The Sociology of Finance by Bruce G. Carruthers and Jeong-Chul Kim

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The Sociology of Finance

Bruce G. Carruthers and Jeong-Chul Kim
Department of Sociology, Northwestern University, Evanston, Illinois 60201;
email: b-carruthers@northwestern.edu
Annu. Rev. Sociol. 2011. 37:23959
Keywords
First published online as a Review in Advance on

April 4, 2011
credit, trust, banking, nancialization, disintermediation,

performativity
The Annual Review of Sociology is online at

soc.annualreviews.org
This articles doi:
10.1146/annurev-soc-081309-150129
c 2011 by Annual Reviews.
Copyright
All rights reserved
0360-0572/11/0811-0239$20.00
Abstract
The economic crisis of 20082010 stimulated an already growing sociological interest in nance. Before the crisis, disintermediation and
securitization changed how the U.S. nancial system operated, as bank
operations shifted from the traditional originate-and-hold model to
originate-and-distribute. During the 1980s and 1990s, the overall size
and protability of the nancial system grew as deregulation unleashed
nancial innovation and reorganization. Global shifts toward capital
market integration and liberalization created greater global interdependence. Households in the years before the crisis also altered their
relationship to the nancial system, increasing debt loads and overall exposure to the stock market. Research reveals the importance of politics
for many nancial market developments, various implications for corporate governance, the continuing signicance of social factors within
nance, and the role of theoretical and material devices in shaping nancial practices. Key directions for future research focus on nance
in relation to social inequality, informal sectors, valuation, and social
networks.
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INTRODUCTION

American bankers used to follow the 3-6-3 rule:

take in deposits at 3%, lend the money at 6%,
and be on the golf course by 3 PM. Studying
such bankers was like watching paint dry. But
the boring stability of old-fashioned banking is
now gone. Indeed, the entire nancial sector
has become more dynamic and is characterized
by impressive innovation, growing complexity and interdependence, and sometimes dramatic instability. So even before subprime lending and collateralized debt obligations (CDOs)
were cast as culprits in the latest economic crisis, sociologists had begun to study nance.
Finance involves an interconnected set of
four elements: actors, actions, contexts for action, and rules governing action. The actors
consist of individuals, who might be borrowers,
lenders, investors, bankers, brokers, traders,
and so on. Organizational actors include banks,
pension funds, insurance companies, tax authorities, hedge funds, pawn shops, venture
capital funds, investment clubs, savings and
loans, mutual funds, and credit unions, among
others. Sometimes one actor provides the context for others, leading to complex nested relationships among them. The New York Stock
Exchange offers an institutional platform on
which investors trade equities, for example, and
the Federal Reserve System regulates and manages the U.S. nancial system.
Other contexts for action include networks
(like the informal hawala system, through which
international remittances often ow, or the
computer systems that link together investment
bank trading oors), markets (e.g., the U.S.
housing market), the polity (wherein appeared
George W. Bushs ownership society initiatives, nineteenth-century populist criticisms
of bankers, and recent outrage about bankers
bonuses), laws and regulations (e.g., usury laws,
prohibitions on predatory lending, capital requirements for banks, disclosure requirements
for share offerings), and devices (stock tickers, computer screens, credit cards, nancial
formulas). Financial actions consist of various
activities, including simple borrowing, saving,
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Kim
and lending, but also investing, rating, analyzing, arbitrage, origination, taxing, underwriting, regulating, trading, listing, and hedging.
Not all actors can perform all actions, and they
are selectively paired. For instance, only a member of the New York Stock Exchange can trade
on the exchange, and ratings are done by a small
number of credit rating agencies. Actions are
governed by formal and informal rules, set both
privately and publicly. The Securities and Exchange Commission imposes legal disclosure
requirements on rms that issue publicly traded
securities. But private actors such as the New
York Stock Exchange or the Chicago Mercantile Exchange also impose their own rules on
market participants. And nancial traders often develop informal behavioral norms among
themselves.
Promises form the core of nance. One
party promises to pay a sum of money to
another. Much nancial activity involves, one
way or another, the design, production, distribution, evaluation, acceptance (or rejection),
enforcement, and modication of promises.
Promises can be simple or complex. A simple
loan involves money paid at one point in
time, in exchange for a promise to repay the
money (plus interest) later on. In making such
loans, lenders have to decide if they trust the
borrowers promise, and there are many ways
to make such a determination (Carruthers
2009). Their willingness to lend is tempered by
how uncertain they are about the borrowers
willingness and ability to repay in the future
and by the exposure entailed by the loan.
The evolution of credit decision making has
been a key part in the development of modern
credit economies, but in general lenders try to
mitigate their uncertainty and vulnerability. A
CDO is a highly complex nancial instrument
that combines and structures pieces of many
prior promises and issues new promises that
are grouped into separate tranches (chiey
distinguished from each other by their seniority). Rating agencies such as Moodys are in
the business of evaluating promises and rating
nancial instruments, including CDOs but also
more ordinary corporate bonds. The economic

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signicance of promises has become particularly obvious in the recent nancial crisis, when
so many promises were broken that overall
condence in nancial institutions virtually
disappeared (Swedberg 2010).
Finance is a renewed topic for sociology,
and most research has focused on particular
combinations of the four nancial elements.
For example, Harrington (2008) examines
individual investors in amateur California investment clubs. Uzzi & Lancaster (2003) study
how relations between bank loan managers and
their clients allow each to acquire critical information about the other. Millo (2007) tracks
the recent origin of index-based derivatives
in a nexus of nancial innovation, organized
exchanges, regulation, and nancial theory.
Guseva & Rona-Tas (2001) compare the
Russian and American credit card markets,
whereas Morgan & Prasad (2009) contrast
the development of the French and American
taxation systems. Arrighi (2010) views the rise
of nance capital macroscopically, as a stage
in long-term cycles of capital accumulation
that unfold over centuries. Some nancial
actors (e.g., banks and venture capitalists) have
received more attention than others (e.g., pawn
shops, credit unions, and bank regulatory agencies). Likewise, there is more research on some
activities (e.g., mortgage lending) than others
(e.g., borrowing from loan sharks or rating corporate bonds). Despite many gaps, an expanding mosaic of research uses methods ranging
from old-fashioned ethnography to high-tech
network analysis and draws on many theoretical
traditions. Overall, this mosaic reects a growing appreciation of the sociological signicance
of nancial activities and institutions.
Although interest in nance is rapidly
growing, the sociology of nance draws on
other research. Most obviously, classical sociologists such as Max Weber and Georg Simmel
analyzed banking, money, and nance (Weber
1981, pp. 25466, 27980; Simmel 1978). Like
economic sociology more broadly, the sociology of nance attends to the institutional foundations for nancial markets (Dobbin 2005,
pp. 3340), including law (Swedberg 2003,
pp. 189217; Halliday & Carruthers 2009),

