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Social capital

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Social capital is a sociological concept used in business, economics, organizational behaviour, political science, public health and the social sciences in general to refer to connections within and between social networks. Though there are a variety of related definitions, which have been described as "something of a cure-all" for the problems of modern society, they tend to share the core idea "that social networks have value. Just as a screwdriver ( physical capital) or a college education ( human capital) can increase productivity (both individual and collective), so do social contacts affect the productivity of individuals and groups".


L.J. Hanifan's 1916 article regarding local support for rural schools is one of the first occurrences of the term "social capital" in reference to social cohesion and personal investment in the community. In defining the concept, Hanifan contrasts social capital with material goods by defining it as:

"I do not refer to real estate, or to personal property or to cold cash, but rather to that in life which tends to make these tangible substances count for most in the daily lives of people, namely, goodwill, fellowship, mutual sympathy and social intercourse among a group of individuals and families who make up a social unit… If he may come into contact with his neighbour, 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 coöperation 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 (pp. 130-131)."

While various aspects of the concept have been approached by all social science fields, some trace the modern usage of the term to Jane Jacobs in the 1960s. However, she did not explicitly define a term social capital but used it in an article with a reference to the value of networks. Political scientist Robert Salisbury advanced the term as a critical component of interest group formation in his 1969 article "An Exchange Theory of Interest Groups" in the Midwest Journal of Political Science. Sociologist Pierre Bourdieu used the term in 1972 in his Outline of a Theory of Practice, and clarified the term some years later in contrast to cultural, economic, and symbolic capital. Sociologists James Coleman, Barry Wellman and Scot Wortley adopted Glenn Loury's 1977 definition in developing and popularising the concept. In the late 1990s the concept gained popularity, serving as the focus of a World Bank research programme and the main subject of several mainstream books, including and Lewis Feldstein's " Better Together (book)".

The concept that underlies social capital has a much longer history; thinkers exploring the relation between associational life and democracy were using similar concepts regularly by the 19th century, drawing on the work of earlier writers such as James Madison ( The Federalist Papers) and Alexis de Tocqueville (Democracy in America) to integrate concepts of social cohesion and connectedness into the pluralist tradition in American political science. John Dewey may have made the first direct mainstream use of "social capital" in The School and Society in 1899, though he did not offer a definition.

Evaluating social capital

Though Bourdieu might agree with Coleman that social capital in the abstract is a neutral resource, his work tends to show how it can be used practically to produce or reproduce inequality, demonstrating for instance how people gain access to powerful positions through the direct and indirect employment of social connections. Robert Putnam has used the concept in a much more positive light: Though he was at first careful to argue that social capital was a neutral term, stating “whether or not [the] shared are praiseworthy is, of course, entirely another matter”, his work on American society tends to frame social capital as a producer of "civic engagement" and also a broad societal measure of communal health. He also transforms social capital from a resource possessed by individuals to an attribute of collectives, focusing on norms and trust as producers of social capital to the exclusion of networks.

Mahyar Arefi identifies consensus building as a direct positive indicator of social capital. (2003) Consensus implies “shared interest” and agreement among various actors and stakeholders to induce collective action. Collective action is thus an indicator of increased social capital.

Edwards and Foley, as editors of a special edition of the American Behavioural Scientist on "Social Capital, Civil Society and Contemporary Democracy," raised two key issues in the study of social capital. First, social capital is not equally available to all, in much the same way that other forms of capital are differently available. Geographic and social isolation limit access to this resource. Second, not all social capital is created equally. The value of a specific source of social capital depends in no small part on the socio-economic position of the source with society. On top of this, Portes has identified four negative consequences of social capital: exclusion of outsiders; excess claims on group members; restrictions on individual freedom; and downward levelling norms. Here it is important to note the distinction between "bonding" and "bridging". There is currently no research which identifies the negative consequences of "bridging" social capital when in balance with its necessary antecedent, "bonding".

Finally, social capital is often linked to the success of democracy and political involvement. Robert D. Putnam, in his book Bowling Alone makes the argument that social capital is linked to the recent decline in American political participation.

