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Press Release: Superstores undermine community, says survey

Big supermarkets undermine social capital and local trust, according to a new study by American economists.

All the research suggests that communities with higher levels of social capital are healthier and more resilient, and their members are better able to work together to solve problems - and this almost certainly contributes to economic growth and poverty reduction.

"Our results indicate that the presence of Wal-Mart depresses social capital stocks in local communities" concluded Stefan Goetz and Anil Rupasingha in their study "Wal-Mart and social capital" published by The American Journal of Agricultural Economics.

The implications include both a weakened social fabric and "real costs for communities in the form of economic growth".

The study looked at communities in which new Wal-Mart stores were built in the 1990s and those that already had a Wal-Mart at the beginning of the decade. The study controlled for other variables known to affect social capital stocks in the community, such as educational attainment. 

"Both the initial number of Wal-Mart stores, and each store added per 10,000 persons during the decade, reduced the overall capital measure," Goetz and Rupasingha found.

They found that communities that gained a Wal-Mart during the decade had fewer local charities and local associations like churches, campaign groups and business groups per capital than those that did not.

They also found that Wal-Mart's presence depresses civic participation. Communities that had or gained a Wal-Mart store in the 1990s had lower voter turnout in the 2000 presidential election.

Goetz and Rupasingha suggest that Wal-Mart's negative effect is partly a result of its impact on locally owned businesses. Wal-Mart harms not only local retailers, but also a wide variety of other businesses and professionals that serve local retailers, such as banks and accountants. When they disappear, the economists write: "the social capital they embody is destroyed, and their entrepreneurial skills and other forms of location-specific human capital are forever lost to the community."

Notes

Source: Radical Economics, Journal of the New Economics Foundation, London, Spring 2007.  www.neweconomics.org