SOCIAL CAPITAL TO STRENGTHEN

ENVIRONMENTAL COLLECTIVE ACTION IN INDONESIA1

Alin Halimatussadiah2
Budy P. Resosudarmo3
Diah Widyawati2

ABSTRACT
Social capital is considered to be an important factor in economic development. It is argued
that it generates a flow of (economic) benefit through collective action, by reducing free
riding and increasing individual contribution. This study examines whether social capital
increases individual contribution in an environmental collective action problem. Two methods
are applied: econometric model using survey-based data IFLS (Indonesia Family Life Survey)
and the experimental method. In the first method, we use probit and logit estimation for crosssection data of the last waves of IFLS (2007) and fixed effect estimation using the last three
waves of IFLS (1997, 2000, 2007). Trust and civic network are used to proxy social capital,
and environmental collective action measured by participation in kerja bakti. The second
method is a classroom experiment with two games conducted sequentially: a trust game to
measure level of trust as a proxy of social capital- and a public goods game to measure
individual contribution in collective action. The public goods game is framed by community
environmental problem: unpicked trash. In the public goods game, we apply some treatments
to look at the impact of partial disclosure of a group members behavior in the trust game on
contribution in the public goods game. In general, the results from the two methods show that
the level of social capital positively impacts individual contribution in collective action.
However, from the experiment method we found no significant evidence to support the
impact of partial disclosure of a group members behavior in the trust game on contribution in
the public goods game.
Keywords: Social Capital, Collective Action, Trust Game, Public Goods Game,
Environmental Protection
JEL Classifications: C72, C91, C92, Z13

1. INTRODUCTION
While developed countries enjoy reliable waste collection services of up to 100 percent, many
underdeveloped and developing countries still struggle to provide with over 50 percent of
such services. Take Burkina Faso (2009) for example, with coverage of just 9 percent. Or
Madagascar (2007), with just 18 percent and Guatemala (2006), at 22 percent4. In Indonesia,

1

This paper is based on Summary of Dissertation, presented at the Final Defense Exam, 20 August 2013.
Department of Economics, Faculty of Economics University of Indonesia
3
Arndt-Corden Department of Economics, Crawford School of Public Policy, Australian National University
2

http://unstats.un.org/unsd/environment/municipalwaste.htm. Retrieved 6 August 2013. Last updated in March 2011.

the figure is not encouraging either, with waste collection services coverage (2008) at 56
percent (AusAID, 2011).
The inability of local governments to regularly provide with solid waste management services
has led to an increase in environmental, sanitation and health problems. Waste is dumped in
open space, on access roads and along watercourses. Scavengers and animals scour through
these garbage dumps. Flies, rats and other animals leave their own waste in those dumps,
which then become breeding grounds for disease vectors. Soil and nearby water, precipitation
that percolates through waste and generates leachate from decomposing garbage leads to
negative environmental consequences. Drains blocked by solid waste leads to the stagnation
of water, further encouraging the breeding of mosquitoes, increasing health risks like malaria
and dengue fever (UN Habitat, 2010).
Empirical studies have found the possibility of community involvement in waste management
at local levels in India (Chakrabarti, et al., 2009; Rathi, 2005), Thailand
(Mongkolnchaiarunya, 2005), and Bangladesh (Pargal et al., 1999). Not only did community
participation resolve uncollected waste problems at the local level, Rathi (2005) also showed
that community participation in Mumbai yielded lower costs of waste collection per ton
(USD$35), compared to waste collection through public private partnership (USD$41), and
via the local government at municipality level (USD$44).
In Indonesia, Pasang, et al. (2007) found that neighborhood associations5 play a critical role in
waste management in Jakarta. These neighborhood associations manage the collection of
waste and transport it to the nearest dumpsite to be collected by local government trucks.
Survey literature by Anschutz (1996) also points to community-based primary collection
programs in a number of areas in Indonesia. He tells of success stories in the Pajeksan village
of Yogyakarta, Parupuak Tabing and Lapai villages in West Sumatra, and the Pacar Keling
village in Surabaya. These are all low-income areas located either in the city center or in the
peripheral region.
In other locations, activities were not just limited to collection, but also the processing and the
treatment of the waste. In some urban areas, such as near the Ciliwung river area of Jakarta,
and in the West Java capital of Bandung, Bank Sampah6 emerged as a community initiative.
Households manage and separate their organic garbage from the inorganic, then sell the waste
to Bank Sampah where it will be resold again to other agents. This particular initiative is not
only about waste collection, but exhibits efforts at sustainable neighborhood environment
management through the reuse, composting and the recycling of waste efforts that are
expected to cut the amount of solid waste by 50 percent. Through such an initiative, extra
cash can be obtained from the buying and selling of waste (Nugraheni, 2013). Today, there

5 Neighborhood associations are sub-level, below subdistricts (kelurahan), and consists of RW (Rukun Warga) and RT (Rukun Tetangga).
One RW consists of several RT and one RT covers about 50 households. The community chooses their head of RT and RW through their
forum or they vote. RT and RW administrators usually work on a voluntary basis. RT and RW become government tools to care for the
administrative needs of a village, including those linked to government regulations or development programs.
6
Bank Sampah literally means garbage bank.

are 1,195 Bank Sampah initiatives across 58 districts in Indonesia, empowering 106,000
workers and generating a monthly revenue of IDR 15.7 billion7.
So what drives a community to form a collective action to resolve local problems? A study by
Oliver (1984), Granzin & Olsen (1991), Bwalya (2004), Beard (2005), and Chakrabarti et al.
(2009) analyzes the individual characteristics that affect contributions in a collective action.
Considering how social context fits into the analysis of collective action becomes important
for the following reason:
In a collective action problem, there is the social dilemma where an individual benefits
largely from collective services or goods without contributing anything to it this individual
is known as the free rider. Categorized as a public service, waste management, to some
degree, has non-excludable and non-rivalrous characteristics: we cannot exclude people from
enjoying this public service and all receive the same benefits every time the service is used. In
essence, free riding exists in this case since everybody tries to utilize this public service
without paying or contributing anything.
Looking at evidence where cooperation to provide collective goods voluntarily existed, many
analyzed the kinds of social context other than individual characteristics that induces
collective action. The analyses pointed to several factors, including interaction among
community members (Siyaranamual, 2013; Duffy & Ochs, 2009; Cason & Khan, 1998),
social preference (Andreoni, 1990, 1995), institutions or formal and informal values built into
the community e.g. social sanctions (Fehr & Gachter, 2000), norms of reciprocity among
community members (Fehr & Fischbacher, 2004; Lubell & Scholz, 2001; Pfeiffer et al., 2005;
Keser & van Winden, 2000), and trust (Bouma et al., 2008; Sene, 2013; Gachter et al., 2004;
Carpenter et al., 2006); with most using the experimental method.
In general, the factors mentioned above could be merged into a singular concept, labeled
social capital. Putnam (1995) refers to social capital as features of a social organization such
as networks, norms and social trust that facilitates coordination and cooperation of mutual
benefits. Similar to Putnam, Fukuyama (1997) defined social capital as the existence of
certain informal values or norms shared among members of a group that permit cooperation
among them.
In Indonesia, collective action can be found in gotong royong or mutual assistance. Gotong
royong is a key element in the Indonesian system of political and cultural powers.
Gotong royong in the strict sense of the term can be referred to as collective social activities.
But the deepest meaning of gotong royong can be explained as a philosophy of life that takes
the collective life as the most important. The philosophy of gotong royong is now part of
Indonesian culture, because gotong royong is not the property of a particular ethnic group.8
Gotong royong is the idea and practices of reciprocity, which is the important feature of social

7
8

http://www.antaranews.com/berita/383961/bank-sampah-hasilkan-rp157-miliar. Retrieved 16 July 2013.

