for a child's
development suggests that the statistical analysis that examines the effects of these
quantities should take a particular form. There should be an interaction term between
human capital (parents' education) and social capital (some combination of measures
such as two parents in the home, number of siblings, and parents' expectations for
child's education). In the analysis reported, here, however, a simple additive model
without interaction was used.
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Social Capital
which I will turn in a later section): its public goods character, which
leads to underinvestment.
Social capital within the family that gives the child access to the adult's
human capital depends both on the physical presence of adults in the
family and on the attention given by the adults to the child. The physical
absence of adults may be described as a structural deficiency in family
social capital. The most prominent element of structural deficiency in
modern families is the single-parent family. However, the nuclear family
itself, in which one or both parents work outside the home, can be seen as
structurally deficient, lacking the social capital that comes with the presence
of parents during the day, or with grandparents or aunts and uncles
in or near the household.
Even if adults are physically present, there is a lack of social capital in
the family if there are not strong relations between children and parents.
The lack of strong relations can result from the child's embeddedness in a
youth community, from the parents' embeddedness in relationships with
other adults that do not cross generations, or from other sources. Whatever
the source, it means that whatever human capital exists in the parents,
the child does not profit from it because the social capital is missing.
The effects of a lack of social capital within the family differ for different
educational outcomes. One for which it appears to be especially important
is dropping out of school. With the High School and Beyond
sample of students in high schools, table 1 shows the expected dropout
rates for students in different types of families when various measures of
social and human capital in the family and a measure of social capital in
the community are controlled statistically.5 An explanation is necessary
for the use of number of siblings as a measure of lack of social capital.
The number of siblings represents, in this interpretation, a dilution of
adult attention to the child. This is consistent with research results for
5 The analysis is carried out by use of a weighted logistic model with a random sample
of 4,000 students from the public schools in the sample. The variables included in the
model as measures of the family's financial, human, and social capital were socioeconomic
status (a single variable constructed of parents' education, parents' income,
father's occupational status, and household possessions), race, Hispanic ethnicity,
number of siblings, number of changes in school due to family residential moves since
fifth grade, whether mother worked before the child was in school, mother's expectation
of child's educational attainment, frequency of discussions with parents about
personal matters, and presence of both parents in the household. The regression
coefficients and asymptotic standard errors are given in the App. table Al. An analysis
with more extensive statistical controls, including such things as grades in school,
homework, and number of absences, is reported in Hoffer (1986, table 25), but the
effects reported in table 1 and subsequent text are essentially unchanged except for a
reduced effect of mother's expectations. The results reported here and subsequently
are taken from Hoffer (1986) and from Coleman and Hoffer (1987).
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American Journal of Sociology
TABLE 1
DROPOUT RATES BETWEEN SPRING, GRADE 10, AND SPRING, GRADE 12, FOR STUDENTS
WHOSE FAMILIES DIFFER IN SOCIAL CAPITAL, CONTROLLING FOR HUMAN CAPITAL
AND FINANCIAL CAPITAL IN THE FAMILYa
Percentage Difference in
Dropping Percentage
Out Points
1. Parents' presence:
Two parents ..................... 13.1 6.0
Single parent ............... .. .................. 19.1
2. Additional children:
One sibling .......... ...... .. ................... 10.8 6.4
Four siblings ......... ...... .. .................. 17.2
3. Parents and children:
Two parents, one sibling .......... .. ............. 10.1 12.5
One parent, four siblings .......... .. ............. 22.6 J
4. Mother's expectation for child's education:
Expectation of college ............................ 11.6 l 8.6
No expectation of college .......... .. ............. 20.2
5. Three factors together:
Two parents, one sibling, mother expects college .... 8.1 22.5
One parent, four siblings, no college expectation ..... 30.6 J
a Estimates taken from logistic regression reported more fully in App. table Al.
measures of achievement and IQ, which show that test scores decline
with sib position, even when total family size is controlled, and that
scores decline with number of children in the family. Both results are
consistent with the view that younger sibs and children in large families
have less adult attention, which produces weaker educational outcomes.
Item 1 of table 1 shows that, when other family resources are controlled,
the percentage of students who drop out between spring of the
sophomore year and spring of the senior year is 6 percentage points higher
for children from single-parent families. Item 2 of table 1 shows that the
rate is 6.4 percentage points higher for sophomores with four siblings
than for those with otherwise equivalent family resources but only one
sibling. Or, taking these two together, we can think of the ratio of adults
to children as a measure of the social capital in the family available for the
education of any one of them. Item 3 of table 1 shows that for a sophomore
with four siblings and one parent, and an otherwise average background,
the rate is 22.6%; with one sibling and two parents, the rate is
10.1%-a difference of 12.5 percentage points.