and considers the embeddedness of nancial
transactions in social networks (Smith-Doerr
& Powell 2005, Uzzi 1999). Financial institutions play a key role in economic growth and
so are relevant to studies of globalization and
economic development (Geref 2005). Credit
functions as a substitute for money, and credit
arrangements have been important in sustaining consumer demand and have bearing on the
sociology of consumption (Zelizer 1994, 2005).
We start by reviewing the large-scale
changes that have recently made nance such an
interesting topic for sociologists. We then consider various connections to politics and public
policy and discuss how nance affects households. Finally, we turn to the micro contexts
for nance: the local settings in which nancial
activities unfold. It is usual to show how macroscopic processes set the context for small-scale
activities, but in nance the reverse also holds.
Each of these topics covers an overlapping set
of actors, contexts, activities, and rules.
MACRO FINANCE
Changes in nance have motivated much recent scholarly attention, and researchers note
various connections to macroscopic processes
such as globalization, deregulation, nancialization, and neoliberalism. The United States
plays a leading role in all these changes and so is
frequently the focus of analysis. One reason for
the attention on nance is simple: By various
measures, the nancial sector of the U.S. economy has grown signicantly in the past several
decades ( Johnson & Kwak 2010, p. 59). The nancial industrys share of GDP increased from
around 15% in 1960 to roughly 23% in 2001,
surpassing manufacturing in the early 1990s.
Finances share of corporate prots also grew
substantially over the same period (Dore 2008;
Guillen & Suarez 2010, p. 260; Krippner 2005,
pp. 17879), and bank prots were particularly
high in the decade before the recent crisis
(Tregenna 2009). Some of those extraordinary
prots have been (unevenly) shared with
employees, and so nancial sector wages rose
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throughout the 1990s and 2000s (Philippon &

Reshef 2009). A job on Wall Street became an
increasingly attractive prospect for Ivy League
college graduates. Furthermore, nonnancial
rms derived a growing proportion of their
overall income from nancial sources (Krippner 2005, pp. 18586). For many years, for
example, in addition to building cars, General Motors made money nancing car sales
through GMAC, and GMAC expanded into
other nancial services, including mortgages
and banking. Many of the largest rms, both
nancial and nonnancial, have become more
accountable to institutional investors (like pension funds), whose shareholdings have steadily
grown. Justied by agency theory and pushed
by institutional investors (Dobbin & Jung
2010), shareholder value became a guiding
principle in corporate governance (Davis 2009).
Finance represents a leading edge of globalization (LiPuma & Lee 2004, pp. 56; Obstfeld
& Taylor 2004, pp. 2728). Global capital
markets are highly integrated, capital is mobile,
and so nancial changes and shocks quickly
spread around the world. With little delay, for
example, problems with U.S. subprime mortgages crossed the Atlantic to trouble European
banks and pension funds. And Wall Street rating agencies pass judgment on borrowers from
around the world, including sovereign governments (Sinclair 2005). Global nancial markets
have also conformed to global policy trends favoring deregulation. The neoliberal orthodoxy
embraced by the International Monetary Fund
(IMF) and World Bank favored the removal
of capital controls, central bank independence,
privatization, and nancial deregulation (Babb
2009, p. 70; Brune et al. 2004; Polillo & Guillen
2005). Stock exchanges have also spread around
the world in the past several decades (Posner
2005, Weber et al. 2009). Even China, which
has maintained close political control over
its development of a socialist market economy, has dramatically modied its nancial
system (Yao & Yueh 2009). When coupled
with the transition from command to market
economies in eastern and central Europe,
market governance has become truly pervasive.

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Although the United States has never

been subject to IMF conditionalities (Babb
& Carruthers 2008), a domestic version of
neoliberalism unfolded in the 1980s and 1990s
(Prasad 2006). Much of the New Deal nancial
regulatory apparatus was pulled down, piece
by piece (Davis 2009, pp. 11621; Krippner
2011, pp. 6063, 1025). Savings and loans
institutions functioned as inadvertent crash test
dummies in being the rst nancial institutions
to be deregulated en masse. They were also the
rst to produce an expensive crisis (Calavita
et al. 1997; Seabrooke 2006, p. 115), but the
lessons of that episode were soon forgotten
in an era of triumphal hubris and irrational
exuberance. Terms such as the Great Moderation signaled the widespread belief that
by the late 1990s the U.S. nancial system
had entered a new era of good governance
and rational risk management. The business
cycle became less volatile starting in the 1990s
(Stock & Watson 2002), and some claimed that
macroeconomic stabilization policy had nally
succeeded (Lucas 2003). Henceforth, nancial
markets did not need government regulation
because they could self-regulate.
Deregulation unleashed nancial innovation and consolidation. Banks grew in
size and shrank in number, which mattered
because, among other things, large banks tend
to lend differently than small banks (Cole
et al. 2004). Financial conglomerates moved
across formerly inviolable boundaries to merge
commercial banking with investment banking,
insurance, brokerage, wealth management, and
other nancial services (Davis 2009, pp. 124
26; Seabrooke 2006, p. 136). Furthermore, a
shadow banking system formed as institutions
like hedge funds and private equity groups
undertook bank-like activities without the
regulatory oversight to which banks are subject
(Stulz 2007). Investment banks began to
create a stream of new nancial products and
techniques that were heralded as key tools for
a new era of risk management (Power 2006),
in part because of their exotic complexity
and the widespread employment of quants
(physicists and mathematicians) in their design

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and application (Holzer & Millo 2005). Some

