A road to trust
AbstractThe authors explore the relationship between transaction costs and generalized trust. Using panel data from 2,100 households in 135 rural communities of the Philippines, the paper shows that where transaction costs are reduced (proxied by road construction), there is an increase in generalized trust. Consistent with the argument that generalized trust is built through repeated interactions, the authors find that the individuals most likely to engage in exchange exhibit an increase in trust after road construction. These results suggest that, rather than being an input to economic growth, trust might be a product of reduced transaction costs (which also favors growth).
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Bibliographic InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 4706.
Date of creation: 01 Sep 2008
Date of revision:
Post Conflict Reconstruction; Transport Economics Policy&Planning; Rural Roads&Transport; Social Capital; Corporate Law;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-09-13 (All new papers)
- NEP-DEV-2008-09-13 (Development)
- NEP-SOC-2008-09-13 (Social Norms & Social Capital)
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