Asset Valuation of Social Capital

The objective of this paper is to evaluate the asset value of social capital. Whereas empirical attempts to estimate the productivity of social capital have accumulated considerably in Japan, almost no attempt has so far been reported that aims at imputing the asset value of social capital. Our approach is to estimate Tobin's q ratio of social capital following the original approach of defining Tobin's q ratio for private capital. Our estimation results indicate that the average social capital q ratio over prefectures in Japan has drifted from 1981 to 1996 rather stably around the values between 1.5 and 2.0. This ratio takes high values up to 3.0 in the urban prefectures of the Kanto, Kansai, and Chubu districts while it takes low values centering on 1.0 in the remaining prefectures in rural districts.