nancial trading continued to occur on formal
exchanges, which offered relative transparency
and some measure of standardization and
regulatory oversight. But increasingly, other
products were traded over the counter through
opaque private networks and with little
oversight by anyone (Huault & Rainelli-Le
Montagner 2009).
Some forms of nancial innovation challenged prevailing social norms. In the oil-rich
states of the Persian Gulf, modern nance ran
up against the strictures of Islamic law, including its ancient prohibition on usury (Warde
2000). Evolving forms of credit that target poor
borrowers (e.g., payday loans) frequently raised
the issue of predatory lending (Stegman 2007).
Quinns (2008) study of viatical settlements
(a transaction in which a terminally ill individual sells his or her life insurance benets)
points out that some new products appeared
morally problematic. Market participants wrestled with sharply conicting rhetorical framings: that viaticals commercialized the sacredness of death; that they provided much-needed
assistance to the dying; or that they are simply
mutually advantageous transactions, devoid of
moral salience. In general, the moral salience
of nance is intermittent and selective, but it
never entirely disappears.
Many of the recent changes are subsumed
under the terms disintermediation and securitization. Traditionally, banks and other nancial
institutions acted as intermediaries: taking
money from savers and lending it to borrowers.
The challenge was to create a protable
spread (lending money out at an interest rate
sufciently higher than what the institutions
paid for deposits) and to manage the maturity
mismatch (long-term assets versus short-term
liabilities). This originate-and-hold model is
being replaced by an originate-and-distribute
model (Mizruchi 2010, pp. 12223). Rather
than hold loans to maturity, banks increasingly securitize them (Davis 2009, pp. 3738;
Leyshon & Thrift 2007, p. 100). Securitization
involves bundling loans together and selling
them to investors. On a large scale, it began
when the Federal National Mortgage Association (Fannie Mae) bundled home mortgages
together and created simple pass-through
securities to sell to investors (Stuart 2003,
pp. 2122, 68). But others securitized different
income streams (accounts receivable, credit
card payments, leasing revenues), and securitization can be done in more complicated ways
to create products such as CDOs (Coval et al.
2009, Benmelech & Dlugosz 2009). Either way,
banks recover their capital sooner (when the securitized loans are sold) rather than later (when
borrowers complete repayment), and so they
are ready to lend again. In effect, securitization
turns bank loans, which are notoriously illiquid,
into marketable securities. It also increases
the amount of money available to borrowers
because investors who would otherwise not
want to lend are often willing to purchase
highly rated securitized loans ( Johnson &
Kwak 2010, pp. 76, 84). It can also, however,
undermine a lenders interest in ensuring that
a borrower is truly creditworthy (Immergluck
2009, pp. 1005). With the originate-and-hold
model, the bank directly suffered if it made a
bad loan. But with the originate-and-distribute
model, banks no longer keep loans in their
own portfolio, and thus the investors who
purchased the loan suffer if the loan goes sour.
The recent nancial crisis has brought several of these trends together. In the early 1980s,
banks and savings institutions dominated home
mortgage lending, but they were supplanted
by market-based lending by the early 1990s
(Adrian & Shin 2010, p. 604). Mortgage origination proved to be extremely protable in the
early 2000s, and as the market for U.S. prime
mortgages became saturated, lenders expanded
into nonconventional mortgages such as Alt-A
and subprime. With strong, worldwide demand
among investors for highly rated securities
(some of it due to regulatory requirements),
mortgage lending expanded dramatically
and became more concentrated at the same
time (Fligstein & Goldstein 2010, pp. 4445;
Rona-Tas & Hiss 2010, p. 146). Foreign
investors were assured not only by the high
ratings issued by Moodys and Standard and
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Poors, but also by the credit default swaps that

insured against default. As long as U.S. housing
prices kept rising, even marginal borrowers
could service their loans long enough to renance their mortgages and accumulate home
equity. But once the housing bubble burst,
things fell apart quickly. Mortgage default rates
soared, and highly rated, mortgage-backed
securities and the CDOs built out of them also
began to fail. Rating agencies downgraded so
many AAA-rated securities that it became clear
their initial ratings were wildly inaccurate.
Financial rms were vulnerable to collapse
because of how highly leveraged (i.e., dependent on borrowed money) they had become
(Guillen & Suarez 2010, p. 267) and because
a surprising number held onto some of the
nancial instruments they produced (Fligstein
& Goldstein 2010, p. 32). Thus, losses in subprime mortgages turned into a more general
credit crunch (Adrian & Shin 2010, p. 611).
Large public entities such as nation-states
have also been affected by nancial developments. Researchers have long examined how
states extract resources and the fact that the
historical development of the state depends
on its ability to mobilize resources through
various means: taxation, conscation, and
debt. Older comparative studies by Tilly
(1990), Goldstone (1991), Centeno (1997),
and others discerned different patterns of state
scal development and the corollary role of
public nance in state breakdown. Fears that
contemporary globalization would eviscerate
the ability of modern nation-states to set their
own taxing and spending policies have proven
to be overblown, and there has been no simple
race to the bottom (Swank 2008). Investors
do not always migrate to tax havens. Furthermore, evidence from taxation often challenges
conclusions about public policy that are based
on spending. For example, when looking
at expenditures, many contrast threadbare
American welfare programs with lavish European welfare states. And yet the United States
has long possessed a more progressive tax
structure (Martin et al. 2009, p. 15; Morgan
& Prasad 2009), and through revenue features

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such as the earned income tax credit, child tax

credit, and mortgage interest deductions, the
U.S. tax code functions as a form of social policy (Howard 2009). Kiser & Sacks (2009) claim
that contemporary African states could learn
from early modern European states about how
to organize their tax systems. Kiser & Sacks
argue that, with sharp information asymmetries
and poor monitoring, African states should
decentralize and privatize tax collection, rather
than build centralized tax bureaucracies, if they
want to raise revenue efciently. Yet where
taxes are concerned, politics often trumps efciency, and informal rules may be preferable to
formal procedure. Martins (2008) analysis of
recent U.S. property tax revolts suggests that
these were largely prompted by the modernization of property tax systems, where formal and
transparent rules replaced older, informal systems dominated by favoritism and patronage.
Modern tax systems meant market valuations
for property, higher taxes, and unhappy voters.
POLITICS AND FINANCE

Financial markets are not autonomous or natural, given that they always operate in a political context. Politics clearly played a role in
processes of nancialization because, as many
have noted, deregulation of the nancial sector
did not happen on its own. The label neoliberalism (and more pointedly, market fundamentalism) has been attached to a package of policy reforms that spread during the 1980s and
1990s and led to capital market liberalization
and deregulation in many countries. For example, increasing global ows of foreign direct investment were made possible by the bilateral
investment treaties that many countries signed
with each other (Elkins et al. 2008). Within the
United States, a series of legislative measures
dismantled much of the New Deal nancial
regulatory apparatus and even prevented the
extension of surviving regulatory oversight to
new nancial activities such as credit default
swaps (Campbell 2010, p. 79). Supporters of
deregulation found powerful intellectual allies
in Chicago school economists, who celebrated

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the efciency and rationality of markets. Growing nancial sectors have become powerful interest groups with considerable political clout
and ready to wield the threat of capital ight
against policies they do not like. Economic sectors that benet from credit ows can also form
a political constituency in favor of particular
credit policies. The housing industry, for example, supports the many ways in which the U.S.
government steers credit into home mortgages.
Corporate nance has also become a
new venue for politics. Although companies
have long had deep connections to politics
(Carruthers 1996), recent decades witnessed the
emergence of new political strategies targeting
corporate ownership via stock markets (King &
Pearce 2010). Various social movements have
embraced divestment as a form of collective action, pressuring high-prole investors (such as
universities and public pension funds) to divest
shares in companies that undertake objectionable policies or produce unwanted outcomes
(Soule 2009). For example, in the 1980s several
American universities divested their portfolios
of the stocks and bonds of companies that did
business in apartheid South Africa (Soule 2009,
pp. 80103). King & Soule (2007) nd that
under certain conditions, protestors targeting
corporations can inuence investors and affect
corporate share prices. Various political agendas have cumulated in the development of socially responsible investing, which subjects investment decisions to explicitly political criteria
(Vogel 2005). A socially responsible investment
fund, for example, will often refuse to invest
in rms that manufacture alcohol or tobacco
products, produce military weapons, or have
poor environmental or labor records. Various
codes now purport to measure the social performance of rms (Chatterji & Levine 2006),
although their validity is sometimes questionable (Chatterji et al. 2009).
The politics of nance vary with the polity.
Although this has been increasingly well
documented as an empirical fact, the overall
connections are not yet fully understood.
Haveman et al. (2007) nd that Progressive Era political developments enabled the
widespread bureaucratization of California