Definitions, forms, and measurement

Social capital lends itself to multiple definitions, interpretations, and uses. David Halpern argues that the popularity of social capital for policymakers is linked to the concept's duality, coming because "it has a hard nosed economic feel while restating the importance of the social." For researchers, the term is popular partly due to the broad range of outcomes it can explain; the multiplicity of uses for social capital has led to a multiplicity of definitions. Social capital has been used at various times to explain superior managerial performance , improved performance of functionally diverse groups , the value derived from strategic alliances and enhanced supply chain relations .

Early attempts to define social capital focused on the degree to which social capital as a resource should be used for public good or for the benefit of individuals. Putnam suggested that social capital would facilitate co-operation and mutually supportive relations in communities and nations and would therefore be a valuable means of combating many of the social disorders inherent in modern societies, for example crime. In contrast to those focussing on the individual benefit derived from the web of social relationships and ties individual actors find themselves in, attribute social capital to increased personal access to information and skill sets and enhanced power . According to this view, individuals could use social capital to further their own career prospects, rather than for the good of organisations.

In The Forms of Capital Pierre Bourdieu distinguishes between three forms of capital: economic capital, cultural capital and social capital. He defines social capital as "the aggregate of the actual or potential resources which are linked to possession of a durable network of more or less institutionalised relationships of mutual acquaintance and recognition". His treatment of the concept is instrumental, focusing on the advantages to possessors of social capital and the “deliberate construction of sociability for the purpose of creating this resource”.

James Coleman defined social capital functionally as “a variety of entities with two elements in common: they all consist of some aspect of social structure, and they facilitate certain actions of actors...within the structure” – that is, social capital is anything that facilitates individual or collective action, generated by networks of relationships, reciprocity, trust, and social norms. In Coleman’s conception, social capital is a neutral resource that facilitates any manner of action, but whether society is better off as a result depends entirely on the individual uses to which it is put.

According to Robert Putnam, social capital "refers to the collective value of all ' social networks' and the inclinations that arise from these networks to do things for each other". According to Putnam and his followers, social capital is a key component to building and maintaining democracy. Putnam says that social capital is declining in the United States. This is seen in lower levels of trust in government and lower levels of civic participation. Putnam also says that television and urban sprawl have had a significant role in making America far less 'connected'. Putnam believes that social capital can be measured by the amount of trust and "reciprocity" in a community or between individuals.

Nan Lin's concept of social capital has a more individualistic approach: "Investment in social relations with expected returns in the marketplace". This may subsume the concepts of some others such as Bourdieu, Flap and Eriksson.

In "Social Capital and Development: The Coming Agenda", Francis Fukuyama points out that there isn't an agreed definition of social capital, so he explains it as “shared norms or values that promote social cooperation, instantiated in actual social relationships” (Fukuyama, 27), and uses this definition throughout this paper. He argues that social capital is a necessary precondition for successful development, but a strong rule of law and basic political institutions are necessary to build social capital. He believes that a strong social capital is necessary for a strong democracy and strong economic growth. Familism is a major problem of trust because it fosters a two-tiered moral system, in which a person must favour the opinions of family members. Fukuyama believes that bridging social capital (a term coined by Putnam in "Bowling Alone"), is essential for a strong social capital because a broader radius of trust will enable connections across borders of all sorts and serve as a basis for organizations. Although he points out many problems and possible solutions in his paper, he does admit that there is still much to be done to build a strong social capital.

The Social Capital Foundation (TSCF) suggested that social capital should not be mixed up with its manifestations. While for example social capital is often understood as the networks that a person possesses and that he/she may use in a social integration purpose, it is more the disposition to create, maintain and develop such networks that constitutes real social capital. Similarly, civic engagement is a manifestation of social capital but not social capital itself. In this definition, social capital is a collective mental disposition close to the spirit of community.

Nahapiet and Ghoshal in their examination of the role of social capital in the creation of intellectual capital, suggest that social capital should be considered in terms of three clusters: structural, relational and cognitive. Carlos García Timón describes that the structural dimensions of social capital relate to an individual ability to make weak and strong ties to others within a system. This dimension focuses on the advantages derived from the configuration of an actor's, either individual or collective, network. The differences between weak and strong ties are explained by Granovetter (1973). The relational dimension focuses on the character of the connection between individuals. This is best characterized through trust of others and their cooperation and the identification an individual has within a network. Hazleton and Kennan added a third angle, that of communication. Communication is needed to access and use social capital through exchanging information, identifying problems and solutions, and managing conflict. According to Boisot and Boland and Tensaki, meaningful communication requires at least some sharing context between the parties to such exchange. The cognitive dimension focusses on the shared meaning and understanding that individuals or groups have with one another.