Sinar Harapan, June 22, 1984, p.6, as translated in Bowen (1986).

capital (Bowen, 1986). Gotong royong not only explains the term collective action, but also
social capital. Collective action can be seen from the implementation of the gotong royong
concept, and social capital can be seen from the philosophy of gotong royong, which puts
social interests above the individual interest.
Although the concept of gotong royong is rooted in Indonesian society, its formalization and
utilization for social development programs began during the Suharto era. It is linked to the
village system in Indonesia (Junus, 1969). In Gayo, Aceh, the term gotong royong carries a
specific meaning of cleaning the village together in the morning, before Friday prayers
(Bowen, 1986).
The operationalization of social capital can be traced through the existence of local
associations. In Indonesia, social service groupings are the most important type of local
association which absorbs 27.3% of all membership, followed by finance and credit
groupings, religious groupings and governmental affairs groupings. Among social service
groupings, PKK (Pembinaan Kesejahteraan Keluarga), a national organization for
Indonesian housewives, is most important (Grootaert, 2001).
Then there are the community-based organizations in Indonesia which are partly established
by the state (PKK, Posyandu9); others are originally formed by communities and exist outside
government jurisdiction (arisan or rotating credit schemes, Jumat Kliwon in Java, subak in
Bali and nagari in West Sumatra); and some are hybrids of the state and indigenous
organizations (siskamling managed by neighborhood associations) (Beard, 2005).
In Indonesia, numerous studies have been conducted to look at the relations linking social
capital and a number of quality of life indicators, such as health (Miller et al., 2006;
Sujarwoto & Tampubolon, 2011), poverty and welfare (Grootaert 1999, 2001; Tampubolon,
2007).
But we have hardly found a study on how social capital affects collective action in Indonesia.
This study is important since social capital influences well-being through its effect on public
goods provision (Putnam, 2000). Ostrom and Ahn (2007) suggested that social capital induces
collective action. Through collective action, voluntary provision of public goods may occur.
The challenge in conducting an empirical study on how social capital induces collective
action lies with the measurement of social capital as well as collective action. Social capital is
a broad concept and to determine variable(s) representing this concept requires a lot of
understanding. Another problem is the availability of the data that fits our concept. If there is
no data to represent our variable, then we have to make do with a proxy.
From the broadly used questionnaire to measure social capital in many empirical studies,
there are serious concerns that survey-based measures of social capital are not meaningful

9

Community service for health and family planning

(Anderson et al, 2004) and have limitations (Durlauf, 2002). Glaeser et al. (2000) found that a
survey on trust only explains trustworthiness but not trust behavior. This concern arises
because of the different features of measurement. In a survey, the value on trust is obtained
from self-reported values which are vulnerable when it comes to a respondents memory and
relative judgments among respondents. The value is also vulnerable to consistency of the
valuation of trust across different time series for an individual.
The same problems with measurement can occur in estimating contributions to collective
action. Cummings et al. (1997) conducted a real and a hypothetical referendum on the
willingness to pay for a guidebook for citizens which provides information on contaminated
groundwater. The measurement results from the real and the hypothetical referendums were
not the same. In this case, the experiment to estimate individual contributions for the
provision of collective goods becomes important.
This dissertation consists of three independent essays. In the first essay, the aim is to elaborate
the link between social capital and collective action. It starts with a description of the
collective action problem, what factors affect cooperation, and what role does social capital
play in inducing collective action. This first essay will help provide a better understanding of
the second and third essays.
In the second essay, empirical methods using econometric model are used to enrich the
empirical study on social capital and collective action. The collective action variable is
presented through whether or not individuals engage in kerja bakti. The significance of this
study relies on the measurement issue of social capital. We do not only use social capital
measurements at the level of the individual, but also at the level of a community/ region,
using two variables: trust and civic network. Arisan is put in the model to control the social
capital variable as it represents a community network that originally exists in Indonesia.
The third essay is about the conducting of the experimental method. In Indonesia, the
experiment is rarely used. Just a few can be mentioned on targeting the poor (Alatas, 2010)
and monitoring corruption (Olken, 2007). This study becomes one of the few studies that uses
the experimental method, and is expected to promote the use of this method in other fields of
study. Specifically for this dissertation, the experiment is used to overcome the potential
problem of measurement errors and simultaneity that may occur in constructing the social
capital variable for the empirical study detailed in the second essay.
In this experiment we gathered two kinds of data on social capital: observed behavior and
self-stated survey. It will be useful to compare how the two different kinds of data work in
accordance to their function as factors influencing contribution in collective action. The
debate on the use of these two kinds of data is discussed in Glaeser et al. (2000), Anderson et
al. (2004) and Durlauf (2002).

It is relevant to conduct this study in Indonesia because a concept similar to social capital
which induces collective action is rooted in Indonesian society. Hence, the utilization of such
a concept becomes important because social capital already exists and is ready for use.
The result of this study also has important policy implications in terms of understanding the
contribution of social capital to encourage a community toward making collective actions and
how self-governed solutions can emerge something which is very useful for policy analysis
(Cardenas and Ostrom, 2004). Policymakers need to recognize the importance of social
capital and use the potential of social connections to support government policy and social
goals. The knowledge of how a society can perform collective actions is also important for a
government, so that the latter has the option of choosing when to intervene in order to resolve
a collective problem in the case a society is unable to do the job on its own. Through this, the
social structures of a society can be strengthened, and the local government can implement
appropriate policies that shall not weaken existing social capital.

2. THE LINK BETWEEN COLLECTIVE ACTION AND SOCIAL CAPITAL

Three explanations describe the collective action problem. First is the seminal works of
Garrett Hardin published in the journal Science (1968) which tells of a social dilemma in The
Tragedy of the Commons. In this model, Hardin suggests that degradation of the environment
would occur when many individuals, for their own self-interest, rationally cause the depletion
of a shared resource. This degradation could be seen as collective problem and occurs due to
self-interest, when individuals knowingly overexploit open access shared resources.
The second is the argument made by Mancur Olson (1965, 1971) in his book, The Logic of
Collective Action. Olson (1965) suggests that rational, self-interested individuals will not
act in large groups to further their common or shared interests unless they are induced to do
so by coercion or by some separate and selective incentives. Collective goods are nonexcludable, so there is no incentive to provide them privately, which leads to suboptimal
conditions no one will provide the goods. Also, the larger the group, the incentive for free
riders to take advantage of collective goods increases.
The third explanation can be found in the game, The Prisoners Dilemma. It illustrates two
prisoners who jointly participate in a crime. Prosecutors interrogate each suspect in different
rooms, seeking a confession, as prosecutors lack evidence. The two suspects could cooperate
with each other and refuse to give evidence, or one could implicate and betray the other. The
problem is that each suspect has no way of knowing what his or her partner will tell
prosecutors. Therefore, each suspect has an incentive to betray, regardless of what he or she
believes the other party will do.
The Prisoners Dilemma tells of a situation in which there are gains from cooperation if both
of them choose the action to not confess. However, each player has the incentive to
confess whatever the other player has allegedly done. The Nash Equilibrium solution of this

problem is for both these suspects to confess (1,1). This solution explains that because of the
tendency to betray, an individual with rationale and self-interest motives cannot achieve joint
benefits, which is higher (2,2). Voluntary provision of public goods could also use this
framework. The tendency to betray is the same as that of a free ride. Because of the tendency
to free ride, one cannot achieve the joint benefits - which is higher (2,2) - than if all were to
become free riders (1,1).
Figure 1. The Prisoners Dilemma
Suspect 2

Suspect 1

Not
Confess/Cooperate

Confess/Defect

Not
Confess/Cooperate

2,2

0,3

Confess/Defect

3,0

1,1

Note: Figures represent utility/payoff of each suspect (1,2).

The higher the utility means the lower the punishment (years in jail).

The three models suggest that cooperation is unlikely to happen. Is cooperation never formed
then? Runge (1984) developed on the assumption that if there was some kind of contract that
ties the agents, cooperation could occur. Agents also tend to opt for a cooperative strategy
during plays of a game that is repeated for an infinite number of times infinite horizon
games. Assuming the game is repeated for a possibly infinite number of times, an agent who
deviates from this cooperative strategy will be punished by other agents.
Moving toward possibilities of cooperation, by getting rid of the assumption that all people
exclusively care only for their self interests, we can understand conditions for successful
collective actions (Fehr and Fischbacher, 2002; Ahn et al., 2003). The important features of
social preference is that an agent does not only care about the material resources allocated to
him but also cares about the material resources allocated to relevant agents. An agents utility
function depends on his or her own and all other agents utilities. An important type of a
persons social preference is the preference of reciprocity or reciprocal fairness: a reciprocal
individual will reciprocate kindly to kind mannerisms, and with hostility to hostile
mannerisms. Such people are referred to as conditional cooperators. Other kinds of social
preferences are inequity aversion, pure altruism and envious preferences. The heterogeneity
of peoples motives have to be considered in order to analyze a cooperative action problem
(Fehr and Fischbacher, 2002; Ahn et al., 2003). On the empirics, Fehr and Fischbacher
(2004) showed that about 50% of the participants in the Prisoners Dilemma experiment on
public goods are conditional cooperators. Conditional cooperators are people who are willing
to contribute more to a public good, the more others contribute.
Social Capital and Collective Action
Social capital functions to promote cooperation and solve collective problems (Putnam, 2000;
Fukuyama, 1997; Ahn & Ostrom, 2002). Over past decades, the idea of social capital has
been utilized in many empirical social studies. Although the fundamental idea of social