thrift institutions (predecessors of savings and
loans), despite the fact that bureaucracy was antithetical to the original mutualist values of the
thrifts. Rao & Hirsch (2003) examine the Czech
Republic during the Velvet Revolution of the
1990s, when democratization in the polity
accompanied the transition to a market economy. Investment privatization funds were used
by incumbent commercial banks and insurgent
entrepreneurs in their struggle over the process
of mass privatization. The ultimate prize was
control over the newly established market
economy. Roe (2006) tests the argument
that legal systems determine long-term stock
market development by varying the protections
offered to outside shareholders: greater legal
protections under Common Law (compared
with Civil Law) encourage more investment
and boost stock market growth. Hence, common law countries tend to have more highly
developed nancial markets. Instead, Roe
concludes that historical events (such as World
Wars I and II) and political factors (such as the
power of nancial interests) are more important
in shaping long-term trajectories. Similarly,
Krippner (2011) describes nancialization as
a largely unintended consequence of attempts
by U.S. lawmakers, starting in the late 1960s
and early 1970s, to deal with the problems of
ination and the decit by deregulating the
nancial system and attracting foreign capital.
On a comparative scale, Verdier (2002)
offers a political explanation for four aspects of
modern nancial systems: their concentration,
internationalization, market development, and
specialization. His key explanatory variables
include state centralization and the political
power of traditional economic sectors such
as agriculture, local retailers, and artisans
(Verdier 2001, p. 331). Financial markets are
redistributive (in that they take savings from
one place and invest them elsewhere), and
powerful traditional sectors tried to stop the
mobilization of capital away from themselves
and toward industry. Their choice of strategy
depended on whether the state was centralized
or decentralized. When local government
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possessed signicant autonomy, traditional

sectors used local banks, protected by local
government, to retain capital locally.
CONSEQUENCES OF
MACRO FINANCE

The large-scale changes of the last several decades have directly affected ordinary
households. For one thing, nancial assets
constitute a growing proportion of total assets
for households in general, not just for the very
wealthy (Keister 2005, pp. 811, 7172). The
long-term shift from dened benet to dened
contribution pensions, such as 401(k) plans, has
exposed workers ability to accumulate assets
for retirement more directly to the uncertainties of the stock market (Hacker 2002, p. 153;
Shuey & ORand 2004). For instance, many
retirements were postponed after the stock
market decline of 2008, and political interest
in privatizing Social Security has diminished.
Aside from pensions, households have also
increased their involvement in the stock market
through direct share ownership or via mutual
funds and similar investment vehicles (Davis
2008, p. 15; Dynan 2009, pp. 6566). Dore
(2008, pp. 11067) claims that the rise in equity
ownership in the United States and United
Kingdom became explicit policy goals starting
under the Reagan and Thatcher administrations in the 1980s. Regardless of the reason,
many people now have a direct nancial stake
in the stock market, which also gives market
performance greater political salience.
American households have recently become
more vulnerable to credit market conditions
because of their indebtedness (Sullivan 2009).
Median household debt relative to income
grew from 0.14 in 1983 to 0.61 in 2008, and the
median debt service ratio increased from 5%
in 1983 to 13% in 2007 (Dynan 2009, pp. 54,
59). Put another way, the personal savings rate
fell from an average of about 10% in 1980 to
roughly 2% in 2005 (Dynan 2009, p. 51). More
so than in the past, U.S. households spend
more than they earn, maintaining consumption
by accumulating debt. Much of this growth
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in indebtedness came from mortgage debt

(and was tied to rising housing prices), and
overall indebtedness increased largely because
households with prior access to credit obtained
more credit, rather than because households
with no credit were able to gain access (Dynan
2009, p. 57). The trend also coincided with
increased income volatility (and inequality)
and may represent an attempt by households
to stabilize consumption in the face of unstable
income (Dynan 2010). On the lender side,
adopting the originate-and-distribute model
put the stress on the volume of loans, and as
the prime mortgage market became saturated,
originators had to move down the income
distribution to maintain loan volumes. Rajan
(2010) even suggests that household debts rose
because of easy credit policies put in place to
ameliorate increased income inequality. Letting poor people borrow may have been more
politically palatable than overtly redistributive
interventions such as increasing tax progressivity. Others (e.g., Dore 2008, p. 1107) also
recognize a broad connection between growing
economic inequality and changes in the nancial sector, but in truth the exact linkages have
not yet been determined. Nevertheless, with
higher indebtedness and greater debt service
obligations, households have become more
vulnerable to decreases in income, unexpected
expenditures, or increases in debt payments.
Job losses, the expiration of teaser interest rates
for a home mortgage or credit card debt, or
unexpected health care expenses can easily push
a highly leveraged household into a foreclosure
proceeding or even into bankruptcy.
Although American households assumed
greater debt burdens, access to credit remains unevenly distributed. Not only do
racial disparities in wealth and income endure
(McCall & Percheski 2010), but peoples ability
to borrow money (and on what terms) also
varies across groups. The capacity to borrow
allows people to anticipate future income and
smooth current consumption, and access to
credit is absolutely critical for the success of
a business. Black-owned small businesses are
more likely to be denied credit, compared with

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their white-owned counterparts (Blanchower

et al. 2003). Contemporary evidence also
suggests that minority applicants are more
likely than white applicants to be denied a
mortgage, controlling for various economic
variables (Pager & Shepherd 2008). Stuart
(2003) showed that such disparities resulted
from long-standing organizational practices,
not just personal animus: Because the ability to
obtain a secured loan depended on the value of
the collateral, appraisal methods that systematically undervalued minority or mixed-income
neighborhoods had a discriminatory effect
(pp. 3334). Access to other nancial products,
such as insurance, also appears to have been
uneven when discretion entered into the underwriting process. In particular, the emphasis
placed on the moral character of the applicant
invites biased decision making (Glenn 2000).
Various trends in household nance have
combined to make the current recession
especially difcult for many people. Unlike two
previous recessions (starting in 1990 and 2001),
the downturn that began in December 2007
involved a simultaneous decline in housing
prices and the stock market. And unlike the
earlier recessions, the recent drop in household
net worth occurred in low- and high-income
households and in low and highnet worth
households (Moore & Palumbo 2010, pp. 11
12). With higher levels of indebtedness, particularly mortgage debts, households in 2007 were
especially precarious, and so mortgage and
credit card delinquency rates and bankruptcy
rates have climbed much higher than in past
recessions (Moore & Palumbo 2010, gure 3).
Financial innovation has tested the nancial
literacy of ordinary households. Most people
can navigate a world of savings and checking
accounts and understand ordinary 30-year
xed-rate home mortgages. But the contractual detail buried in contemporary credit card
agreements stymies most nonlawyers, and the
nancial obligations assumed under something like a oating adjustable-rate mortgage
with introductory teaser rate can be hard to
predict. Simple disclosure does not solve the
problem, and many consumers do not entirely
understand their own nancial obligations

