The Environmental Kuznets Curve Under a New framework: Role of Social Capital in Water Pollution



b- Professional organization

c- Labor organization

d- Civic and social organization

e- Political organization
f- Religious organization

Methods

Social capital indexing

To create a composite social capital index and relate it to individual pollutants in the
EKC framework, we choose the essential variables and determine the relative weights to
consolidate them into a single index. We follow Jha and Murthy’s procedure to develop
social capital index and methodology used to develop this index. Principal component
analysis (PCA) is an appropriate methodology because it maximizes the variance rather
than minimizes the least square distance. PCA is capable of providing the original set of
variables into a smaller set of uncorrelated variables containing most of the information.
The transformation of original variable to new index is presented as

p

У1 = all xi + α12χ 2 +..........+ al pxp = ∑ aιX                       (1)

i =1

PCA determines the optimal vector of weights (a11, a12,....., a1p) and the associated

variance of y1 which is denoted by .

Based on the Cattell’s scree plot, we chose the variables that have the highest
loading on a component. Following this procedure, we define the social capital for the ith
parish as SCi = ɪw jxji, where wj is the jth component score and xi is the value of the

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