Women’s Empowerment and the Creation of Social Capital in Indian Villages WENDY JANSSENS * VU University Amsterdam, The Netherlands Summary. — Community-based development projects are often argued to strengthen social capital. This paper investigates the impact of a women’s empowerment program in India on trust and cooperation, using data on 2,000 households. The program significantly in- creases trust and stimulates contributions to educational and infrastructural community projects. The effect on informal assistance among households is less consistent. The findings suggest substantial spillovers on the wider community. Households who do not par- ticipate in the program themselves but who live in a program village are significantly more trusting and more likely to engage in collective action than households in control villages. Ó 2009 Elsevier Ltd. All rights reserved. Key words — women’s empowerment, social capital, impact evaluation, cooperation, Asia, India 1. INTRODUCTION The involvement of local communities in project design and project management is a growing trend in development coop- eration (Pritchett & Woolcock, 2004). The so-called participa- tory or community-based development (CBD) approach is claimed to have many advantages compared to traditional, top-down development programs (Grootaert & van Bastelaer, 2002; World Bank, 2000, 2002). Among them, participation in projects would enhance social interactions, increase trust be- tween community members, and further strengthen their pro- pensity to engage in collective action. If such projects are indeed able to generate social capital, their impact might mul- tiply over time as communities become increasingly empow- ered to take matters in their own hands. Social capital in this context refers to the trust and shared norms of behavior that arise within informal social networks and that generate externalities for the members of a group (Durlauf & Fafchamps, 2004). It influences the resources that an individual can mobilize through his or her social network (Woolcock & Narayan, 2000) and the propensity of commu- nity members to engage in collective action (Ostrom & Ahn, 2002). Social capital is considered as an umbrella term that covers a variety of aspects of social organization, analogous to human and financial capital (Coleman, 1990). “Cognitive social capital” encompasses shared trust, norms, and values, which are based on mental processes and often difficult to ob- serve. Social networks, informal organizations, or voluntary associations on the other hand are components of “structural social capital,” which is more easily observed and hence has received most attention in empirical work (Uphoff, 2000). This paper adopts a behavioral approach to social capital as an essential concept in explaining why cooperation arises in some situations, but fails to materialize in others. The paper specifically focuses on trust and on cooperative behavior as an important source and a manifestation, respectively, of so- cial capital. 1 In his seminal work The Logic of Collective Action, Olson (1965) convincingly described the social dilemma inherent to collective action. Free-riding problems, often described in terms of a prisoner’s dilemma, lie at the core of many theories that explain the absence of cooperation. In reality however, behavior often deviates from the assumptions of strong ratio- nality and self-interested utility-maximization (Ostrom, 1998). A number of systematic findings from experimental economics support this less pessimistic view. For example, experimental trust games reveal that people generally show substantial lev- els of trust toward others, and that this trust is often rewarded (Cardenas & Carpenter, 2004). Likewise, cooperation in one- shot public good games is much more prevalent than that the theory predicts. This is found in communities from Pa- pua-New Guinea to Zimbabwe to Belarus (Barr, 2001; Gaech- ter, Herrman, & Thoeni, 2004; Henrich et al., 2001), as well as in many industrialized countries (Fehr & Schmidt, 1999). Trust in others can help to overcome the prisoner’s dilemma inherent in social dilemmas. It reflects the expectation that others will not betray you or cheat you for their own benefit (Ostrom, 1998; Ostrom & Ahn, 2002), opening the door to cooperative outcomes. Trust can grow and be destroyed: indi- viduals regularly adopt their beliefs about others based on past experiences. If a CBD project successfully joins members of a community in cooperation, it seems likely that they will trust each other to do so again at the next opportunity. Thus, trust and cooperative behavior are interdependent and mutually beneficial. Abundant field evidence shows that trust and cooperation are positively correlated (e.g., Ostrom, 1990; Platteau, 2000), although the direction of causality is more difficult to estab- lish empirically. However, despite the growing budgets devoted to CBD projects, surprisingly few quantitative eval- uations exist to support the claim that CBD projects can * The author is very grateful to Jacques van der Gaag and Jan Willem Gunning for their continuous support and detailed comments, as well as to Jean-Philippe Platteau and Simon Gaechter for their very helpful su- ggestions. She greatly appreciates the discussions with Marleen Dekker, Arjun Bedi, Jetske Bouma, and other seminar participants at the NAKE workshop in Maastricht, the Institute for Social Studies in The Hague, the Sunbelt Conference in Los Angeles, the Dutch Ministry of Development Cooperation, and the EAEPE conference in Istanbul. Special thanks are due to the Mahila Samakhya program in Bihar for its cooperation and hospitality, and in particular to Shantwana Bharti for the many inspiring discussions. Final revision accepted: December 3, 2009. World Development Vol. 38, No. 7, pp. 974–988, 2010 Ó 2009 Elsevier Ltd. All rights reserved 0305-750X/$ - see front matter www.elsevier.com/locate/worlddev doi:10.1016/j.worlddev.2009.12.004 974