3.2  Norms and Institutions

Social norms are most commonly contrasted with the formal institutions of the State, which are created in a centralized, deliberate manner, and which act to coordinate expectations through the use of coercive powers imposed by a common third party. The limits on the effectiveness of social norms – in terms of the complexity and scale of interactions they can regulate – have been suggested as a reason for the existence of government. Nevertheless, social norms retain an important role in advanced societies.

Of most interest in the current context are the interactions between social norms and the effectiveness of formal government institutions. [6]

Social norms and formal state institutions interact in a variety of ways. [7] For instance, informal social norms might pre-date formal laws, but, once they are widely observed, may be reflected in and reinforced through formal codification in law. A law supports a norm through supplementing private enforcement with the formal enforcement mechanisms of the state. The law may also add credibility to a norm by signalling the seriousness with which society views an issue. The presence of an effective legal framework means that less reliance needs to be placed on informal social norms and generalised inter-personal trust (a scarce commodity) to “enforce” agreements.

On the other hand, laws ultimately require support from social norms if they are to be effective. This is the fundamental explanation for the failure of the “rule of law” in many countries where the formal laws are not at all observed in practice. Social norms play a role in generating and sustaining commitment to a society’s institutional structures – in other words, norms play an important role in building social cohesion. [8] For example Norms may proscribe anti-social activity, such as crime and the avoidance of social and citizen responsibilities (e.g. tax evasion, abuse of the benefit system). Norms may foster a sense of responsibility amongst individuals for their own future, and for the impacts of their actions on others, particularly in their families and local communities. [9] Norms of fairness and reciprocity act to coordinate expectations, and to limit the scope for conflict. A norm of generalised interpersonal trust can act to create a willingness to give people some “benefit of the doubt” in social, political and economic interactions when those people are neither directly known nor known through mutual acquaintance.

The law typically defines expected behaviour with greater clarity than an informal norm. However, while a law may add clarity to a norm over the domain covered by the law, this clarity may be gained at the cost of suggesting that conformity with the law is the limit of one’s social obligations. Externally imposed laws may undermine the emergence or viability of informal social norms, especially where there is weak enforcement of the law. Ostrom (2000) has also argued that there is evidence that norms have a certain staying power in encouraging the growth of the desire for cooperative behaviour over time, whereas cooperation enforced by externally imposed rules can disappear very quickly.

Laws and norms may be mutually self-supporting because they have complementary strengths and weaknesses. Social norms are often best at preventing numerous small infractions where the cost of enforcement is low. Laws often function best to prevent infrequent but serious infractions where the cost of enforcement is high.

The law may provide the backdrop against which individuals negotiate bilateral or multilateral arrangements, in the manner envisaged by Coase (1960). On the other hand, in some situations the formal legal situation may be unknown or misperceived by individuals, who nevertheless develop informal social norms to regulate behaviour. [10]

Customary law represents a hybrid between informal social norms and formal, state-supplied law. [11] In a number of countries customary law governs much of everyday social and commercial life, especially in rural communities. It is often imposed through formalised processes – and may be recognised in Statute law. In New Zealand, Maori customary law has force in some spheres, such as land ownership and adoption.

The common law also represents a hybrid between state-supplied law, and informal, decentralised social norms. The common law is not codified, can transcend national boundaries, evolves over time and has its foundations in customary practices. For instance, courts may look to informal business customs to flesh out incomplete contracts.

Government institutions may play a role in the evolution of fairness norms. Gorringe (1995) has suggested that the actions of public institutions can improve “framing effects” by influencing perceptions of fairness through changing the context in which issues are presented. [12]

A good enabling environment for civil society (e.g. civil liberties) creates the space for social bonds to be created in the non-government sector. For example, voluntary membership of like-minded individuals in groups working together for common ends assists the evolution and maintenance of social norms. In turn, an effective civil society – such as an active media, and well-informed Non-Government Organisations - can generate pressure for more effective and accountable government.

An effective legal framework establishing property rights and supporting the functioning of markets facilitates voluntary economic exchanges, thereby contributing to the development of norms such as fair dealing and trust.

Constitutional conventions, such as the doctrine of ministerial responsibility, can be viewed as social norms that guide the legitimate use of coercive power by government. They represent an important check on the potential abuse of power by the executive. [13]

3.3  The Span of Norms

An important dimension of social norms is the extent to which they span sub-groups in society. Inter-group relations might be extensive, and be based on a high level of shared norms and values. Alternatively, there may be limited interaction between different sub-groups, and a relatively low level of shared norms and values.[14] In the latter case, cohesion would presumably require that the norm of tolerance of diversity at least should be widely shared.

