Working Paper: NBER ID: w13387
Authors: Paola Sapienza; Anna Toldra; Luigi Zingales
Abstract: Several papers study the effect of trust by using the answer to the World Values Survey (WVS) question "Generally speaking, would you say that most people can be trusted or that you can't be too careful in dealing with people?" to measure the level of trust. Glaeser et al. (2000) question the validity of this measure by showing that it is not correlated with senders' behavior in the standard trust game, but only with his trustworthiness. By using a large sample of German households, Fehr et al. (2003) find the opposite result: WVS-like measures of trust are correlated with the sender's behavior, but not with its trustworthiness. In this paper we resolve this puzzle by recognizing that trust has two components: a belief-based one and a preference based one. While the sender's behavior reflects both, we show that WVS-like measures capture mostly the belief-based component, while questions on past trusting behavior are better at capturing the preference component of trust.
Keywords: Trust; Economic Behavior; Trust Game
JEL Codes: G10; G30; Z10
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| WVS-like measures (I31) | belief-based component of trust (D83) |
| past trusting behavior questions (D91) | preference component of trust (D81) |
| sender expectations about receivers' trustworthiness (D83) | amount sent in trust game (C79) |
| expected trustworthiness (sender) (D83) | amount sent (larger amounts) (E42) |
| risk aversion (D81) | amount sent (F35) |
| trust (G21) | economic decisions (G11) |
| altruism (D64) | sender behavior (Y60) |
| heterogeneous populations (R23) | expectations about receiver behavior (D84) |
| sender behavior (Y60) | correlation with trust measures (C10) |