capital can be traced back in de Tocqueville ([1840] 1945 as in Ostrom and Ahn, 2003), the
term social capital was first stated by L.J. Hanifan, practical reformer of the Progressive Era
and state supervisor of a rural school in West Virginia in 1916 (Putnam, 2000). He stated that
social capital referred to:
those tangible substances [that] count for most in the daily lives of people:
namely good will, fellowship, sympathy and social intercourse among the
individuals and families who make up a social unit. The individual is
helpless socially if left to himself. If he comes into contact with his
neighbor, and they with other neighbors, there will be an accumulation of
social capital, which may immediately satisfy his social needs and which may
bear a social potentiality sufficient to the substantial improvement of living
conditions in the whole community. The community as a whole will benefit by
the cooperation of all its parts, while the individual will find in his associations
the advantages of the help, the sympathy, and the fellowship of his neighbors.
Jacobs (1961) defines social capital as neighborhood networks. It has both the individual and
collective aspects. Just as an individual invests to engage in a network that benefits himself,
social capital can have externalities that affect the wider community, so not all the cost and
benefits of social connections accrue to the person making the contact.
A well-connected individual in a poorly connected society is not as productive as a wellconnected individual in a well-connected society. Even a poorly connected individual may
derive some spillover benefits from living in a well-connected society. If the crime rate in my
neighborhood is lowered by my neighbor keeping an eye on one anothers homes, I benefit
even if I personally spend most of my time on the road (Putnam, 2000).
From the economists point of view, social capital can be defined parallel to other forms of
capital, e.g. physical capital and human capital (Lin, 1999). All forms of capital involve
investments that increase the probability of higher returns from individual and joint efforts
over a future period (Ahn & Ostrom, 2002). An individual engages to build social networks
because it has several benefits: it facilitates the flow of information, it permits the individual
to access resources in his social networks/relations and it reinforces identity and recognition
(Lin, 1999).
This does not only lead to positive consequences. Social capital can be used for negative
purposes. Therefore it is important to look at how positive features of social capital e.g.
mutual support, cooperation, trust and institutional effectiveness can be maximized and the
negative features e.g. sectarianism, ethnocentrism, corruption are minimized. This is related to
the concept of bridging (or inclusive) and bonding (or exclusive) social capital. Bonding
social capital is inward-looking and to some extent, it is necessary to reinforce exclusive
identities and homogeneity of the community. It becomes the basis of reciprocity and
mobilizing solidarity. In certain ethnic enclaves, dense networks provide social and
psychological support for its members who are less fortunate i.e. job opportunities, soft-loan

financing, etc. In contrast, bridging social capital is outward-looking and comprises of people
spanning across different social identities and status. Bridging networks is important for better
linkage to external resources and for information exchange (Putnam, 2000).
Many studies on social capital have emphasized its role to increase the quality of life, namely
health (Miller et al., 2006; Sujarwoto & Tampubolon, 2011), reduce poverty and increase
welfare (Grootaert 1999, 2001; Tampubolon, 2007). But we have to consider how social
capital brings about those factors. Putnam (2000) noted that social capital influences wellbeing through its effect on public goods provision. Ostrom and Ahn (2007) also suggested
that social capital induces collective action. Through collective action, voluntary provision of
public goods may occur.

3. EMPIRICAL STUDY ON THE IMPACT OF SOCIAL CAPITAL TO

ENVIRONMENTAL COLLECTIVE ACTION
The study described in this essay mainly aims to look at the relation model between collective
environmental action, social capital, and several individual, household and community
characteristics. Collective environmental action is measured by participation in routine
collective action in cleaning the neighborhood, called kerja bakti. In this study, collective
action covers activity conducted in a community through neighborhood networks.
In this study, we try to employ our social capital variables at the level of the individual as well
as at the level of the community. We introduce trust variable and civic network variable for
social capital. We also try to place control for our social capital variables that fits in with
Indonesian culture i.e. arisan10 variable (Putnam, 1993). Besides social capital, other factors
individual, household and regional characteristics are placed as determinants for an
individual to participate in kerja bakti.
Social capital is measured by two approaches: individual social capital and community social
capital. For the individual social capital, trust variable is measured through several questions
on trust, and civic network variable is measured from the knowledge of an individual on
existing community programs (Beard, 2005).
Community social capital is constructed as the average of the individual score for each social
capital variable (Rocco & Suhrcke, 2012; Mellor & Milyo, 2004). For example, trust in a
community level, is the average of individual trust levels in the respective community. This
measurement also holds for civic network at community level.
We model factors affecting individual contribution in environmental collective action kerja
bakti as follows:

10

Arisan is a regular social gathering that involves the regular collection of money from every member of the group. In every gathering, they
will randomly choose one member of the group that will get the whole collection of money. Every member of the group will get the money
in a single cycle of arisan gatherings.

!" = + ! !"# + ! !"# + ! !"# + ! !"# + !

Where is environmental collective action variable, k is vector of social capital variables
SC, l is vector of individual characteristics IC, m is vector of household characteristics HC
and n is vector of regional characteristics RC. Social capital variables consist of trust and
civic network at individual level and at community level. Individual characteristics consist of
education, age, gender, position as head of household, health condition, whether respondents
ethnicity is the same with ethnic majority, and as control to social capital variable, we put in
arisan whether he/she joins arisan.
Household characteristics consist of income, household members and whether the house is
owned or not. Regional characteristics consist of type of region (urban or rural), religion and
ethnic diversity, and the degree of environmental problems in the region (for waste disposal
problems). For the panel model we add dummy years.
The heterogeneity of religion and ethnicity is measured by the standard fragmentation (or
fractionalization) index used in certain literatures i.e. Alesina et al. (2002), La Ferara (2002),
Easterly & Levine (1997). This index is calculated as one minus the Herfindahl Index of
ethnic group shares (in the case of religion diversity, it is religion shares).
!
!
!"

! = 1
!!!

Where sij is the share of group i (i = 1 N) in region j. This index represents the probability
that two randomly drawn households belong to different ethnic (or religion) groups.
This study uses IFLS (Indonesia Family Life Survey) data. IFLS is an ongoing longitudinal
survey in Indonesia that has four waves of survey (1993, 1997/1998, 2000, and 2007/2008).
IFLS4 (2007/2008) has a total of 29,054 adults - household member aged 15 or older - across
12,692 households as respondents. IFLS is a multipurpose survey that collects data at the
individual, household and community level. For the purpose of this study, data is taken from
household surveys. Appendix 1 describes how each variable is constructed.
This study uses two models to test our hypothesis that social capital induces collective action.
The first model uses a binary response model of probit and logit using cross-section data of
IFLS4 (2007). The second model uses unbalanced longitudinal data of 2nd, 3rd and 4th waves
of IFLS. This model uses fixed effect estimation for the binary response model. The
estimation results for cross section and panel models are in Appendix 2 and 3.
The results show the model that is used for environmental collective action kerja bakti or a
routine collective action in cleaning the neighborhood. In kerja bakti, people clear waste
that blocks the drainage system, collect waste that is uncollectable and burn it, etc.

10

Estimation results show that social capital variables at the individual and community level trust and civic network - have a positive impact on the probability of the individual
participating in kerja bakti.
From all variables affecting the likelihood to participate in kerja bakti, civic network acts as
the most important variable at the individual level. At the mean value of 0.39, civic network
has about a 37.1 percent probability to induce the collective action, kerja bakti - much
higher than the trust variable. But at community level, the probability of trust in inducing the
collective action, kerja bakti, is higher than the civic network variable.
Some interpretations of these figures have cropped up. Existent information on voluntary
programs is important for an individual to be engaged in a collective action such as kerja
bakti. The more knowledge an individual has on varying kinds of voluntary acts, the more he
or she is likely to contribute in kerja bakti. This knowledge could represent one dimension of
social capital i.e. individual access to social networks (Lin, 1999).
Arisan is a kind of a civic network but in this model, this variable, due to its different
characteristics, separates itself from the two other individual social capital indicators. Trust is
based on the self-stated value of the respondent. The civic network variable is based on the
knowledge of or exposure to different kinds of voluntary activities. In the case of arisan, what
is measured is whether or not a person will participate in arisan activities. In contrast to those
who will not join arisan activities, individuals who do join in have a 1.1 percent higher
probability of contributing in the collective action, kerja bakti. This probability is lower than
other social capital variables either on the individual level or the community level, but it is
still noteworthy to consider.
With the individual characteristic category, education has a negative impact on the probability
to join a collective action, although the impact is quite low. This result is contradictory to the
findings of Chakrabarti (2009) and Rupasingha (1997). Beard (2005) had pointed out that in
order to participate, there are minimum educational requirements, and that people who are
highly educated are more likely to contribute their money, but not time.
Men are more likely to join an environmentally-related collective action than women: this
variable is among the most influential ones, even more so than income and several social
capital variables, when it comes to joining kerja bakti. There is a 25 percent higher
probability for men to join kerja bakti rather than women.
This may be due to the nature of the activity, which is volunteering to clean the
neighborhood. This is a physical activity and is not just about giving money or time. Men are
more likely to conduct this particular activity than women. In comparison however, Granzin
and Olsen (1991) recorded different results on the activities of donating and recycling - in
which women are more likely than men to donate and recycle - but the same results, where
men are more likely to turn up than women for walkathons linked to conservation and
environmental protection.

