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The Development Of Trust And Social Capital In Rural Uganda: An Experimental Approach

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  • Arjan Verschoor
  • Paul Mosley

Abstract

Trust is important for development but can be hard to build. In this paper, we report on experiments designed to understand the determinants of trust in villages in eastern Uganda, and in particular whether trust can be `built´ by offering insurance to people as a protection against the possibility that the trust they offer will not be reciprocated. We find, firstly, that the effects of income and wealth on trust are ambiguous: trust is higher in the richer than the poorer village, but once association and female education are added as explanatory variables, the wealth effect disappears. Secondly, although the offer of insurance is taken up by a majority of players, this is in most cases not an `effective demand´ in the sense of incentivising higher levels of trust. Effective demand for insurance, defined in this way, however responds positively to high levels of risk efficacy, microfinance membership and female education. Insurance offered in this form, therefore, is on its own apparently not a reliable technology for building trust; but its effectiveness as a trust-building instrument appears to increase if certain complementary institutions are in position.
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  • Arjan Verschoor & Paul Mosley, 2004. "The Development Of Trust And Social Capital In Rural Uganda: An Experimental Approach," Royal Economic Society Annual Conference 2004 106, Royal Economic Society.
    • Handle: RePEc:ecj:ac2004:106
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    4. Juan Camilo Cardenas & Jeffrey P. Carpenter, 2005. "Experiments and Economic Development: Lessons from Field Labs in the Developing World," Middlebury College Working Paper Series 0505, Middlebury College, Department of Economics.
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    6. Tomomi Tanaka & Colin F. Camerer & Quang Nguyen, 2006. "Preferences, Poverty and Politics: Experimental and Survey Data from Vietnam," Levine's Bibliography 321307000000000054, UCLA Department of Economics.
    7. Johansson-Stenman, Olof & Mahmud, Minhaj & Martinsson, Peter, 2013. "Trust, trust games and stated trust: Evidence from rural Bangladesh," Journal of Economic Behavior & Organization, Elsevier, vol. 95(C), pages 286-298.
    8. Borghans, J.A.M. & Borghans, Lex & Weel, Bas ter, 2005. "Is There a Link between Economic Outcomes and Genetic Evolution? Cross-Country Evidence from the Major Histocompatibility Complex," Research Memorandum 029, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
    9. Mao, Hui & Zhou, Li & Ifft, Jennifer & Ying, RuiYao, 2019. "Risk preferences, production contracts and technology adoption by broiler farmers in China," China Economic Review, Elsevier, vol. 54(C), pages 147-159.
    10. Alvin Etang Ndip & David Fielding & Stephen Knowles, 2007. "Survey Trust, Experimental Trust and ROSCA Membership in Rural Cameroon," Working Papers 0713, University of Otago, Department of Economics, revised Nov 2007.
    11. Greig, Fiona & Bohnet, Iris, 2005. "Is There Reciprocity in a Reciprocal Exchange Economy? Evidence from a Slum in Nairobi, Kenya," Working Paper Series rwp05-044, Harvard University, John F. Kennedy School of Government.
    12. Alvin Etang & David Fielding & Stephen Knowles, 2011. "Does trust extend beyond the village? Experimental trust and social distance in Cameroon," Experimental Economics, Springer;Economic Science Association, vol. 14(1), pages 15-35, March.
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    More about this item

    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments

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