(Warren 2010, p. 402). People often use their
social networks for nancial information, but
poorer households are less likely to get advice
from a nancial professional (Chang 2005).
Consumers may also not perceive how much
others interests diverge from their own. For
example, mortgage brokers are often compensated via yield spread premiums, a payment
from the lending institution that depends on
the interest rate of a borrowers loan ( Jackson
& Burlingame 2007). Although brokers often
claim to be seeking the lowest interest rate for
their clients, in fact they have a hidden (to the
borrower) nancial incentive to steer borrowers
into higher interest mortgage loans and can take
advantage of naive or inexperienced borrowers
( Jackson & Burlingame 2007, pp. 34951).
Burdensome debts trouble both households
and rms, but the legal system offers a way
out. Personal and corporate bankruptcy proceedings enact failure and provide a form of
redemption. An insolvent individual with more
liabilities than assets can le for bankruptcy,
surrender his or her assets to creditors through
a court-supervised procedure, and receive a
discharge from the balance of his or her debts.
In effect, the debtor is forgiven remaining
debts and enjoys a fresh start. Modern laws
usually allow debtors to retain certain assets
(like personal clothing) and some debts are
nondischargeable (i.e., they encumber the
debtor even after the bankruptcy proceeding).
People cannot escape child-support payments
or taxes, for example, by ling for bankruptcy.
Bankruptcy laws, and how they constitute
economic failure, are affected by politics.
The 2005 amendments to U.S. bankruptcy
laws made it more difcult for individuals to
discharge their credit card debts, a change long
sought by credit card companies. Creditor
interest groups had argued that personal
bankruptcy rates increased because the stigma
of personal bankruptcy had declined, and
people had a weaker sense of obligation
to keep their promises. Although debtors
prison no longer awaits the insolvent (as it
did in eighteenth-century America), personal
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bankruptcy remains a singularly disruptive event with strongly negative connotations

(Sullivan et al. 2006; Warren 2010, p. 394). Personal bankruptcies increase when the overall
economy worsens, and many consumers have
recently felt the effects of the amended law.
Insolvent corporate debtors have two
main options: liquidation or reorganization
(Carruthers et al. 2001, pp. 1025). In the
former, corporate assets are pooled and distributed to creditors according to certain rules
(for instance, secured creditors are paid before
unsecured creditors, rst mortgages before
second mortgages). Then the rm is simply
closed down, and employees lose their jobs. In a
reorganization, the troubled rm goes through
a process of organizational rebirth: debts are
renegotiated, costs are cut, and the rm may be
shrunk, in order to return to protable operation. In both options, bankruptcy operates as a
distributional exercise that shares losses among
corporate stakeholders, and in the proceedings
each tries to shift the burden onto someone
else. In a reorganization, for example, workers
want bank creditors to reduce their interest
charges rather than have wages slashed. Some
national bankruptcy systems are more debtor
friendly than others, and even though lenders
structure their loans to adapt to legal differences, credit recovery rates still vary across
legal jurisdictions (Davydenko & Franks 2008).
Corporate bankruptcy laws also respond
to political forces. During the Asian nancial
crisis of 19971998, the IMF and World Bank
used the leverage afforded by their bailout loans
to force Indonesia and South Korea to revise
their bankruptcy laws (Halliday & Carruthers
2009). During the 1990s, many countries
adopted bankruptcy laws as a necessary part
of the transition from a command to a market
economy but then were reluctant to implement
those laws because of the political implications of widespread corporate insolvency
(Carruthers et al. 2001, p. 106). China was slow
to adopt a new bankruptcy law, in part because
of the political consequences of what such a law
might do to insolvent state-owned enterprises
(Halliday & Carruthers 2009, pp. 24950).

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MICRO CONTEXTS FOR

MACRO FINANCE
When examined at the global level, modern nance looks exceedingly abstract, impersonal,
and disembodied. Huge volumes of almost incomprehensibly complicated, intangible nancial contracts with immense notional values are
traded at lightning speed through advanced
computer networks that link the globe. Many of
the transactions involve program trading, and
so are executed algorithmically and without a
human decision maker. Against this picture of
abstraction, however, several scholars point out
that contemporary global nance continues to
unfold in very local and human-scale settings
(Knorr Cetina & Bruegger 2002).
In principle, modern nancial transactions
can be conducted from anywhere with a
computer and Internet access. And yet, despite
this technological liberation from geography,
modern nancial markets cluster in a nite
number of communities where people can, and
do, meet face-to-face, both in and out of work:
lower Manhattan in New York City, the City of
London, Marunouchi in Tokyo, Bay Street in
Toronto, and so on. Geographical concentration creates a social connectivity that parallels
and articulates with the economic connectivity
of global nance (MacKenzie 2004; Sassen
2006, p. 27). Although the recent nancial crisis
was global in scope, many of the key players
came from surprisingly small communities:
Mortgage originators were heavily concentrated in Orange County, California; hedge
fund headquarters congregated in Greenwich,
Connecticut, and Londons West End; and investment banks gathered together in New York
City and London (Pozner et al. 2010, p. 201).
The overlap of geographic proximity,
social connection, structural equivalence, and
nancial market involvement helps to create
well-dened peer groups for market actors.
Observers have often noted the prevalence in
nancial markets of herding and bandwagon
behavior, where people follow the crowd, and
contagion effects, where an innovation diffuses
rapidly through the nancial community.

