Social Capital and Consumption among Agricultural Households

This paper develops a life cycle model for agricultural households in which social capital is a fixed input into household production. The intertemporal solutions of the model yield four results that are consistent with recent empirical and qualitative literature on social capital and consumption among agricultural households: commodity consumption will rise for an agricultural household in a village where public social capital is increasing - even if the household itself has invested little in their own accumulation of social relations; increased inequality within villages is associated with lower social capital; public social capital will decrease significantly in the presence of migration of young from rural communities; and current consumption levels will be less sensitive to increases in income uncertainty when social capital is increasing. The paper uses information on agricultural households in Tanzania to illustrate the model.