A network-based conception can also be used for characterizing the social capital of collectivities (such as organizations or business clusters).


Definitional issues

The term "capital" is used by analogy with other forms of economic capital, as social capital is argued to have similar (although less measurable) benefits. However, the analogy with capital is misleading to the extent that, unlike traditional forms of capital, social capital is not depleted by use, but in fact depleted by non-use ("use it or lose it"). In this respect, it is similar to the now well-established economic concept of human capital.

Social Capital is also distinguished from the economic theory Social Capitalism. Social Capitalism as a theory challenges the idea that Socialism and Capitalism are mutually exclusive. Social-Capitalism posits that a strong social support network for the poor enhances capital output. By decreasing poverty, capital market participation is enlarged.


In his pioneering study, Bowling Alone: The Collapse and Revival of American Community (Simon & Schuster, 2000), Harvard political scientist Robert D. Putnam wrote: " Henry Ward Beecher's advice a century ago to 'multiply picnics' is not entirely ridiculous today. We should do this, ironically, not because it will be good for America — though it will be — but because it will be good for us." Putnam is not suggesting here that we must expand an already stable level of networking and civil interaction. He has found an overall decline in social capital in America over the past fifty years, a trend that may have significant implications for American society.

Putnam speaks of two main components of the concept: bonding social capital and bridging social capital, the creation of which Putnam credits to Ross Gittel and Avis Vidal. Bonding refers to the value assigned to social networks between homogeneous groups of people and Bridging refers to that of social networks between socially heterogeneous groups. Typical examples are that criminal gangs create bonding social capital, while choirs and bowling clubs (hence the title, as Putnam lamented their decline) create bridging social capital. Bridging social capital is argued to have a host of other benefits for societies, governments, individuals, and communities; Putnam likes to note that joining an organization cuts in half an individual's chance of dying within the next year.

The distinction is useful in highlighting how social capital may not always be beneficial for society as a whole (though it is always an asset for those individuals and groups involved). Horizontal networks of individual citizens and groups that enhance community productivity and cohesion are said to be positive social capital assets whereas self-serving exclusive gangs and hierarchical patronage systems that operate at cross purposes to societal interests can be thought of as negative social capital burdens on society.

Social capital development on the internet via social networking websites such as Facebook or Myspace tends to be bridging capital according to one study, though "virtual" social capital is a new area of research.


There is no widely held consensus on how to measure social capital, which has become a debate in itself: why refer to this phenomenon as 'capital' if there is no true way to measure it? While one can usually intuitively sense the level/amount of social capital present in a given relationship (regardless of type or scale), quantitative measuring has proven somewhat complicated. This has resulted in different metrics for different functions. In measuring political social capital, it is common to take the sum of society’s membership of its groups. Groups with higher membership (such as political parties) contribute more to the amount of capital than groups with lower membership, although many groups with low membership (such as communities) still add up to be significant. While it may seem that this is limited by population, this need not be the case as people join multiple groups. In a study done by Yankee City, a community of 17,000 people was found to have over 22,000 different groups.

The level of cohesion of a group also affects its social capital. However, there is no one quantitative way of determining the level of cohesiveness, but rather a collection of social network models that researchers have used over the decades to operationalize social capital. One of the dominant methods is Ronald Burt's constraint measure, which taps into the role of tie strength and group cohesion. Another network based model is network transitivity.

How a group relates to the rest of society also affects social capital, but in a different manner. Strong internal ties can in some cases weaken the group’s perceived capital in the eyes of the general public, as in cases where the group is geared towards crime, distrust, intolerance, violence or hatred towards other. The Ku Klux Klan and the Mafia are examples of these kinds of organizations.

