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Trust as a Proxy for the Ability to Produce Local Public Goods: Testing Different Measures

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The ability to produce local public goods and services such as sharing savings, risk, insurance, sanitation and educational services, is a key fator for development. This ability, however, varies greatly across communities (Ostrom 1990 ; Khwaja 2009). Considering that this ability depends critically on members' willingness to act collectively, this paper investigate whether the level of trust among people measured in different ways can predict the amount of public good produced. I find that (i) trust, as measured by survey questions, has poor predictive power, while (ii) the results from our version of Trust Game are much better predictors of local public-good production.

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Paper provided by Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne in its series Documents de travail du Centre d'Economie de la Sorbonne with number 12041.

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Length: 31 pages
Date of creation: Jun 2012
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Handle: RePEc:mse:cesdoc:12041

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Keywords: Trust; collective action; provision of local public goods; trust game.;

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