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Decision making under conditions of uncertainty can produce widespread emulation, such
that decision makers favor whatever course of
action peers are currently pursuing. Bankers
are more likely to get into subprime lending if
everyone else is doing it. And network connections within the community are frequently
the channels through which innovations and
information diffuse. Thus, researchers have
found that institutional investors herd both
into (buying) and out of (selling) the shares of
particular industries (Choi & Sias 2009). Similarly, mutual fund managers are more likely to
buy (or sell) the same stock as other managers
who are located in the same city (Hong et al.
2005). Wall Street analysts also herd by initiating or dropping coverage of NASDAQ-listed
rms when their peers do so (Rao et al. 2001).
Cohen et al. (2007) nd that mutual funds tend
to invest in companies when the mutual fund
manager and corporate board member are embedded in the same educational network, in part
because of joint access to private information.
Although social connectivity can take many
forms, the signicance of concrete social networks and relationships remains a recurrent
theme of many sociological studies of nance.
Venture capital is used to fund small-size highrisk rms (so-called start-ups) operating in
highly uncertain markets such as computer software design and biotechnology. For every successful rm like Microsoft or Google, there are
a thousand failures. Research documents that
Silicon Valley rms and high-tech industries in
other areas are highly networked (Castilla et al.
2000, Castilla 2003, Powell et al. 2005, Stuart
1998, Stuart et al. 1999). A dynamic structure
of relationships linking together law rms, venture capitalists, universities, and start-up rms
allocates capital, propels technological innovation, circulates personnel, and tries to get small
rms to the point where they can seek more
orthodox funding via an initial public offering (Ferrary & Granovetter 2009). Kogut et al.
(2007) show that venture capital networks do
not just agglomerate from the bottom up, but
rather always involve both local and national
connections.
Outside of leading-edge industries, social

relationships between bank loan ofcers and
borrowers affect the availability and pricing
of bank loans to mid-sized businesses (Ferrary
2003, Uzzi & Lancaster 2003). However,
Mizruchi et al. (2006) show that the impact of
social relations on nancing is contingent: The
effect of director interlock networks on U.S.
corporate borrowing declined during the 1970s
and 1980s. Similarly, Lincoln & Gerlach (2004)
document the changing role of large banks
in Japanese business groups (keiretsu), which
formerly used bank loans and equity ownership
to forge the ties holding the group together. In
the transitional economies of eastern Europe
and China, networks and factions also shape
access to capital from external sources, such as
foreign direct investment (Bandelj 2008, Stark
& Vedres 2006), and from internal sources,
such as domestic banks (Shih 2004). Guseva
(2008, pp. 8690) documents the importance
of networks in the construction of a credit
card market in post-transition Russia, whereas
Garva (2007) underscores the role of social
networks in syndicate lottery play in Spain.
Relationships continue to matter for nance,
but how and why social networks matter
remain works in progress.
Modern nancial institutions are themselves
embedded in networks of extraordinary size and
complexity. If institutions are nodes, then the
transactions among them, or claims and obligations they have to each other, form the links in
a network. Given the very high volume of electronic trading that occurs every day, these networks have an unusually high number of links.
Using network analytic techniques originating
in sociology, nonsociologists have examined nancial networks in Austria (Boss et al. 2004),
Hungary (Lubloy
2006), Great Britain (Becher
et al. 2008), and the United States (Soramaki
et al. 2007), comparing their network structures
and drawing out implications for the stability of
the overall nancial system.
Networks have played a role in shaping
the organizational dynamics of nancial
deregulation. As regulatory barriers weakened in the 1990s, U.S. commercial banks
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entered the market for investment banking

services, including bond underwriting. Jensen
(2003) nds that commercial banks that had
preexisting network ties to a debtor rm or
that possessed high status (dened in network
terms) were more likely to be the lead managers
in a bond issue. His results suggest that in
some measure network relationships could be
transferred from one market to another. Jensen
(2008) also found that during the same period
incumbent investment banks were less likely
to partner with high-status commercial banks
in an underwriting syndicate, in part because
high-status commercial banks posed more of a
threat.
Traditionally, organized exchanges and nancial transactions involved mostly face-toface interactions. The London stock market, for
example, started in the coffee houses adjoining
Exchange Alley in central London. There was
little anonymity or impersonality when trading
in small, stable groups. Several ethnographic
and qualitative studies have exploited this faceto-face reality to explore the social texture of
nance. Ho (2009) studied entry-level hiring
and training into contemporary U.S. investment banking, noting the strong tendency for
banks to recruit only from elite colleges and
business schools. The high social status of candidates and their employers was emphasized repeatedly during recruitment and hiring, cultivating and reinforcing a sense of collective selfworth verging on hubris (Ho 2009, pp. 40, 50,
75). Zaloom (2006) compared face-to-face trading in Chicagos markets circa 2000 with electronic trading in London. Chicago traders afrmed the importance of personal relations in
creating trust and supporting market liquidity
(Zaloom 2006, pp. 5253, 61). Electronic trading, by contrast, engendered a more technical
and rational comportment on the part of market participants (Zaloom 2006, p. 112). But it
is not that face-to-face trading is social, while
electronic trading is anonymous. Rather, the
context for trading affects how markets are social. Of course, economists have also tracked
the shift to electronic trading, but their focus
is more on efciency and how the transition

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lowers costs and narrows spreads, among other

trends (Stoll 2006).
For both participants and regulators, nancial markets are not places only for austere and
dispassionate calculation. People trading on the
Paris Stock Exchange in the late 1990s routinely
displayed the full range of human emotions
(Hassoun 2006), an ethnographic observation
consistent with the psychological evidence of
Lo et al.s (2005) analysis of day traders and
Lo & Repins (2002) physiological evidence.
According to Pixley (2009), nancial organizations operate with emotion rules that stipulate
appropriate attitudes and comportment for personnel (including the supreme self-condence
noted by Ho 2009). Abolaa (2005) analyzed
the transcripts of the meetings of the Federal Open Market Committee (FOMC), the
chief policymaking body of the Federal Reserve System. Although the FOMC has abundant quantitative data and calculative capacity,
the face-to-face meetings consisted of collective sense-making, multivocal interpretive work
performed by participants to frame the economy and pose plausible and legitimate policy
responses. Bandelj (2008) documents a more
dispersed form of sense-making by recognizing that foreign investment, like other cultural
objects, possesses meaning. Newspaper debates
about the signicance of foreign investment in
Slovenia reveal a complex of multiple and sometimes contradictory understandings.
The micro context for market participants
also includes the devices, techniques, and information they use to comprehend and trade.
In studying these, some researchers have drawn
from prior work in the sociology of science
(e.g., Knorr Cetina, MacKenzie) and underscore the importance of distributed cognition
(Vollmer et al. 2009). Preda (2009) shows
that the nineteenth-century stock ticker transformed how shares were priced and how investors perceived prices. A public market price
is a social and technological accomplishment,
and Preda notes that the published lists used
to circulate price information in the early nineteenth century were unreliable, unsystematic,
out of date, and often simply false. In fact,