Another indicator of adult attention in the family, although not a pure
measure of social capital, is the mother's expectation of the child's going
to college. Item 4 of the table shows that, for sophomores without this
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Social Capital
parental expectation, the rate is 8.6 percentage points higher than for
those with it. With the three sources of family social capital taken together,
item 5 of the table shows that sophomores with one sibling, two
parents, and a mother's expectation for college (still controlling on other
resources of family) have an 8.1% dropout rate; with four siblings, one
parent, and no expectation of the mother for college, the rate is 30.6%.
These results provide a less satisfactory test than if the research had
been explicitly designed to examine effects of social capital within the
family. In addition, table Al in the Appendix shows that another variable
that should measure social capital in the family, the frequency of talking
with parents about personal experiences, shows essentially no relation to
dropping out. Nevertheless, taken all together, the data do indicate that
social capital in the family is a resource for education of the family's
children, just as is financial and human capital.
Social Capital outside the Family
The social capital that has value for a young person's development does
not reside solely within the family. It can be found outside as well in the
community consisting of the social relationships that exist among parents,
in the closure exhibited by this structure of relations, and in the parents'
relations with the institutions of the community.
The effect of this social capital outside the family on educational outcomes
can be seen by examining outcomes for children whose parents
differ in the particular source of social capital discussed earlier, intergenerational
closure. There is not a direct measure of intergenerational closure
in the data, but there is a proximate indicator. This is the number of
times the child has changed schools because the family moved. For
families that have moved often, the social relations that constitute social
capital are broken at each move. Whatever the degree of intergenerational
closure available to others in the community, it is not available to
parents in mobile families.
The logistic regression carried out earlier and reported in table Al
shows that the coefficient for number of moves since grade 5 is 10 times its
standard error, the variable with the strongest overall effect of any variable
in the equation, including the measures of human and financial
capital in the family (socioeconomic status) and the crude measures of
family social capital introduced in the earlier analysis. Translating this
into an effect on dropping out gives 11.8% as the dropout rate if the
family has not moved, 16.7% if it has moved once, and 23.1% if it has
moved twice.
In the High School and Beyond data set, another variation among the
schools constitutes a useful indicator of social capital. This is the distinc-
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American Journal of Sociology
tions among public high schools, religiously based private high schools,
and nonreligiously based private high schools. It is the religiously based
high schools that are surrounded by a community based on the religious
organization. These families have intergenerational closure that is based
on a multiplex relation: whatever other relations they have, the adults are
members of the same religious body and parents of children in the same
school. In contrast, it is the independent private schools that are typically
least surrounded by a community, for their student bodies are collections
of students, most of whose families have no contact.6 The choice of
private school for most of these parents is an individualistic one, and,
although they back their children with extensive human capital, they
send their children to these schools denuded of social capital.
In the High School and Beyond data set, there are 893 public schools,
84 Catholic schools, and 27 other private schools. Most of the other
private schools are independent schools, though a minority have religious
foundations. In this analysis, I will at the outset regard the other private
schools as independent private schools to examine the effects of social
capital outside the family.
The results of these comparisons are shown in table 2. Item 1 of the
table shows that the dropout rates between sophomore and senior years
are 14.4% in public schools, 3.4% in Catholic schools, and 11.9% in other
private schools. What is most striking is the low dropout rate in Catholic
schools. The rate is a fourth of that in the public schools and a third of
that in the other private schools.
Adjusting the dropout rates for differences in student-body financial,
human, and social capital among the three sets of schools by standardizing
the population of the Catholic schools and other private schools
to the student-body backgrounds of the public schools shows that the
differences are affected only slightly. Furthermore, the differences are not
due to the religion of the students or to the degree of religious observance.
Catholic students in public school are only slightly less likely to drop out
than non-Catholics. Frequency of attendance at religious services, which
is itself a measure of social capital through intergenerational closure, is
strongly related to dropout rate, with 19.5% of public school students
who rarely or never attend dropping out compared with 9.1% of those
who attend often. But this effect exists apart from, and in addition to, the
effect of the school's religious affiliation. Comparable figures for Catholic
6 Data from this study have no direct measures of the degree of intergenerational
closure among the parents of the school to support this statement. However, the one
measure of intergenerational closure that does exist in the data, the number of residential
moves requiring school change since grade 5, is consistent with the statement. The
average number of moves for public school students is .57; for Catholic school students,
.35; and for students in other private schools, .88.