11

Age positively impacts the probability of individuals in joining kerja bakti, with a
diminishing marginal contribution as one gets older, with threshold age at 44 years. Studies
by Chakrabarti (2009) and Rupasingha (1997) however showed that age has a negative impact
on collective action. Meanwhile, Beard (2005) noted that individuals in the 31-45 age group
were more likely to contribute than other age groupings, which is related to his/her status as
the head/spouse of a household. The latter is consistent with this studys findings that the
head of the household has a higher probability in joining a collective environmental action.
On households, the household income has a negative impact to the probability of individuals
joining kerja bakti, with a much higher marginal effect than most control variables. As
household incomes increase, people are more willing to pay for cleanliness maintenance
services, thus shifting away from community-based activities to opt for the private sector.
The private sector sees the potential for making profits from providing cleanliness
maintenance services. With the assumption that the income generated is correlated with time
to work: the higher the income, the more the marginal value of leisure time increases. This
value could be higher when compared to the net benefits of joining kerja bakti. More time
given to work implies lesser time spent on neighborhood networks.
The status of home ownership positively impacts collective action the likelihood of
individuals joining in kerja bakti. By a 1 percent probability, individuals who own a home are
more likely to engage in a collective action than those who do not. A house is an asset that
cannot be liquidated easily and a lengthy process is required in home ownership transactions.
To live in a house owned by our own family could form certain expectations on the length of
time one plans to live there. This influences an individuals behavior when it comes to
engaging with neighbors.
In reference to home ownership, more individuals in rural areas live in homes they own
outright [87 percent] in comparison to those who live in urban areas [67 percent]. Individuals
living in rural areas have a 1.7 percent higher probability of joining kerja bakti than those
living in urban areas. Beard (2005) suggests that more social capital is found in rural areas.
Rural residents are more likely to live in their areas for a long time and thus they are more
likely to get to know their neighbors and neighboring families living in their proximity better.
This type of network has the potential to solidify trust among neighbors. On average,
individuals living in urban areas generate a higher income [IDR 6.5 million per capita per
year] almost double than the average income in rural areas [IDR 3.9 million per capita per
year]. In line with the previous assumption that a higher household income implies lesser
time spent engaging in neighborhood collective actions more individualistic concerns
prioritized this could indicate why there is lesser social capital found in urban areas than in
rural areas. Our statistics result show that even though individual trust indicator in rural areas
[0.628] slightly higher than urban areas [0.616], mean difference test show significant
different at 5% significance level. For the civic network indicator, urban areas [0.403] show
higher value than rural areas [0.373] at 5% significance level. Urban areas show slightly more
variation with the civic network indicator [std dev : 0.22] than the rural [std dev : 0.19].

12

On religions and ethnicity, people within communities with a greater diversity in terms of
religions and ethnicity are more likely to join kerja bakti. Our result is different from Alesina
& La Ferara et al. (2000), Miguel & Gugerty (2005) and de Oliveira et al. (2010). They found
that lower public goods provision is the impact of highly diverse communities. This lower
provision of public goods results from the preference for ethnic homogeneity (Alesina & La
Ferara, 2002), heterogeneous tastes for the type of collective goods across ethnic groups
(Alesina et al., 1999), and the ability to impose sanctions within ethnic groups (Miguel &
Gugerty, 2005).
However, Schundeln (2012) found that an increase in ethnic heterogeneity is associated with
an increase in the willingness to contribute to public goods. He argued that more ethnic
diversity may be associated with higher uncertainties about the expected contributions of
other individuals. This will lead to higher private contributions to public goods through the
ethnic diversity factor rather than through ethnic homogeneity.
On diversity, we found that in urban areas diversity is much greater, double than that in rural
areas. This applies not only for ethnic diversity (0.236 vs 0.117), but also diversity over
religious backgrounds (0.096 vs 0.049), even as religious diversity is smaller than ethnic
diversity. It is well-known that Indonesia is a country with a majority of Muslims (90 percent)
but that it is very diverse when it comes to ethnicities.
The second model uses fixed effect estimation. The use of this method is to overcome the
problem of the omitted variable bias and the endogeneity problem that may occur on a static
model which is presented in a cross-section model. What is shown in Appendix 3 is similar to
the main conclusion of the first model. Through these two models, the first research question
of this study has been answered. It can be safely concluded that the empirical results show
that individual social capital has an impact on an individuals willingness to contribute in a
collective environmental action.

4. TRUST TO ENHANCE ENVIRONMENTAL COLLECTIVE ACTION:

AN EXPERIMENTAL METHOD
The basic theoretical model suggests that due to an individuals self-interests, he or she will
not contribute to a collective action since the benefits from being a free rider is superior to
those obtained as a contributor. Nevertheless, empirical evidence using the experimental
method has found that cooperation among individuals could happen. How this cooperation
occurs is usually presented within a public goods game setting. From a number of
experiments on public goods, many factors have been identified to increase individual
contributions in a collective action, such as communication (Isaac et al., 1985), social value
orientation (Kollock, 1998), group identity (Orbell et al., 1988; Dawes et al., 1977), increased
identifiability (Fox & Guyer, 1978; Croson & Marks, 1998), reciprocity (Lubell & Schloz,
2001; Naugebauer et al., 2009), social interaction (Duffy & Ochs, 2009), punishment (Fehr &

13

Gachter, 2000), trust (Gachter et al., 2004) and the more broader concept, social capital
(Anderson et al., 2004; Potipiti, 2012; Leonard et al., 2010; and Chapra et al. (2008).
To overcome concerns on the measurement of social capital (Durlauf, 2002; Glaeser et al.,
2000) and contributions in collective action (Cummings et al., 1997), we introduced the
experimental method to measure both social capital and contributions in a collective action.
Trust is used as a proxy for social capital. Putnam (1995) and Fukuyama (1995, in Bouma,
2008) suggested that trust is central to the theory of social capital. Ostrom and Ahn (2007)
also mentioned that trust is the link between social capital and collective action. Trust is the
expectation about anothers trustworthiness (Ostrom & Ahn, 2003). In this concept, the norm
of reciprocity is applied. This refers to the act of the trust, when an individual entrusts
something of value to another, with the hope that the latter will reciprocate in kind.
Through the experiment, one can overcome the measurement issues and the simultaneity
problem. Measurement issues can arise from survey-based measurements of social capital due
to the self-stated value of civic engagement and trust. Simultaneity problems can arise from
the reciprocal relationship between social capital and collective action. The experimental
design in our study enables us to localize the impact of social capital on collective action.
Through the experiment, we can control the institution and the respondents environment,
which is not possible with field data. With these controlled conditions, we can ensure that the
focus lies on the impact of social capital on collective action, and not the other way round.
These problems of measurement and simultaneity linked to social capital and collective action
points to the importance of conducting a study that will overcome such problems. The
proposed method is using an experiment to measure trust as well as contributions in a
collective action. It is also interesting to look at whether there is a relation between trust
measurements obtained from the experiment and those obtained from survey-based data.
An experiment in a computer lab is conducted to find out whether social capital induces
individual contributions in solving a collective problem. The case selected for this study is a
waste collection problem in a local community. Two kinds of games will be conducted in this
experiment: the trust game to measure trust and the public goods game to describe the
collective action problem. Trust is used to proxy the social capital variable. Outside of
measuring trust from the experiment, measurements from a questionnaire on social capital
also includes questions on trust. The results will be compared to trust measurements obtained
from the experiment to look at the impact on individual contributions to collective action.
With the experiment, controlled conditions here include the fact that the experiment is taking
place in a laboratory designed in an artificial environment customized to meet the purposes of
a study. In a controlled economic environment, agents live in an institution where the agents
interact. The institution provides specific rules that represents actions available to agents, and
the outcomes that will result from each possible combination of an agents actions. Here, this
institution is represented through the experiments instructions the instructions provide
specific details on the procedures and messages of the game, most often they are computer

