Does the Internet undermine social capital, such as real-world inter-personal relations and civic engagement? Merging unique telecommunication data with geo-coded German individual-level data, we investigate how broadband Internet affects social capital. A first identification strategy uses first-differencing to account for unobserved time-invariant individual heterogeneity. A second identification strategy exploits a quasi-experiment in East Germany created by a mistaken technology choice of the state-owned telecommunication provider in the 1990s that hindered broadband Internet roll-out for many households. We find no evidence of negative effects of the Internet on several aspects of social capital. In fact, the effect on a composite social capital index is significantly positive.That is from a new published paper by Stefan Bauernschuster, Oliver Falck, & Ludger Woessmann. A draft is here.
They explain in the conclusions
Our findings are in clear contrast to the significant negative impact of TV consumption on social capital shown by Olken (2009). It seems that on average, because of the distinguishing feature of interactivity, the Internet is qualitatively different from the television in that its main function is not so much one of passive entertainment. At least in some areas of social engagement, the main function of the Internet seems rather one of active information and communication – which the Internet provides in an individualized form at any time – that is conducive to social interaction. Such an interpretation is in line with the fact that the significant positive effects are found in particular for activities where reserving and purchasing tickets might be easier via the Internet, as well as with suggestive evidence that most people use the Internet for information search and communication, whereas much fewer people use it for mere entertainment purposes. p. 23