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prices varied over the day, across traders, and

between purchases and sales (producing the
spread). It was not until 1868 that the Wall
Street Journal began to publish daily closing
prices (Preda 2009, p. 122), and price information diffused slowly at rst. The stock ticker,
however, gave brokerage ofces direct access
to prices from the oor of the exchange, in real
time, and became the authoritative source of
credible price data. Multiple and discontinuous sources of price information were replaced
by a single, continuous, nationally distributed
stream of prices and price changes (Preda 2009,
p. 142). For someone sitting in a brokerage rm
in Wichita, Kansas, in 1926, the stock ticker was
effectively the stock market.
In contemporary nancial markets, the phenomenology of trading is shaped by continuous ows of electronically mediated knowledge
and information. Traders typically view multiple computer screens that portray a broad range
of information, from prices and trading volumes to headline news. They are connected to
each other via phone, email, instant messaging,
and text messaging. Looking at their screens,
they also monitor the ambient noise on their local trading oor. The foreign exchange traders
studied by Knorr Cetina & Bruegger (2002,
p. 915) not only traded currencies, but also
continuously exchanged information. And their
interactions, conversations, and relationships
with each other involved various kinds of reciprocity and informal codes of conduct (pp. 924
28, 932, 936). In short, electronic markets did
not erase sociabilitythey facilitated its recreation and redeployment into new forms.
Conceptual devices have had as big an
impact on modern nance as physical devices. Financial economics has become highly
mathematical, and various proofs, ideas, and
formulas were enshrined in the markets as
traders adopted and implemented them and designed software around them. Performativity
is a key concept in this regard (Callon 2007),
and MacKenzie & Millos (2003) discussion of
the Black-Scholes option pricing model offers
an exemplary application (see also MacKenzie
2006). The Black-Scholes model was derived in
two 1973 papers to answer the question: What

is the value of an option (an option bestows the
right, but not the necessity, to sell, or buy, at a
given price)? After its introduction, the BlackScholes model was quickly adopted as a canonical device in options markets (and its inventors
received Nobel prizes), although it was partly
wrong (MacKenzie & Millo 2003, pp. 12732).
But the insight of the performativity approach
is that we should not simply ask if the model
was accurate or not. Rather, we should study
how the model was enacted, applied, or performed so that it could become more or less
true. The signicance of Black-Scholes lay in its
prescriptive force, not just its descriptive veracity. One nds a similar prescriptive/descriptive
duality in the efcient markets hypothesis
closely associated with Chicago school economics and institutionalized in numerous index
funds (MacKenzie 2006, pp. 2930, 8488).
Versions of the performativity idea lie behind other discussions. According to Marron
(2007), the development of quantitative credit
scoring methods and their large-scale application to consumer credit helped to institutionalize (and not simply measure) particular conceptions of risk. Vollmer et al. (2009) view the
quantication of creditworthiness as a larger
process of performativity that enhances overall
calculability, commensurability, and standardization. The idea of arbitrage is fundamental
to nancial economics as an intellectual discipline, but it is also a practice that is enacted
in concrete social, organizational, and technological circumstances (Beunza et al. 2006).
Smith (2007) draws on an older theoretical tradition to argue that markets not only price and
allocate goods, but also generate the meanings and shared understandings that govern
market practices and participation. And in her
comparative study of economics professions,
Fourcade (2009, p. 30) provocatively suggests
that economic knowledge may be performed
differently in different national settings. Nevertheless, the performativity concept has its critics
(see Mirowski & Nik-Khah 2007).
Several other cognitive devices, less formally
theorized than Black-Scholes, have been widely
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institutionalized in the allocation and pricing

of credit and include the credit ratings developed for small businesses (Carruthers & Cohen
2010), net present value calculations (Faulhaber
& Baumol 1988), and the ratings issued by
Moodys, Standard and Poors, and Fitch
(Rona-Tas & Hiss 2010, Sinclair 2005). Credit
ratings and scores are now calculated for all
kinds of individuals and organizations and provide a summary measure of the trustworthiness
of debtors. Having spread over the twentieth
century, their near ubiquity transformed
many types of credit decision making from an
application of situated judgment into a more
standardized algorithmic exercise (Marron
2007, p. 104). When combined with cheaper
information technology, high volumes of
algorithmic credit decisions can be performed
quickly and at low cost. Although quantication
connotes greater objectivity, some lenders still
augment quantitative measures with socially
based information (Ferrary 2003), and the latter
continues to matter in some contexts (Berger &
Udell 2002, Cole et al. 2004, Uzzi & Lancaster
2003).
The signicance of agency-issued credit
ratings was further reinforced when ratings
were incorporated into public regulations and
private contracts. Their simplicity and ostensible precision made them extremely portable
information. Both in the United States and
elsewhere, prudential regulations for pension
funds and insurance companies commonly
prohibit investments that are too risky, where
risk is dened in terms of a privately issued rating. Thus, an insurance company cannot invest
in corporate bonds that are below investment
grade. Ratings also gure centrally in the Basel
II bank standards, in which capital requirements are adjusted by the riskiness of bank
assets (Langohr & Langohr 2008, pp. 43637).
Outside of regulation, ratings have been
incorporated as triggers in private contracts, so
that, for example, a rating downgrade means
that a borrower has to post additional collateral
or accelerate its repayments. High ratings
also protect a duciary from legal liability if
investments go sour (Coffee 2006, p. 294).

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Poor performance by rating agencies gured

prominently in the recent nancial crisis and
prompted scholars and policy makers to wonder
how ratings became so central to the operation
of modern capital markets. Investment banks
securitizing home mortgages worked closely
with the rating agencies to secure the highest possible ratings for the securities they produced, and subsequent rating downgrades essentially proved that the initial ratings were
overly optimistic (Carruthers 2010, pp. 163
67). Individual credit scores (i.e., FICO scores)
are now used to issue credit cards, to issue mortgage loans, and even to price automobile insurance. They pervasively affect a households access to credit (Poon 2007) and also played a role
in the subprime crisis (Poon 2009).
Other studies have focused less on devices
and more on the particular groups who use
them. Beunza & Garud (2007), for example,
examine securities analysts, who write reports
and make recommendations to investors and
portfolio managers. Although analysts have ample information, their recommendations are
usually made under conditions of uncertainty.
Beunza & Garud note their reliance on
calculative frames, a coherent package of
categories, metrics, rhetoric, and analogies, in
deciding whether to make a buy or sell recommendation. Zuckerman (2004) also underscores
the importance of the cognitive categories used
by analysts. Stocks that do not map cleanly onto
industry category systems (incoherent stocks)
are more vulnerable to conicting signals, and
that vulnerability increases trading volume and
volatility.
CONCLUSION
The current crisis accelerated an already
growing sociological interest in nance, and it
conrmed the importance of the topic. As bets
a global phenomenon, the leading research on
nance is done by an international group of
scholars who engage in genuine intellectual
exchange, unlike in many other areas of sociology. Studies of nance have also enabled new
conversations between economic sociology and