14

controlled. In this controlled environment, monetary rewards are used to induce the desired
specific action. Each agent has economically relevant characteristics such as preference,
endowment and information and will consider the environmental and institutional setting of
the laboratory in order to take a specific action. In the experiment, a reward medium is used to
allow the experimenter to induce pre-specified characteristics in the subjects undergoing the
experiment. The original characteristics become quite irrelevant (Friedman & Sunder, 1994;
Smith, 1991).
In the laboratory experiment setting, what factors then induce cooperation? Ledyard (1995)
compiled factors that improved cooperation or voluntary contributions in public goods
services. They include marginal per capita return (MPCR), number of subjects, repetition,
common knowledge, gender, homogeneity in endowments, thresholds, beliefs, economics
training, experience, friendship/group identification, learning, altruism, fairness, effort, risk
aversion, communication, rebates, unanimity and moral suasion.
Many of the factors listed e.g. communication, group identification, altruism and fairness
have social context. In addition, we could include trust, reciprocity, and social preference.
One concept that could capture all these factors linked to social preference is known as social
capital. Experiments on how social capital induces collective action have been done by
Anderson et al. (2004); Potipiti (2012); and Leonard et al. (2010). These three studies used a
questionnaire to measure social capital and a public goods game to measure contributions in
collective action.
As discussed above, the use of the survey-based method has its limitations. In this study, we
try to employ two games the trust game and the public goods game - to measure social
capital and contribution in collective action.
We expect to have the observed values of trust and contributions to differentiate from
previous studies. Capra et al. (2008) is a study that had worked on both games, but there were
differences found in game design and the purpose. It was only concerned with trust
measurements by looking at the correlation between the survey and results from experiments.
Games Construction
The following is an explanation on how the trust game is built and modeled. First, participants
are divided into two groups, A and B. Each is given E, which represents endowment. No
communication is allowed between the participants. The identity of every participant is kept
confidential. A has to decide how much of the endowment is to be sent to B. The amount sent
by A is tripled by the experimenter and B will receive the tripled amount. In the second step
of the game, B has to decide how much money if any - is to be returned back to A, from the
money received plus the endowment B possesses. The amount of money sent by A is taken to
be a measure of trust, and the amount returned by B to A represents a degree of
trustworthiness.

15

The relationship shared between A and B can take the form of a trusting pair or a distrusting
pair. The table below briefly defines the relationships shared between A and B.
Each type of pair represents the experiences that A and B shared together. They will
remember this experience for a future event i.e. A was betrayed by B in the type 2 pairing.
We will see whether this experience will affect their decision in the next game.

NO
1

Money
sent by A
IDR 0

> IDR 0

> IDR 0

Table 1. Pair Type of A and B

Money
Act
sent by B
IDR 0
A does not trust B. B could not
display his trustworthiness.
<A
A trusts B. B takes advantage of
As trust.
>A
A trusts B. B reciprocates As
trust with a degree of
trustworthiness.

Pair Type
distrusting pair
distrusting pair
trusting pair

From the trust game, a number of things can be confirmed: whether trust exists, the
measurement of trust, identification of the type of pairings (trusting pair and a distrusting
pair) and how a trustee responds to the amount of money sent/ is not sent by a trustor.
The model for a collective action problem can be described by a simple public goods game
with threshold. These equations describe individual is payoff function for a collective action
problem. For certain level threshold j (Tj), individual payoff ! are
! ! (! , ! ) + (
!

!
!!! ! )

if

!
!!! !

! ; and

if

!
!!! !

< !

Where individual i payoff function i may be formed into two equations. The first equation is
when the total contribution !
!!! ! is at least the same as the threshold required ! to
provide the environmental goods. In this situation, individual i will receive the initial
endowment , minus his own contribution ! , which is dependent on his trust level measured
in the trust game TRi and his group type (GTi); added by benefit received from the
environmental goods which depends on the total contribution of the group ( !
!!! ! ). The
higher the total contribution is, the higher the quality of environmental goods provided, which
is reflected in higher benefits received.
The second equation occurs when the total contribution is below the threshold required
!
!!! ! < ! . In this situation, individual i will either face a status quo or the payoff will be
the same as his/her initial endowment .
An individuals contribution represented by ! - in a public goods game is influenced by
two factors: the individuals level of trust measured in the trust game, and the group he or she
is categorized in. There are three different kinds of groupings, and each type is a specific

16

treatment applied in the public goods game. The first group sees an individual categorized
randomly. The second will see an individual categorized in the same group as she or he had
been in the trust game, with the same partner [A with B]. The third type will not see the
individual categorized in the same grouping, with his or her partner in the trust game [A with
another A; B with another B].
For A, if he or she had been partnered with a B partner in the trust game who had sent a larger
amount than what A had initially sent to B, then A knows that he or she is being paired with
a generous partner B.
Meanwhile, if A had been partnered with a B partner in the trust game who had sent a lesser
amount than what A had initially sent to B, then A knows now that he is she is being paired
with an exploitative partner B.
In the trust game, the money A had sent to B had been multiplied threefold by the
experimenter and B received all of it, which means B reaped all the benefits and decided not
to share it with A in the case of B is being an exploitative partner. This is why there is the
assumption that should A be grouped in the same grouping as he or she had been with B in
the trust game, this will affect the individuals contribution in the public goods game.
Experimental Design and Procedures
This study used a computerized class experiment, with 462 undergraduate students of
University of Indonesia as the participants. The experiment was conducted in a computer
laboratory at the Department of Economics, Faculty of Economics, University of Indonesia in
Depok, West Java. The computer laboratory has a capacity for 16 students, so there were 29
sessions of the experiment in total. Each session took about one hour. All sessions were
completed within 10 days.
Twenty-four participants attended the pilot experiment. The participants were third year
students of an undergraduate economics program and they were enrolled in the Natural
Resources and Environmental Economics course, a class which I teach. The experiment was
conducted manually and lasted for about 3 (three) hours. Some modifications to the pilot
design were made for the design of the real experiment.
The experiment used a widely-used software called z-Tree, or Zurich Toolbox for Readymade
Economic Experiment program from the Department of Economics, University of Zurich. ZTree is a user-friendly program and has features that are needed in most experiments, like
communication between the computers, data saving, time display, profit calculation and tools
for screen layouts. The Z-Tree also offers readymade programs for games like the public
goods game and we can combine this with other games, customized or modified for our study
purposes11.

11

http://www.iew.uzh.ch/ztree/index.php

17

The game simulation addresses the environmental problem i.e. uncollected trash. We will
look at the role of social capital, measured by trust toward making contributions to a
collective action which is providing environmental public services. The trust game is
conducted to measure trust and the public goods game is conducted to measure individual
contributions in public goods provision. In addition, trust is also measured by a questionnaire
on social capital.
In general, there are four activities in this experiment. First, filling out a questionnaire on
social capital. Second, conducting the trust game. Third, conducting a public goods game.
Fourth, filling out a socio-economic questionnaire.
All participants are guaranteed a minimum payment of IDR 20.000. In this experiment, no
one can communicate with each other and every participants identity will be kept
confidential. In the beginning, every participant will notice that the amount earned will be
determined through a lottery.
The lottery is conducted to ensure that the payoffs from both games the trust game and the
public goods game are independent of each other. This is important because should a
participant receive payoffs from both games, then we are faced with two problems:
The first: If we guarantee participants that they will receive a payoff from the trust game, then
this payoff will add on to their endowments received from the public goods game. The
endowment in the public goods game will no longer be equal among the participants
[heterogeneity in endowment] and this will complicate the analysis of the results. The second
problem is that the individuals decision on how big or small his or her contribution should be
in the public goods game is dependent on the earnings this individual makes through the trust
game. We therefore need to avoid these two problems. We only want to see that the decision
made by the individual in the public goods game is independent of the earnings he or she
makes in the trust game.
Even though this is the case, it is worth noting that even as the payoffs from both games end
up being independent of each other through a lottery, the experience that a participant
undergoes in the trust game could influence his or her actions in the public goods game. In
other words, even as we can ensure that what is decided by the individual is not influenced
through the earnings he or she makes in the trust game, this individual will still remember
how he or she and his or her partner acted in the trust game.
First comes the Social Capital Questionnaire, which is adapted from Bullen & Onyx (1998).
Second, the Trust Game. Every participant is given IDR 50.000 and the computer assigns
randomly 16 participants into two groups equally: groups A and B. Each participant in A is
paired randomly with a participant from B. Each participant in A is asked to decide on how
much money, if any, is to be given to B. A has the option to give no money at all, give all of
it, or some of it. The computer will triple the money A decides to send to B, and B receives all

