Working Paper: CEPR ID: DP2646
Authors: Alberto Alesina; Eliana La Ferrara
Abstract: Both individual experiences and community characteristics influence how much people trust each other. Using individual level data drawn from US localities we find that the strongest factors associated with low trust are: i) a recent history of traumatic experiences; ii) belonging to a group that historically felt discriminated against, such as minorities (blacks in particular) and, to a lesser extent, women; iii) being economically unsuccessful in terms of income and education; iv) living in a racially mixed community and/or in one with a high degree of income disparity. Religious beliefs and ethnic origins do not significantly affect trust. The role of racial cleavages leading to low trust is confirmed when we explicitly account for individual preferences on inter-racial relationships: within the same community, individuals who express stronger feelings against racial integration trust relatively less the more racially heterogeneous the community is.
Keywords: Heterogeneity; Local Interaction; Trust
JEL Codes: H73; I31; J15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Recent traumatic experiences (E71) | Decreased trust (Z13) |
| Financial problems (G01) | Decreased trust (Z13) |
| Belonging to historically discriminated groups (J15) | Decreased trust (Z13) |
| Higher economic status (P46) | Increased trust (Z13) |
| Living in racially mixed communities (R23) | Decreased trust (Z13) |
| Income inequality in communities (D31) | Decreased trust (Z13) |
| Racial fragmentation (F12) | Decreased trust (Z13) |
| Community heterogeneity (R23) | Decreased trust (Z13) |