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Social Capital
TABLE 2
DROPOUT RATES BETWEEN SPRING, GRADE 10, AND SPRING, GRADE 12,
FOR STUDENTS FROM SCHOOLS WITH DIFFERING AMOUNTS OF SOCIAL
CAPITAL IN THE SURROUNDING COMMUNITY
Other
Private
Public Catholic Schools
1. Raw dropout rates ................................ 14.4 3.4 11.9
2. Dropout rates standardized to average public
school sophomorea ............................... 14.4 5.2 11.6
Non-Catholic
Religious Independent
3. Raw dropout rates for studentsb from independent
and non-Catholic religious
private schools ............... ................... 3.7 10.0
a The standardization is based on separate logistic regressions for these two sets of schools, using the
same variables listed in n. 5. Coefficients and means for the standardization are in Hoffer (1986, tables 5
and 24).
b This tabulation is based on unweighted data, which is responsible for the fact that both rates are
lower than the rate for other private schools in item 1 of the table, which is based on weighted data.
school students are 5.9% and 2.6%, respectively (Coleman and Hoffer
1987, p. 138).
The low dropout rates of the Catholic schools, the absence of low
dropout rates in the other private schools, and the independent effect of
frequency of religious attendance all provide evidence of the importance
of social capital outside the school, in the adult community surrounding
it, for this outcome of education.
A further test is possible, for there were eight schools in the sample of
non-Catholic private schools ("other private" in the analysis above) that
have religious foundations and over 50% of the student body of that
religion. Three were Baptist schools, two were Jewish, and three from
three other denominations. If the inference is correct about the religious
community's providing intergenerational closure and thus social capital
and about the importance of social capital in depressing the chance of
dropping out of high school, these schools also should show a lower
dropout rate than the independent private schools. Item 3 of table 2
shows that their dropout rate is lower, 3.7%, essentially the same as that
of the Catholic schools.7
I It is also true, though not presented here, that the lack of social capital in the family
makes little difference in dropout rates in Catholic schools-or, in the terms I have
used, social capital in the community compensates in part for its absence in the family.
See Coleman and Hoffer (1987, chap. 5).
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American Journal of Sociology
The data presented above indicate the importance of social capital for
the education of youth, or, as it might be put, the importance of social
capital in the creation of human capital. Yet there is a fundamental
difference between social capital and most other forms of capital that has
strong implications for the development of youth. It is this difference to
which I will turn in the next section.
PUBLIC GOODS ASPECTS OF SOCIAL CAPITAL
Physical capital is ordinarily a private good, and property rights make it
possible for the person who invests in physical capital to capture the
benefits it produces. Thus, the incentive to invest in physical capital is not
depressed; there is not a suboptimal investment in physical capital because
those who invest in it are able to capture the benefits of their
investments. For human capital also-at least human capital of the sort
that is produced in schools-the person who invests the time and resources
in building up this capital reaps its benefits in the form of a
higher-paying job, more satisfying or higher-status work, or even the
pleasure of greater understanding of the surrounding world-in short, all
the benefits that schooling brings to a person.
But most forms of social capital are not like this. For example, the
kinds of social structures that make possible social norms and the sanctions
that enforce them do not benefit primarily the person or persons
whose efforts would be necessary to bring them about, but benefit all
those who are part of such a structure. For example, in some schools
where there exists a dense set of associations among some parents, these
are the result of a small number of persons, ordinarily mothers who do
not hold full-time jobs outside the home. Yet these mothers themselves
experience only a subset of the benefits of this social capital surrounding
the school. If one of them decides to abandon these activities-for example,
to take a full-time job-this may be an entirely reasonable action
from a personal point of view and even from the point of view of that
household with its children. The benefits of the new activity may far
outweigh the losses that arise from the decline in associations with other
parents whose children are in the school. But the withdrawal of these
activities constitutes a loss to all those other parents whose associations
and contacts were dependent on them.
Similarly, the decision to move from a community so that the father,
for example, can take a better job may be entirely correct from the point
of view of that family. But, because social capital consists of relations
among persons, other persons may experience extensive losses by the
severance of those relations, a severance over which they had no control.
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Social Capital
A part of those losses is the weakening of norms and sanctions that aid the
school in its task. For each family, the total cost it experiences as a
consequence of the decisions it and other families make may outweigh the
benefits of those few decisions it has control over. Yet the beneficial
consequences to the family of those decisions made by the family may far
outweigh the minor losses it experiences from them alone.
It is not merely voluntary associations, such as a PTA, in which underinvestment
of this sort occurs. When an individual asks a favor from
another, thus incurring an obligation, he does so because it brings him a
needed benefit; he does not consider that it does the other a benefit as well
by adding to a drawing fund of social capital available in a time of need.
If the first individual can satisfy his need through self-sufficiency, or
through aid from some official source without incurring an obligation, he
will do so-and thus fail to add to the social capital outstanding in the
community.