This in turn leads to recognition that people are to some extent able to choose between alternative norm communities – although there are clearly constraints on such choices. But a legal framework protecting individual rights and freedom of association creates the space for like-minded individuals to establish networks and organisations and to conduct their affairs in terms of mutually-supported norms. The fall in the costs of communications means that cross-country forms of association are increasingly prevalent, and some norms - such as individual rights and democracy - increasingly international in their domain.

3.4  The Negative Side of Social Norms

There are also, however, potential tensions between social norms, institutions and well-being. For example, a strong, widely shared social norm such as gender-defined limits on behaviour is likely to conflict with equality of opportunity. Depending on the perspective adopted (i.e. the outcome desired), such norms might be regarded as negative social capital, or excessive social cohesion. Norms amongst a sub-group or sub-culture might be seen from a national perspective as illegitimately restricting individual rights, and national laws might be motivated in part to constrain such sub-group behaviour. A widely shared norm, such as the importance of social conformity, may contribute to a number of positive outcomes (e.g. low crime), but may entail some loss of individual freedom of lifestyle choice. At some point, widely shared perceptions, and norms of solidarity may reduce openness to new ideas. Diversity can have value in stimulating competition and providing a variety of sources of new ideas.

There is, in addition, a dynamic aspect to social norms. At one time, the strong ties within an ethnic community may provide access to capital and information that assist with the formation of small businesses. Subsequently, norms of obligation to fellow group members may restrict individual advancement.[15]

Furthermore, there are some forms of social norms that, while positive for group insiders, may be negative for the overall society, and therefore detract from social capability and overall well-being. Informal norms can help to increase the effectiveness of close-knit groups, such as criminal gangs, but produce negative outcomes for the broader society. In less extreme cases, social norms in some sub-groups – such as youth peer groups – can encourage activities which are unlikely to be in the best interests of young people – such as dropping out of school, excessive risk-taking, or substance abuse.

There may also be multiple equilibria. Trust breeds trust, while distrust can be extremely difficult to break down because of the typical absence, in a situation of distrust, of the social interactions required if people are to adjust their perceptions. [16]In this situation path dependence is a feature, and the time frames involved in the evolution of social norms are in general likely to be long. On the other hand, Sunstein (1996, p. 912) argues that there can be a large discrepancy between people’s private judgements, and the judgements and behaviour they display in conformity with social norms. “For this reason current social states can be far more fragile than is generally thought, and small shocks can produce widespread changes in behaviour.” Sunstein cites the collapse of communism and apartheid, and, in the US, changing views on issues such as smoking in public places, as evidence that, on occasions, social norms can change rapidly.

3.5  Role of Government in Fostering the Evolution of Social Norms

Governments can encourage positive social norms through their own behaviour in important ways. International evidence suggests that a fundamental test of a country’s ability to support living standards and well-being at the level of the OECD is its rigorous and consistent adherence to the rule of law (see Section 4 below). Transparency, accountability, integrity, and procedural fairness in the actions of governments, politicians, and the civil service all seem to play an important role in supporting the same behaviours throughout the wider society.

It is also fundamentally important that governments provide an effective enabling environment for social and economic exchanges, for the establishment of family relations, and for the functioning of civil society, so as to facilitate decentralized interactions and the emergence of social norms in these spheres of activity.

Government also plays a pervasive role in disseminating information designed to influence individuals’ perceptions and therefore their decisions, and over time, to influence social norms. An example is the providing of information on the health hazards of smoking, or on road safety.

Beyond this, views differ sharply on the legitimacy and/or the effectiveness of government in actively attempting to shape or re-shape social norms and values. As Fukuyama has noted, views on how social norms originate tend to follow views on where they should come from. Libertarians consider that norms emerge from spontaneous decentralised social interaction – with transactions in markets being seen as an important source - and see little or no role for government in trying to lead the way through “social engineering” or undesirable paternalism. Libertarians also point to frequent episodes of extreme nationalism promoted by governments as evidence of the serious risks posed by official attempts to re-shape social norms. Social democrats, on the other hand, view norms as emerging from hierarchical structures and see a central role for the state in shaping and re-shaping them. [17]

A middle ground and the perspective adopted in this paper - is occupied by those who consider that, while there are serious risks in government attempting to play a very active, wide-ranging or coercive role, there may be some legitimate avenues, nevertheless, through which the government can, and should, attempt to foster the evolution over time of socially-beneficial norms and values. This position is conditional, however, on the specific details of the intervention concerned. Inappropriate or ill-conceived initiatives in this area risk lowering well-being rather than increasing it. This issue is returned to in Section V below.