Social capital not only measures the relationship of people and their community, but also the relationship of these citizens with their animal companions. Robert Putnam claims in his book Bowling Alone that an increase in companionship with pets also increases the strength on the community bonds. Interacting with fellow pet owners and citizens at the local dog park, or while exercising your "best friend" can create a network of bridging relationship centered around the commonality of pet ownership. In his chapter entitled "Social Capital in the Dog Park" Putnam uses the example of Fido and his owner Jane to exemplify the bridging relationship between Jane and her dog. The discrepancy in the species type of Jane and Fido illustrates the bridge between them, rather than the bond. And due to this unique relationship that one may possess with his or her pet demonstrates the ability of social capital to increase not only the livelihood of the people in the community, but the pets' livelihoods as well.

Sociologists Carl L. Bankston and Min Zhou have argued that one of the reasons social capital is so difficult to measure is that it is neither an individual-level nor a group-level phenomenon, but one that emerges across levels of analysis as individuals participate in groups. They argue that the metaphor of "capital" may be misleading because unlike financial capital, which is a resource held by an individual, the benefits of forms of social organization are not held by actors, but are results of the participation of actors in advantageously organized groups.

Social capital and civil society

A number of authors give definitions of civil society that refer to voluntary associations and organisations outside the market and state. This definition is very close to that of the third sector, which consists of "private organisations that are formed and sustained by groups of people acting voluntarily and without seeking personal profit to provide benefits for themselves or for others". According to such authors as Walzer, Alessandrini, Newtown, Stolle and Rochon, Foley and Edwards, and Walters, it is through civil society, or more accurately, the third sector, that individuals are able to establish and maintain relational networks. These voluntary associations also connect people with each other, build trust and reciprocity through informal, loosely structured associations, and consolidate society through altruism without obligation. It is "this range of activities, services and associations produced by... civil society" that constitutes the sources of social capital.

If civil society, then, is taken to be synonymous with the third sector then the question it seems is not 'how important is social capital to the production of a civil society?' but 'how important is civil society to the production of social capital?'. Not only have the authors above documented how civil society produces sources of social capital, but in Lyons work "Third Sector", social capital does not appear in any guise under either the factors that enable or those that stimulate the growth of the third sector, and Onyx describes how social capital depends on an already functioning community.

However, a truer definition of civil society is different though not wholly distinct from the third sector. Lyons goes some way to addressing this by introducing a somewhat Marxist interpretation of civil society, where civil society is "the space for free association, where people could meet and form groups to pursue their enthusiasm, express their values and assist others". This is a "vibrant space, full of argument and disputation about matters of greatest import to its citizens", resembling the polis of Athens more than the organisations of the third sector. This also implies "elements of the enlightenment use of the term civil society" including decency, respect, good manners and kindness to fellow beings.

The idea that creating social capital (i.e. creating networks) will strengthen civil society underlies current Australian social policy aimed at bridging deepening social divisions. The goal is to reintegrate those marginalised from the rewards of the economic system into "the community". However, according to Onyx (2000), while the explicit aim of this policy is inclusion, its effects are exclusionary.

Foley and Edwards believe that "political systems...are important determinants of both the character of civil society and of the uses to which whatever social capital exists might be put". Alessandrini agrees, saying, "in Australia in particular, neo-liberalism has been recast as economic rationalism and identified by several theorists and commentators as a danger to society at large because of the use to which they are putting social capital to work".

The resurgence of interest in "social capital" as a remedy for the cause of today’s social problems draws directly on the assumption that these problems lie in the weakening of civil society. However this ignores the arguments of many theorists who believe that social capital leads to exclusion rather than to a stronger civil society. In international development, Ben Fine and John Harriss have been heavily critical of the inappropriate adoption of social capital as a supposed panacea (promoting civil society organisations and NGOs, for example, as agents of development) for the inequalities generated by neoliberal economic development. This leads to controversy as to the role of state institutions in the promotion of social capital.

An abundance of social capital is seen as being almost a necessary condition for modern liberal democracy. A low level of social capital leads to an excessively rigid and unresponsive political system and high levels of corruption, in the political system and in the region as a whole. Formal public institutions require social capital in order to function properly, and while it is possible to have too much social capital (resulting in rapid changes and excessive regulation), it is decidedly worse to have too little.

Kathleen Dowley and Brian Silver published an article entitled "Social Capital, Ethnicity and Support for Democracy in the Post-Communist States." This article found that in post-communist states, higher levels of social capital did not equate to higher levels of democracy. However, higher levels of social capital led to higher support for democracy.

