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Do Welfare Programs Damage Interpersonal Trust? Experimental Evidence from Representative Samples for Four Latin American Cities

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  • Alberto Chong

    ()

  • Hugo Nopo

    ()

  • Vanessa Rios

Abstract

This paper argues that welfare programs are linked with the destruction of social capital, as measured by interpersonal trust in laboratory games. The paper employs experimental data for representative samples of individuals in four Latin American capital cities (Bogota, Lima, Montevideo, and San Jose), finding that participation in welfare programs damage trust. This result is robust to the inclusion of individual risk measures and a broad array of controls. The findings also support the notion that low take-up rates may be due to stigma linked with trust and social capital, rather than transaction costs.

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Bibliographic Info

Paper provided by Inter-American Development Bank, Research Department in its series Research Department Publications with number 4609.

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Date of creation: Jan 2009
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Handle: RePEc:idb:wpaper:4609

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Keywords: Experiments; Surveys; Social Programs; Trust; Stigma; Latin America;

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  1. Abigail Barr, 2004. "Risk Pooling, Commitment, and Information: An experimental test of two fundamental assumptions," Development and Comp Systems 0409030, EconWPA.
  2. Janet Currie, 2004. "The Take Up of Social Benefits," NBER Working Papers 10488, National Bureau of Economic Research, Inc.
  3. Alberto Chong & Hugo Ñopo & Juan Camilo Cardenas, 2008. "To What Extent do Latin Americans Trust and Cooperate? Field Experiments on Social Exclusion In Six Latin American Countries," Research Department Publications 4577, Inter-American Development Bank, Research Department.
  4. John List & David Reiley, 2008. "Field experiments," Artefactual Field Experiments 00091, The Field Experiments Website.
  5. Berg Joyce & Dickhaut John & McCabe Kevin, 1995. "Trust, Reciprocity, and Social History," Games and Economic Behavior, Elsevier, vol. 10(1), pages 122-142, July.
  6. Nava Ashraf & Colin F. Camerer & George Loewenstein, 2005. "Adam Smith, Behavioral Economist," Journal of Economic Perspectives, American Economic Association, vol. 19(3), pages 131-145, Summer.
  7. Rebecca M. Blank & Patricia Ruggles, 1993. "When Do Women Use AFDC & Food Stamps? The Dynamics of Eligibility vs. Participation," NBER Working Papers 4429, National Bureau of Economic Research, Inc.
  8. Arik Levinson and Sjamsu Rahardja, 2004. "Medicaid Stigma," Working Papers gueconwpa~04-04-06, Georgetown University, Department of Economics.
  9. Burks, Stephen V. & Carpenter, Jeffrey P. & Verhoogen, Eric, 2003. "Playing both roles in the trust game," Journal of Economic Behavior & Organization, Elsevier, vol. 51(2), pages 195-216, June.
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