18

of it. After that, B is asked to decide on how much money should be returned back to A. B
could give nothing, all of it, or some of it. B possesses three times the money A had initially
sent, plus an endowment of IDR 50.000. B knows that the computer has tripled the money
transferred by A.
Third, the Public Goods Game. Everyone gets IDR 50.000 as an endowment. There are three
different kinds of groupings, and each type is a specific treatment applied in the public goods
game (see table below). As specified earlier, the first group sees an individual categorized
randomly. The second will see an individual categorized in the same group as she or he had
been in the trust game, with the same partner [A with B]. The third type will not see the
individual categorized in the same grouping, with his or her partner in the trust game [A with
another A; B with another B].
Table 2. Group Type as Treatment in Public Goods Game
Group Type
Function
Description
Group Type 1
Control Group
Random
Group Type 2
Treatment 1
A/B is in the same group with his partner B/A
Group Type 3
Treatment 2
A/B is not in the same group with his partner
B/A (A with other A, B with other B)

Each group has the same problem: neighborhood trash that has been uncollected for about 2
weeks. Everything smells badly in the neighborhood and residents find it uncomfortable to
live there. There exists the health risk of diarrhea as a result of the uncollected trash. Each
participant in the group will be asked how much they wish to contribute to resolve the
problem none of it, all of it or some of the IDR 50.000 received. This problem will be
solved if the total contribution of each group reaches IDR 100.000.
If the threshold is met, then every group-member would have benefited and this would add on
to the money they already have at hand. The higher the total contribution of a single group,
the higher the returns for every group member. From the total contribution of the group, the
computer will double the amount and divide equally among each group-member. So the
marginal per capita return, or MPCR, is 0.5. But if the threshold is not met, then the
contribution will be returned back to every group-member.
Fourth, fill in the Socio-Economic Questionnaire.
At the end of the experiment, the participants can redeem the money earned based on lottery
results.
Results & Analysis of the Experiment
The results of the trust game show that on average, A sent 34 percent of their endowments
(IDR 50.000 for each participant) to B. On average, trustors A who had sent appropriate
sums of money to trustees B received 39 percent more than he or she had invested in B.
Therefore, on average, trust was marginally honored. See descriptive statistics in Appendix 4.

19

Ten participants (4.33%) in Group A gave nothing to B and 11 participants (4.76%) from
Group B gave nothing to A. There are 7 among the participants in Group B who sent money
to A even though A sent nothing to them12. There are 15 among the participants in Group A
who gave all their money to Group B.
About half of the participants in Group B sent more money to partners A than what they had
received from A. Thirty-four percent of the participants in Group B sent lesser money to
partners A than what they had received from A.
Appendix 5 could describe how B and A behaved in the trust game. From this result, it can be
concluded that trust exists, because most of the trustees in group B reciprocated the trust
given to them by trustors in group A.
Trustees Behaviors. We can categorize trustees B into four types based on how a participant
in Group B reciprocates to receiving or not receiving money from a partner in Group A
(Ahmed, 2011). First is the exploitative trustee. This trustee exploits the trust given by trustor
A. Trustee B sends a lesser amount of money than the amount received from A. In this case,
trustor A is worse off and A loses his/her entire investment13 to B. Second is the egoist. This
trustee sends the exact amount back which is received from trustor A. This shows that trustee
B only cares about how to maximize his or her welfare and has no intentions to share any
benefits with trustor A. Trust from A is not honored in this case. Third is the generous trustee.
In this case, trustor A and trustee B gain by trusting each other. Trustor A receives more than
he or she invested. Trust from A is honored here. The last type is the altruist. Although A
does not give B anything [no trust], trustee B is willing to ensure that A is better off by
sending him or her money. Altruist represents unconditional kindness.
So how does B respond to the money he or she receives from A? Ordinary Least Squares
(OLS) are used to test how B responds to money sent in by A. The table below could be
described whether the money sent by trustee B to trustor A is conditional to the amount sent
by A to B. Three simulations are made following Ahmed (2011).
Model 1 is a simple model that links money sent in by B to money sent in by A, and the type
of trustee. In Model 2, we expand the variables by adding trustee behavior, added with
interaction to money sent in by A. In the third model, we want to look at whether or not the
response behavior of B is of a convex or a linear function.
All the three models show that there is a significant positive impact on the amount sent in by
A to the amount returned back by B to A. Model 1 is a simple model that links money
returned by B to money sent by A. We put dummy variables for gender, whether the
participant is from the economics faculty or not, and the type of trustee. The amount of

12
This is different from the pilot experiment, where B only can send money from what he or she receives from A. In the real experiment, B
is able to give money to A, although A may not send any money to B. B could give A money from his or her endowment.
13
The original name of trust game is investment game. The money A gives to B represent the investment by A in favor of Bs returned
money. If A gains benefit from his/her investment as B gains, then it could be said A and B are trust pair. The investment made by A
representing the trust that A gives to B.

20

money sent by A is significantly influential in how much B ends up sending back to A. After
controlling other variables, for each IDR 1000 A has sent to B, B gives back an additional
IDR 1.040 to A (ceteris paribus). The bigger the amount A sends to B, the more money B
will send back to A. In other words, the more money A trusts B with, the more B wants to
reciprocate in kind to A, by being trustworthy. This result is similar to what Berg et al. (1995)
and Ahmed (2011) found. Trustees B from the Economics Faculty tend to return lesser money
(IDR 6.000) to their partner A.
Table 3. Regression Analysis of Money Returned
Dependent Variable: Money Returned by B
Model 1 Model 2
Money Sent by A
(Money Sent by A)

1.04***

0.61**

Gender (male=1)

Model 3
0.81**
0.005

4.355

2.475

4.19

Economics (1=yes)

-6.01*

-3.6

-6.14*

Number of Friends

0.622

0.56

0.626

Exploitative (1=yes)
Generous (1=yes)

-18.8***

-18.52***

17.0***

Exploitative * Money Sent by A

17.3***
-0.468*

Generous* Money Sent by A

1.239***

Constant

3.83

7.02**

5.17

R-squared

0.525

0.620

0.526

Adj-R-squared
F
Prob >|F|

0.512

0.610

0.511

41.184

61.018

35.337

0.000

0.000

0.000

Observations
231
231
231
Note: The coefficients are reported for an OLS. All variables in money terms are counted in thousand rupiahs.
Exploitative = 1 if the trustee has been classified as an exploitative trustee, and generous = 1 if the trustee has
been classified as a generous trustee.
* Statistical significance at 10% level, ** at 5% level, *** at 1% level.

The second model comprises of interaction variables of the type of trustee and money sent by
A. The first interaction is between variables Exploitative and Money Sent by A, and the second
is between variables Generous and Money Sent by A. These interaction variables could answer
the question on whether the differences between the trustee types lie with the constant or in
the slope. For example, if the difference between the generous and reference trustee types lie
in the constant, this means that generous reciprocators reward the trustor for their trust but in
constant terms. Meanwhile, if the difference lies in the slope, then the trustor is awarded
proportionally to the money A had sent to trustee B (Ahmed, 2011). If A gets a generous
partner, A gets an additional return of 124 percent for every IDR 1.000 that A had invested. If
A gets an exploitative partner, A suffers a loss of 47 percent for every IDR 1.000 he invested
in B. These values are the benefits/losses made by A in addition to his regular returns on his
initial investment of 61 percent.
The third model investigates whether or not the function of money returned by trustee B is
convex - whether the money returned by B to A will increase proportionally, in accordance to
an increase in the amount of money sent in by A to B. In essence, is trustor A rewarded

21

proportionally when he trusts B more? If variable Money Sent by A squared is significant and
positive, then the marginal effect of giving B more will increase as A gives B more (Ahmed,
2011). However, the result shows that the marginal effect of money sent by A is constant.
After conducting simulation on what factors affect the amount of money sent in by A to B, we
could not find any clues. But we conducted a correlation test, and the result is that the amount
of money sent by A to B is correlated with environmental concerns (positive) and whether A
has joined another experiment (negatively correlated). These results are evaluated at a
significance level of 10 percent.
Trust and Contribution in Public Goods. The table 4 shows how the explanatory variables
affect contributions made by A and B in a public goods game. The results show that for both
A and B, the amount contributed in the public goods game is positively dependent on the
amount of money contributed to their partner in the trust game.
In the trust game, money sent by A to B measures how much A trusts B, and for B, money
sent back by B to A measures how trustworthy B is toward A. Should we compare the
coefficient, additional money contributed in the public goods game as a proportion to
additional money sent in the trust game is much less lower for B, compared to A (ceteris
paribus). Trustor A is sensitive to the ratio of money sent by B over A; as generous trustee B
sends more money to A is relative to what A has sent to him (ratio > 1), A will contribute
more in the public goods game.
For both A and B, the amount of money contributed in the public goods game also depends
on obedience to their religion. As the religious rate (scale 0-10) increases by 1, the amount of
money contributed increases by about IDR 1.050 for A and IDR 1.400 for B. For A,
undergoing another experiment lowers his contribution in the public goods game. For B, as
many experiments have given the same result, being an economics student (this includes
management and accounting) will lower his contribution to about IDR 6.000.
Treatment Effect. The group treatment is conducted to answer the second research question
i.e. whether particular knowledge in a group could affect individual contributions in solving a
collective problem. The group treatments consist of two treatments with random grouping in
the public game as the control group. The first treatment is represented by A and B being in
the same group. In this case, what happens in the trust game may affect the public goods
game or influence the contribution in a public goods game. For example, if A thinks he is in
the same group with B who has returned back lower/higher amount of money than A had sent
to B, then it may affect As contribution in the trust game. The same is true for B. In the
second treatment, A and B are not in the same group. So the decision of each participant in
the public goods game could be independent from the trust game. So, for A, being in one
group with his partner B is likely to influence his contributions more than if A was not in the
same group with his partner B. This could depend also on what experiences A and B had
undergone in the trust game, and whether they had a good partner or a bad one.

