There are many situations where it is difficult to enforce a social contract. In addition, addressing global problems such as climate change requires collective action. Social capital can help overcome market failure due to the inability to enforce social contract and collective action. However, social capital can be affected by external shocks such as electricity provision in developing countries, but not evident in the literature. This study examines the effect of electricity on social capital, particularly household-level trust, social interactions \& network density. To address the endogenous electricity provision, we estimate bivariate probit model using plausibly exogenous land gradient as an instrument.

Our results show that, in short run the effect of electricity on various measures of social capital is not distinguishable from zero. However, we do find some evidence of a heterogeneous effect. Female-headed and electrified households are positively correlated with social interaction and trust.