A number of intellectuals in developing countries have argued that the idea of social capital, particularly when connected to certain ideas about civil society, is deeply implicated in contemporary modes of donor and NGO driven imperialism and that it functions, primarily, to blame the poor for their condition.

The concept of social capital in a Chinese social context has been closely linked with the concept of guanxi.

An interesting attempt to measure social capital spearheaded by Corporate Alliance in the English speaking market segment of the United States of America and Xentrum through the Latin American Chamber of Commerce in Utah on the Spanish speaking population of the same country, involves the quantity, quality and strength of an individual social capital. With the assistance of software applications and web based relationship oriented systems such as LinkedIn, these kinds of organizations are expected to provide its members with a way to keep track of the number of their relationships, meetings designed to boost the strength of each relationship using group dynamics, executive retreats and networking events as well as training in how to reach out to higher circles of influential people.

Social capital and education

Coleman and Hoffer collected quantitative data of 28,000 students in total 1,015 public, Catholic and other private high schools in America from the 7 years’ period from 1980 to 1987. It was found from this longitudinal research that social capital in students' families and communities attributed to the much lower dropout rates in Catholic schools compared with the higher rates in public.

Teachman et al. further develop the family structure indicator suggested by Coleman. They criticise Coleman, who used only the number of parents present in the family, neglected the unseen effect of more discrete dimensions such as stepparents' and different types of single-parent families. They take into account of a detailed counting of family structure, not only with two biological parents or stepparent families, but also with types of single-parent families with each other (mother-only, father-only, never-married, and other). They also contribute to the literature by measuring parent-child interaction by the indicators of how often parents and children discuss school-related activities.

Morgan and Sorensen directly challenge Coleman for his lacking of an explicit mechanism to explain why Catholic schools students perform better than public school students on standardised tests of achievement. Researching students in Catholic schools and public schools again, they propose two comparable models of social capital effect on mathematic learning. One is on Catholic schools as norm-enforcing schools whereas another is on public schools as horizon-expanding schools. It is found that while social capital can bring about positive effect of maintaining an encompassing functional community in norm-enforcing schools, it also brings about the negative consequence of excessive monitoring. Creativity and exceptional achievement would be repressed as a result. Whereas in horizon expanding school, social closure is found to be negative for student's mathematic achievement. These schools explore a different type of social capital, such as information about opportunities in the extended social networks of parents and other adults. The consequence is that more learning is fostered than norm-enforcing Catholic school students. In sum, Morgan and Sorensen’s (1999) study implies that social capital is contextualised, one kind of social capital may be positive in this setting but is not necessarily still positive in another setting.

In their journal article “Beyond social capital: Spatial dynamics of collective efficacy for children”, Sampson et al. stress the normative or goal-directed dimension of social capital. They claim, "resources or networks alone (e.g. voluntary associations, friendship ties, organisational density) are neutral--- they may or may not be effective mechanism for achieving intended effect"

Maljoribanks and Kwok conducted a survey in Hong Kong secondary schools with 387 fourteen-year-old students with an aim to analyse female and male adolescents differential educational achievement by using social capital as the main analytic tool. In that research, social capital is approved of its different effects upon different genders. In his thesis "New Arrival Students in Hong Kong: Adaptation and School Performance ", Hei Hang Hayes Tang argues that adaptation is a process of activation and accumulation of (cultural and social) capitals. The research findings show that supportive networks is the key determinant differentiating the divergent adaptation pathways. Supportive networks, as a form of social capital, is necessary for activating the cultural capital the newly arrived students possessed. The amount of accumulated capital is also relevant to further advancement in the ongoing adaptation process..

Min Zhou and Carl L. Bankston in their study of a Vietnamese community in New Orleans find that preserving traditional ethnic values enable immigrants to integrate socially and to maintain solidarity in an ethnic community. Ethnic solidarity is especially important in the context where immigrants just arrive in the host society. In her article “Social Capital in Chinatown”, Zhou examines how the process of adaptation of young Chinese Americans is affected by tangible forms of social relations between the community, immigrant families, and the younger generations. Chinatown serves as the basis of social capital that facilitates the accommodation of immigrant children in the expected directions. Ethnic support provides impetus to academic success. Furthermore maintenance of literacy in native language also provides a form of social capital that contributes positively to academic achievement. Stanton-Salazar and Dornbusch found that bilingual students were more likely to obtain the necessary forms of institutional support to advance their school performance and their life chances.