22

We only consider treatment 1 as a dummy in the above regression because of very little
difference in the nature of treatment 2 and the reference group. From the estimation result we
see that the treatment only affects trustor A and not trustee B. We expect that if A was paired
with generous B (ratio of money sent B/A is high) in the trust game, and A is in the same
group with B in the public goods game, then his contribution in the public goods game will be
higher. However, the sign of the coefficient is different from what we expected. When A is in
the same group with his partner B in the public goods game, A tends to contribute less. If A
thinks he is in the same group with generous people, he will rely on Bs contribution, and he
thinks he can generate more benefits through the second game by contributing less.
Table 4. Model Estimation of Contribution in Public Good Game
Dependent Variable: Contribution in Public Good Game
Independent Variables

Model for A
Coefficient
Std Error
0.295***
0.062
0.289**
0.104

Model for B
Coefficient
Std Error
0.079**
0.03

Money Sent to Partner

Ratio of Money Sent B/A
Ratio Earning B/Earning A
-0.144
Treatment * Ratio of Money Sent B/A
-0.256*
0.129
Treatment1*exploitative
4.193
Treatment1*Generous
2.606
Gender
1.448
1.882
3.343
Type of Region in Childhood
0.271
2.063
1.011
Using Ethnic Language
0.426
1.813
-1.742
Have Mother and Father
-0.372
2.759
-1.202
Migration
-0.273
1.764
2.733
Pocket Money
0
0.001
0.002
Environmental Concern
0.436
0.831
1.242
Religious Practitioners
1.046*
0.465
1.427**
Participate in Other Experiment
-5.970*
2.85
2.715
Number of Friends in the Same
-0.047
0.43
0.521
Session
Economics
-0.794
1.846
-5.976**
Constant
15.056
9.08
3.659
Adj-R-squared
0.102
0.116
R-squared
0.157
0.174
F
2.873
3.01
Prob >|F|
0.001
0
Observations
231
231
Note: The coefficients are reported for an OLS. All variables in money terms counted in
thousand rupiahs. * Significant at 10% level, ** at 5% level, *** at 1% level.

0.139
2.756
2.232
1.743
2.174
1.89
2.507
1.856
0.002
0.786
0.481
2.382
0.408
1.837
8.325

Trust Measurement: Experiment vs Survey. This section aims to compare measurement of

trust from the trust game and from a social capital questionnaire. Two kinds of analysis are
performed: comparing trust measurements from the trust game and trust measurements
obtained from the social capital questionnaire; and comparing the significance of the two
methods of measuring trust to the contributions made in a collective environmental action.

23

We found no outstanding relation between trust (and social capital) measurement from the
survey-based method and trust behavior from the experiment. For example, for trustee B who
is categorized as an altruist, he or she has the lowest level of social capital that comes from a
low score of civic engagement. His trust level is not at the highest either. We could also look
at trustor A who sends nothing to B, but he or she has the highest social capital and trust
scores. Meanwhile, our conditional reciprocators (A who sends more than zero and B who
sends more than A) only have moderate scores, both for civic engagement and trust.
We also test for a correlation between money sent to a partner as a trust measurement from
the experiment method - with a social capital score for each question asked. For both A and
B, none of the questions on civic engagement are correlated with money sent to a partner,
with a significance level of 5%. However, for the trust questionnaire, we found 1 question
that was correlated with money sent by A (Can you get help from friends when you need
it?) and 1 question that was correlated with money returned by B (Do you feel safe walking
down your street after dark?). We put this question as an explanatory variable to our
estimation model on contribution in a public goods game to replace the variable, money sent
to partner. After putting the correlated trust question variable to the model, the estimation
shows that the trust question was only significant for B. In general, we can conclude that the
measurement from the survey hardly represents observed behavior. Another type of question
should be considered for the next research conducted on this matter.

5. CONCLUSION
In many developing countries, including Indonesia, the absence or lack of waste management
services is a common problem. This problem could bring about environmental and health
risks. There are empirical findings that in certain regions in Indonesia, communities carry out
collective actions to resolve environmental problems in their neighborhood. From existing
literature, we have found that not only individual, household and regional characteristics
induce collective action, but that social capital is a key factor too.
This study aims to conduct empirical testing to find out whether or not social capital variables
impact on the individual contribution in a collective action. The challenge of this study lies in
the measurement of social capital as well as environmental collective actions. We also
provide two kinds of measurement of social capital; at individual and community level. Two
kinds of methods are applied: first is an empirical study using IFLS data and the second is an
experimental method using computerized laboratory.
Our first empirical study uses probit and logit estimation for cross section data of IFLS 2007
and fixed effect logit estimation for the last three waves of IFLS. The result is convincing:
that social capital in individual and community levels- induces individual contribution in the
collective action kerja bakti. We also found that the collective action kerja bakti tends to
be conducted by males rather than females, considering the activity dominantly require
physical activities. In rural communities, the probability of individuals in joining a collective
environmental action is higher than in urban communities.

24

The experimental method is conducted to overcome a measurement error problem that could
potentially happen in a fixed effect model. Through this method, the measurement of social
capital and collective action are based on observed behavior in controlled conditions, using
money as the incentive. The result from the experiment shows that trust as a variable to
proxy the social capital variable - significantly impacts the contribution of an individual in
solving a collective problem.
The results from the two methods are quite convincing. However, we found that the trust
measurement obtained from a survey is not correlated from the trust measurement obtained
from the experiment method. In this case, the use of two kinds of these data sources have to
be looked at carefully since it could lead to different conclusions of our hypothesis.
Our results have led to further questions: Should we invest in social capital? Could we invest
in social capital? What instruments do governments have in order to intervene in order to use
the potential of social capital?
Investing in social capital is possible. From the magnitude of the coefficient of our first
empirical study, civic network at the individual level shows a significant value. At the
community level, trust becomes important to increase the likelihood of individuals joining in
a collective action.
This could signal that the fact that individuals are exposed to voluntary activities is an
important factor to increase the likelihood of successful collective actions. From a
policymakers point of view, to propagate information on existing community-based
organizations could become an important policy variable. Governments could also establish
organizations in certain regions such as Posyandu, PKK, or cooperatives to be managed later
by communities. The existence of local associations does have a central role in the
communication of information among members, to reduce opportunistic behavior, and to
facilitate collective decision making (Grootaert, 1999). On trust at community level, we have
no suggestion in making investments on trust, but it have to be noted that no government
intervention should break community trust. A study by Cameron & Shah (2011) shows that
missing out on the actual targets [the poor] who should be receiving direct cash transfers
(BLT/Bantuan Langsung Tunai) from local governments reduced social capital, increased
social conflict and crime levels. Social capital can be useful in the context of formulating a
successful development project. Certain types of infrastructure should not be proposed for
villages that lack in social capital for maintenance purposes e.g. irrigation. During the project
design of development activities, the identification of existing social structure and norms
should be considered so that it does not cut down on community social capital (Grootaert,
1999).
Collective action also tends to occur within low-income groups or communities. As people
have more income, time spent for work and private consumption becomes greater, cutting
down on time to engage in neighborhood networks. The individual also has a higher