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the sociologies of science, culture, law, organizations, and the professions. And nance offers
new ways to develop and extend older, core insights about the importance of social networks
and the embeddedness of nance. Much of the
research is empirically motivated in the sense
that nance has recently changed in interesting
and consequential ways. Finance is also central
to processes such as globalization and connects
directly to the traditional sociological topics of
inequality, politics, institutions, organizations,
and public policy. For some, the growing
salience of technical expertise, combined with
nances higher status and power, activated
sociologys debunking impulse. In the 1990s,
modern nance started to look and sound like
the Great Oz, and sociologists sought for the
curtains to peer behind. Helpfully, the nancial
crisis blew those aside.
We characterize current research as a mosaic chiey because it is more an assemblage
of scholarly activity than a sustained, coherent,
and unitary enterprise. Topics involve particular clusters of actors, activities, contexts, and
rules, and some have been, and will continue to
be, more thoroughly covered than others. One
group of scholars focuses on corporate governance and how rms became beholden to nancial markets and institutional investors, with
an emphasis on shareholder value and shortterm share prices. Another group focuses on
the techniques, methods, and practices of high
nance, studying their adoption and spread,
and viewing their signicance from the perspective of performativity. Several scholars have
imported sociologys traditional focus on social
relationships and networks and used this to illuminate many aspects of nance. And, of course,
many are now diagnosing the current crisis.
Several directions for future research
seem especially promising. On the macronance side, the study of income and wealth
inequalities, and all that engenders them,

should be systematically extended to credit.
People gain differential access to purchasing
power through the income they receive (earned
and unearned), the wealth they possess (inherited and accumulated), but also through the
money they can borrow. Credit policies that appear to benet disadvantaged borrowers, such
as subprime lending, may not have that effect
(Rugh & Massey 2010). Some progress has been
made in studying inequality and borrowing, especially for specic types of credit such as home
mortgages, but the topic needs more work. A
second issue crosses between macro and micro
nance. It is clear, for example, that credit circulates through formal and informal channels, and
although formal institutions are easier to study,
informal credit is often very signicant. This issue concerns nance in relation to law and calls
attention to the fact that formal and informal arrangements operate interdependently, not separately. Third, the micro contexts for macro nance call for further work. For instance, much
of nance involves routine valuation, calculating the current or future worth of something. At
the nadir of the current crisis, key nancial actors felt that market prices no longer reected
fundamental values, and a battle ensued over
mark-to-market accounting. The plasticity of
valuation is also apparent with every accounting
restatement, but such episodes do not simply reect valuation-gone-wrong. Rather, they reveal
how much value is a contested and provisional
judgment whose complexity lies buried beneath
a surface of numbers and quantication. Finally,
although sociology already focuses on social
relations and networks, and despite the wellrecognized importance of networks for nance,
how and why networks matter remain open
questions. Providing answers will encourage researchers to consider the content and meaning
of social ties, in addition to their structure.
DISCLOSURE STATEMENT
The authors are not aware of any afliations, memberships, funding, or nancial holdings that
might be perceived as affecting the objectivity of this review.
253
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ACKNOWLEDGMENTS
The authors wish to thank Wendy Espeland and Douglas Massey for helpful comments.
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Annual Review
of Sociology
Volume 37, 2011

Contents
Prefatory Chapters
Reections on a Sociological Career that Integrates Social Science
with Social Policy
William Julius Wilson p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 1
Emotional Life on the Market Frontier
Arlie Hochschild p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p21
Theory and Methods
Foucault and Sociology
Michael Power p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p35
How to Conduct a Mixed Methods Study: Recent Trends in a Rapidly
Growing Literature
Mario Luis Small p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p57
Social Theory and Public Opinion
Andrew J. Perrin and Katherine McFarland p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p87
The Sociology of Storytelling
Francesca Polletta, Pang Ching Bobby Chen, Beth Gharrity Gardner,
and Alice Motes p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 109
Statistical Models for Social Networks
Tom A.B. Snijders p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 131
The Neo-Marxist Legacy in American Sociology
Jeff Manza and Michael A. McCarthy p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 155
Social Processes
Societal Reactions to Deviance
Ryken Grattet p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 185
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Formal Organizations
U.S. Health-Care Organizations: Complexity, Turbulence,
and Multilevel Change
Mary L. Fennell and Crystal M. Adams p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 205
Political and Economic Sociology
Political Economy of the Environment
Thomas K. Rudel, J. Timmons Roberts, and JoAnn Carmin p p p p p p p p p p p p p p p p p p p p p p p p p p p p 221

The Sociology of Finance

Bruce G. Carruthers and Jeong-Chul Kim p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 239
Political Repression: Iron Fists, Velvet Gloves, and Diffuse Control
Jennifer Earl p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 261
Emotions and Social Movements: Twenty Years of Theory
and Research
James M. Jasper p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 285
Employment Stability in the U.S. Labor Market:
Rhetoric versus Reality
Matissa Hollister p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 305
The Contemporary American Conservative Movement
Neil Gross, Thomas Medvetz, and Rupert Russell p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 325
Differentiation and Stratification
A World of Difference: International Trends in Womens
Economic Status
Maria Charles p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 355
The Evolution of the New Black Middle Class
Bart Landry and Kris Marsh p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 373
The Integration Imperative: The Children of Low-Status Immigrants
in the Schools of Wealthy Societies
Richard Alba, Jennifer Sloan, and Jessica Sperling p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 395
Gender in the Middle East: Islam, State, Agency
Mounira M. Charrad p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 417
Individual and Society
Research on Adolescence in the Twenty-First Century
Robert Crosnoe and Monica Kirkpatrick Johnson p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 439
vi
Contents
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Diversity, Social Capital, and Cohesion

Alejandro Portes and Erik Vickstrom p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 461
Transition to Adulthood in Europe
Marlis C. Buchmann and Irene Kriesi p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 481
The Sociology of Suicide
Matt Wray, Cynthia Colen, and Bernice Pescosolido p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 505
Demography

What We Know About Unauthorized Migration

Katharine M. Donato and Amada Armenta p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 529
Relations Between the Generations in Immigrant Families
Nancy Foner and Joanna Dreby p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 545
Urban and Rural Community Sociology
Rural America in an Urban Society: Changing Spatial
and Social Boundaries
Daniel T. Lichter and David L. Brown p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 565
Policy
Family Changes and Public Policies in Latin America [Translation]
Brgida Garca and Orlandina de Oliveira p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 593
Cambios Familiares y Polticas Publicas
en America Latina [Original,
available online at http://arjournals.annualreviews.org/doi/abs/

10.1146/annurev-soc-033111-130034]
Brgida Garca and Orlandina de Oliveira p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 613
Indexes
Cumulative Index of Contributing Authors, Volumes 2837 p p p p p p p p p p p p p p p p p p p p p p p p p p p 635
Cumulative Index of Chapter Titles, Volumes 2837 p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p p 639
Errata
An online log of corrections to Annual Review of Sociology articles may be found at
http://soc.annualreviews.org/errata.shtml
Contents
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The Sociology of Finance by Bruce G. Carruthers and Jeong-Chul Kim

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