Putnam (2000) mentioned in his book Bowling Alone, " Child development is powerfully shaped by social capital" and continued "presence of social capital has been linked to various positive outcomes, particularly in education". According to his book these positive outcomes are the result of parents' social capital in a community. States where there is a high social capital, there is also a high Education performance. The similarity of these states is that parents were more associated with their children' education. When there is more parents' participation to their children' education and school, teachers have reported these engagements lower levels of students misbehavior, such as bringing weapons to school, engaging in physical violence, playing hooky, and being generally apathetic about education. From these Putnam's arguments and evidents in order to find out relationship between social capital and education, one needs to consider amount of parents engagement to education and a school and existence of amount of social capital in a community. Borrowing Coleman's quotation from Putnam's book, Coleman once mentioned we cannot understate "the importance of the embeddedness of young persons in the enclaves of adults most proximate to them, first and most prominent the family and second, a surrounding community of adults".

The argument that social capital may be negative

It has been noted that social capital may be not always invested towards positive ends. An example of the complexities of the effects of social capital is violent or criminal gang activity that is encouraged through the strengthening of intra-group relationships. (Bonding social capital) This iterates the importance of distinguishing between bridging social capital as opposed to the more easily accomplished bonding of social capital. In the case of deleterious consequences of social capital, it is a disproportionate amount of bonding vis-à-vis bridging.

Without "bridging" social capital, "bonding" groups can become isolated and disenfranchised from the rest of society and, most importantly, from groups with which bridging must occur in order to denote an "increase" in social capital. Bonding social capital is a necessary antecedent for the development of the more powerful form of bridging social capital. Bonding and bridging social capital can work together productively if in balance, or they may work against each other. As social capital bonds and stronger homogeneous groups form, the likelihood of bridging social capital is attenuated. Bonding social capital can also perpetuate sentiments of a certain group, allowing for the bonding of certain individuals together upon a common radical ideal. The strengthening of insular ties can lead to a variety of effects such as ethnic marginalization or social isolation. In extreme cases ethnic cleansing may result if the relationship between different groups is so strongly negative. In mild cases, it just isolates certain communities such as suburbs of cities because of the bonding social capital and the fact that people in these communities spend so much time away from places that build bridging social capital.

Social capital (in the institutional Robert Putnam sense) may also lead to bad outcomes if the political institution and democracy in a specific country is not strong enough and is therefore overpowered by the social capital groups. “Civil society and the collapse of the Weimar Republic” suggests that “it was weak political institutionalization rather than a weak civil society that was Germany’s main problem during the Wihelmine and Weimar eras.” Because the political institutions were so weak people looked to other outlets. “Germans threw themselves into their clubs, voluntary associations, and professional organizations out of frustration with the failures of the national government and political parties, thereby helping to undermine the Weimar Republic and facilitate Hitler’s rise to power.” In this article about the fall of the Weimar Republic, the author makes the claim that Hitler rose to power so quickly because he was able to mobilize the groups towards one common goal. Even though German society was, at the time, a "joining" society these groups were fragmented and their members did not use the skills they learned in their club associations to better their society. They were very introverted in the Weimar Republic. Hitler was able to capitalize on this by uniting these highly bonded groups under the common cause of bringing Germany to the top of world politics. The former world order had been destroyed during World War I, and Hitler believed that Germany had the right and the will to become a dominant global power.

Later work by Putnam also suggests that social capital, and the associated growth of public trust are inhibited by immigration and rising racial diversity in communities. Putnam's study regarding the issue argued that in American areas with a lack of homogeneity, some individuals neither participated in bonding nor bridging social capital. In societies where immigration is high (USA) or where ethnic heterogeneity is high (Eastern Europe), it was found that citizens lacked in both kinds of social capital and were overall far less trusting of others than members of homogenous communities were found to be. Lack of homogeneity led to people withdrawing from even their closest groups and relationships, creating an atomized society as opposed to a cohesive community. These findings challenge previous beliefs that exposure to diversity strengthens social capital, either through bridging social gaps between ethnicities or strengthening in-group bonds.

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