Working Paper: NBER ID: w13712
Authors: Luigi Guiso; Paola Sapienza; Luigi Zingales
Abstract: To explain the extremely long-term persistence (more than 500 years) of positive historical experiences of cooperation (Putnam 1993), we model the intergenerational transmission of priors about the trustworthiness of others. We show that this transmission tends to be biased toward excessively conservative priors. As a result, societies can be trapped in a low-trust equilibrium. In this context, a temporary shock to the return to trusting can have a permanent effect on the level of trust. We validate the model by testing its predictions on the World Values Survey data and the German Socio Economic Panel. We also present some anecdotal evidence that differences in priors across regions are reflected in the spirit of the novels that originate from those regions.
Keywords: Social Capital; Cultural Transmission; Trust
JEL Codes: E0
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| temporary shocks to trust (D80) | permanent changes in trust levels (Z13) |
| cultural context (Z10) | persistent differences in trust and cooperation (Z13) |
| historical governance structures (H11) | contemporary social trust (Z13) |
| historical governance (H11) | social capital (Z13) |
| historical experiences (B15) | social capital (Z13) |
| intergenerational transmission of conservative priors about trustworthiness (D15) | willingness to engage in cooperative behaviors (C71) |