Similar statements can be made with respect to trustworthiness as
social capital. An actor choosing to keep trust or not (or choosing whether
to devote resources to an attempt to keep trust) is doing so on the basis of
costs and benefits he himself will experience. That his trustworthiness
will facilitate others' actions or that his lack of trustworthiness will inhibit
others' actions does not enter into his decision. A similar but more
qualified statement can be made for information as a form of social capital.
An individual who serves as a source of information for another
because he is well informed ordinarily acquires that information for his
own benefit, not for the others who make use of him. (This is not always
true. As Katz and Lazarsfeld [1955] show, "opinion leaders" in an area
acquire information in part to maintain their position as opinion leaders.)
For norms also, the statement must be qualified. Norms are intentionally
established, indeed as means of reducing externalities, and their
benefits are ordinarily captured by those who are responsible for establishing
them. But the capability of establishing and maintaining effective
norms depends on properties of the social structure (such as closure) over
which one actor does not have control yet are affected by one actor's
action. These are properties that affect the structure's capacity to sustain
effective norms, yet properties that ordinarily do not enter into an individual's
decision that affects them.
Some forms of social capital have the property that their benefits can be
captured by those who invest in them; consequently, rational actors will
not underinvest in this type of social capital. Organizations that produce
a private good constitute the outstanding example. The result is that there
will be in society an imbalance in the relative investment in organizations
that produce private goods for a market and those associations and rela-
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American Journal of Sociology
tionships in which the benefits are not captured-an imbalance in the
sense that, if the positive externalities created by the latter form of social
capital could be internalized, it would come to exist in greater quantity.
The public goods quality of most social capital means that it is in a
fundamentally different position with respect to purposive action than are
most other forms of capital. It is an important resource for individuals
and may affect greatly their ability to act and their perceived quality of
life. They have the capability of bringing it into being. Yet, because the
benefits of actions that bring social capital into being are largely experienced
by persons other than the actor, it is often not in his interest to
bring it into being. The result is that most forms of social capital are
created or destroyed as by-products of other activities. This social capital
arises or disappears without anyone's willing it into or out of being and is
thus even less recognized and taken account of in social action than its
already intangible character would warrant.
There are important implications of this public goods aspect of social
capital that play a part in the development of children and youth. Because
the social structural conditions that overcome the problems of supplying
these public goods-that is, strong families and strong communities-are
much less often present now than in the past, and promise to
be even less present in the future, we can expect that, ceteris paribus, we
confront a declining quantity of human capital embodied in each successive
generation. The obvious solution appears to be to attempt to find
ways of overcoming the problem of supply of these public goods, that is,
social capital employed for the benefit of children and youth. This very
likely means the substitution of some kind of formal organization for the
voluntary and spontaneous social organization that has in the past been
the major source of social capital available to the young.
CONCLUSION
In this paper, I have attempted to introduce into social theory a concept,
"social capital," paralleling the concepts of financial capital, physical
capital, and human capital-but embodied in relations among persons.
This is part of a theoretical strategy that involves use of the paradigm of
rational action but without the assumption of atomistic elements stripped
of social relationships. I have shown the use of this concept through
demonstrating the effect of social capital in the family and in the community
in aiding the formation of human capital. The single measure of
human capital formation used for this was one that appears especially
responsive to the supply of social capital, remaining in high school until
graduation versus dropping out. Both social capital in the family and
social capital outside it, in the adult community surrounding the school,
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Social Capital
showed evidence of considerable value in reducing the probability of
dropping out of high school.
In explicating the concept of social capital, three forms were identified:
obligations and expectations, which depend on trustworthiness of the
social environment, information-flow capability of the social structure,
and norms accompanied by sanctions. A property shared by most forms
of social capital that differentiates it from other forms of capital is its
public good aspect: the actor or actors who generate social capital ordinarily
capture only a small part of its benefits, a fact that leads to underinvestment
in social capital.
APPENDIX
TABLE Al
LOGISTIC REGRESSION COEFFICIENTS AND ASYMPTOTIC STANDARD ERRORS FOR
EFFECTS OF STUDENT BACKGROUND CHARACTERISTICS ON DROPPING OUT OF HIGH
SCHOOL BETWEEN SOPHOMORE AND SENIOR YEARS, 1980-82, PUBLIC SCHOOL SAMPLE
b SE
Intercept ................................................ -2.305 .169
Socioeconomic status .................. ..................... -.460 .077
Black ................................................ -.161 .162
Hispanic ................................................ .104 .138
Number of siblings .................... .................... .180 .028
Mother worked while child was young ...... ................. - .012 .103
Both parents in household ............ ...................... -.415 .112
Mother's expectation for college .......... ................... -.685 .103
Talk with parents . ......................................... .031 .044
Number of moves since grade 5 .......... ................... .407 .040
SOURCE.-Taken from Hoffer (1986).
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