Credit: Courtesy of Radha Jagannathan

Radha Jagannathan and Michael Camasso have been research partners for nearly three decades. Their novel study with European colleagues on social capital grew out of a Fulbright fellowship.

When an economy is stuck in the doldrums, conventional wisdom typically points the finger at the usual suspects: tightfisted banks, ineffective financial regulators, and whatever misguided political party is running the show.

Researchers Radha Jagannathan and Michael Camasso think the answer is more complex. Low-wattage entrepreneurial behavior on the part of individuals – or even whole regions – also contributes to the stagnation, they contend, while prosperity ultimately depends on both people and institutions.

While teaching on Fulbright scholarships this past summer – Jagannathan in Germany and Camasso in Italy –  their work on individual social capital, so-called "soft skills," such as trust in outsiders, teamwork, and risk-taking, caught the attention of European colleagues who are joining them in a novel study on social capital’s connections to economic outcomes.

Starting this spring, the researchers will begin surveying hundreds of young people and their parents in Italy, Germany, Switzerland, and the United States on the decision-making behind career choices and living arrangements, as well as their views on the trustworthiness of institutions ranging from banks and municipal courts to churches and families.

"The European Union is interested in how entrepreneurship develops," said Jagannathan, associate professor of urban planning and policy development at the Edward J. Bloustein School of Planning and Public Policy, whose scholarship took her to the University of Konstanz.  "And the Fulbright Commissions in Italy and Germany are pleased that we are cooperating on what they see as a valuable line of research."

Camasso, a professor of agricultural and resource economics at the School of Environmental and Biological Sciences, observed the connections between regional culture and economic output firsthand while teaching at the University of Catania in Sicily.

Sicilians, he noted, typically establish smaller, family-run enterprises, while Germans and Swiss are more comfortable forming – and working for – both large and small companies.

"The soft skills the southern Italians learn, such as trust and cooperation, influence relations with the immediate and extended family, but they don't typically stretch beyond that to the larger society. Where there is lack of trust in outsiders and in institutions like banks, businesses don't expand," he said, adding, "We'll be asking these young people what they're learning at the dinner table."

What drives economic activity – and entrepreneurship and self-sufficiency in particular – is of growing interest to developed nations with large numbers of workers on the public payroll and major demographic shifts under way.

Governments want to understand why young people gravitate toward public jobs and not into private sector businesses and why they aren't taking economic risks. “It takes six or seven times more money to finance a public job than a private one,” Camasso said. “With aging populations, there are not enough people working. Going forward, these countries need to be able to generate enough wealth to supply services."

If the researchers can understand the points at which trust levels of individuals and the trustworthiness of institutions intersect, they can begin to disentangle the chicken and egg conundrum that has plagued many social capital analyses: Is it individuals we must change first or do we first work on modifying institutions? The answers - and policy prescriptions - may vary from region to region, they say.

In a partnership spanning nearly three decades, Jagannathan and Camasso have appraised social welfare policies with scientific precision, measuring their impact on diverse aspects of peoples' lives, from employment to fertility to mental health. They are increasingly intrigued, however, by the role that social skills play in determining success or failure.

Their interest in the topic was sparked more than 25 years ago when they first began evaluating worker training programs, before either had earned a Ph.D.

"Investments in human capital, hard skills such as education, are not sufficient. To thrive, you also need soft skills, like trust and the ability to contribute to a team," Jagannathan said.

Clear deficits in social capital, like yelling at the boss or showing up at interviews in revealing clothing, seem obvious enough, Camasso said. But more subtle skills, such as dependability and adaptability, can be difficult to teach once people have reached adulthood.

"The return on investment is quite low,” he said, of job training programs for dislocated workers, for example. "So we've begun looking at developing programs for younger kids and at long-term development of social capital."