25

willingness to pay up for a service rendered, and he or she could pay a private institution to
deliver the public service. This new institution (market) will replace the function of social
capital as a means to gather resources and conduct collective actions to achieve collective
benefits. This also implies that community-based organizations, as tools to strengthen
neighborhood networks, could gradually lose their function. Social capital will reduce if not
utilized, and will strengthen if fully utilized. For governments, taking too great a role in
society could weaken community social capital as community members will depend more on
government.
Our model has several limitations. We have several insights from a cross-section model as it
could present more variables to be analyzed. But it lacks in analyzing the source of variation
for the overtime in an environmental collective action kerja bakti. The last is best analyzed
by fixed effects estimation. It could also overcome the omitted variable problem of variables
whose values are time-invariant. The limitation of our fixed effects estimation is the amount
of the dependent variables data that were dropped, because they had the same value within the
three waves of IFLS. We still have consistent results of our main variables.
For further research, we would like to suggest the use of a different kind of data source i.e.
SUSENAS and WVS to measure social capital variables and whether the same hypotheses
has the same answer with different kinds of data. With that data, we could conduct at least a
cross-section model. Social capital is a latent variable and to use a different proxy in
measuring it could lead to a better understanding on the concept of social capital, and how to
link it with the empirics.
Our experiment also has limitations. Our findings conclude that measurements from a survey
are different from measurements obtained from the experiment method. Even as this could be
true, more evidence is needed to make a solid conclusion since many studies have different
results on this. More studies should try to use different kinds of social capital [trust] questions
to be compared to the trust game, or other games as proxy to social capital.
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30

Appendix 1. Variable Construction from IFLS Data

Dependent Variable
Environmental collective action kerja bakti
!
Routine collective action in cleaning neighborhood; yes = 1 and no = 0
Independent Variable
!" (Vector of Social Capital Variables)
Social Capital Variables at Individual Level
Social capital variable trust at individual level
!!
1. I am willing to help people in this village if they need it.
2. In this village I have to be alert, or otherwise someone is likely to take
advantage of me.
3. Taking into account the diversity of ethnicities in the village, I trust
people with same ethnicity as mine more.
4. I would be willing to leave my children with my neighbors for a few
hours if I cannot bring along my children with me.
5. I would be willing to ask my neighbors to look after my house if I
leave for a few days
6. How safe do you consider this village?
7. In most parts of the village, is it safe for you to walk alone at night?
For questions 1-7, (strongly) agree = 1, (strongly) disagree = 0
For question 8-10: Say you lost a wallet or a purse containing IDR 200,000 and
your identity card. I would like you to think about how likely it is that it will be
returned with the money if it were found by someone else.
8. Say it was found by someone who lives nearby. Is it likely or unlikely
that it will be returned to you with the money remaining in your wallet?
9. Say it was found by a police officer. Is it likely or unlikely that it will
be returned to you with the money remaining in the wallet?
10. Say it was found by a complete stranger. Is it likely or unlikely that it
will be returned to you with the money remaining in the wallet?
For questions 8-10, likely = 1, unlikely OR dont know = 0
Answers are summed and divided by 0, so the value will be between 0 and 1
Social capital variable civic network at individual level
!!
Do you know whether in the last 12 months, the [..] activity has occurred in
this village?
1. Community meeting
2. Cooperative
3. Collective action in cleaning neighborhood (routine)
4. Community facility repairmen program
5. Youth group activities
6. Religious activities
7. Village library
8. Saving and loan program
9. Community health funds
1=yes, and
0=no or dont know.
Answers are summed and divided by 9, so the value is between 0 and 1
Note: in IFLS3, there number of community-based organization surveyed is
more than IFLS4. The addition consists of: neighborhood security organization
(siskamling14), water for drinking system/supply, system for garbage disposal,
womens association activities (PKK), and community weighing post
(Posyandu).
Social Capital Variables at Community Level
Trust variable at community level
!!
Average of individual trust level in the respective region.
Civic network variable at community level
!!
Average of individual civic network level in the respective region.

14
Siskamling (Sistem Keamanan Keliling) is neighborhood security system that involves community member to be security guard in rotation
assignment.

31

!" (Individual Characteristics)

Level of Education
!
Length of study in years
Age
!
In years
Gender
!
Male = 1
Female = 0
Head of Household
!
Head of Household=1
Others=0
Health Condition
!
Able to do daily activity without help from others=1
Else=0
Individual Ethnicity Compared to Ethnic Majority
!
Individual ethnic is the same with majority ethnic = 1
Others=0
Participation in arisan15
!
In the last 12 months, do you participate in arisan? 1=participate, 0=not
participate
!" (Household Characteristics)
Income per family member
!
Total income gathered in one household is divided by total number of household
members. Income includes labor and non-labor income.
! Number of household member
Number of household members; including non-family members who are
supported by head of household.
! House Status
Owned=1
Else=0
!" (Regional Characteristics)
Type of region
!
Urban = 1
Rural = 0
Religion Diversity
!
Measured with Herfindahl Index
Ai=number of individual with religion i; i=1, 2, .., n.
N=total individual in the region
HI=(A1/N)2 x (A2/N)2 x . x (An/N)2
Ethnic Diversity
!
Measured with Herfindahl Index
The level of severity in environmental problem garbage disposal
!
Disposed in trash can, collected by sanitation service OR burned = 1
Others (to the river, yard, sea, lake, etc) = 0
Percentage of community who disposed garbage properly with respect to total
observation.
( )
Dummy Year 3rd wave
!
3rd wave = 1
Other = 0
Dummy Year 4rd wave
!
4rd wave = 1
Other = 0

15

Arisan is regular social gathering that involve regular collection of money from every member of the group. In every gathering,
they will randomly choose one member of the group that will get the money collected. Every member of the group will get the
money in one cycle of arisan.

32

Appendix 2. Results for Probit and Logit Estimations

Dependent Variable: Environmental Collective Action
Probit
Logit
Independent Variables
Mean
Estimation
Estimation
Social Capital Variables - Individual Level
Trust
0.037***
0.031***
0.622
Civic Network
0.371***
0.312***
0.390
Social Capital Variables - Community Level
Trust
0.241***
0.199***
0.622
Civic Network
0.087***
0.078***
0.389
Individual Characteristics
Education
-0.0015***
-0.0012***
8.162
Head of Household
0.009*
0.006*
0
Health
0.010
0.009
0
Age
0.004***
0.003***
36.887
Age-squared
-0.00***
-0.00***
1604.730
Sex
0.250***
0.244***
0
Ethnicity vs Ethnic Majority1)
0.004
0.003
0
Arisan
0.011***
0.010***
0.234
Household Characteristics
Income
-0.33*
-0.29*
0.005
Household Member
-0.00
-0.00
6.172
House Status
0.010**
0.009**
0.000
Regional Characteristics
Type of Region
-0.01***
-0.01***
0
Diversity in Religion
0.054***
0.044***
0.074
Diversity in Ethnicity
0.017*
0.015*
0.180
Environmental Problem
-0.01
-0.01
0.281
Observations
28975
28975
Log Likelihood
-16236.6
-16236.6
ll
-12382.9
-12385.4
Chi-squared
7707.4
7702.3
Pseudo R-squared
0.237
0.237
Percentage Correctly Predicted
79.98%
80.06%
Note: * significant at 10%, ** at 5%, *** at 1%. Mean=0 for dummy variable.
1)
If the respondents ethnic is different from ethnic majority=1, other=0
2)
Type of region: urban=1, rural=0

33

Appendix 3. Fixed Effects Estimation

Dependent Variable: Environmental Collective Action
Independent Variables
Social Capital Variables - Individual
Level
Civic Network

Marginal Effect

Mean

0.775***

0.471

0.000

7.318

-0.006

0.000

Individual Characteristics
Education
Head of Household
Age

-0.003

38.837

0.0327***

0.0015*

2.810

0.0001

6.057

0.012

-0.037*

-0.098

0.078

0.031

0.307

Dummy Year 2000

-0.172***

0.363

Dummy Year 2007

Observations

-0.047*

0.333

Log Likelihood
Chi-squared

-6525.5

Arisan
Household Characteristics
Income
Household Member
House Status
Regional Characteristics
Type of Region
Diversity in Religion
Environmental Problem

Pseudo R-squared
p-value
Note: * significant at 10%, ** at 5%, *** at 1%.

22972
3572.9
0.215
0.00

34

Appendix 4. Statistics Descriptive of Trust Game and Public Good Game

Money Sent from
A to B in
Trust Game

Money Sent from

B to A in
Trust Game

Contribution in
Public Good
Game

Total
Contribution in
Public Game

Mean

17118.58

24522.68

31906.32

128244.2

Std Dev

14229.37

27916.05

12898.84

28532.08

Min

37500

Max

50000

190000

50000

190000

231

231

231

231

Parameter

Observations

Appendix 5. Decision of A and B in the Trust Game

Decision

Type of
trustee B

Frequency

Percentage

A>0

221

95.67

B>0

220

95.24

A>0;B>A

Generous

116

50.22

A>0;B=A

Egoist

27

11.69

A>0;B<A

Exploitative

78

33.77

A=0;B>A

Altruist

3.03

1.30

A=0;B=0
Number of pairs = 231

35