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Scale of cities and social trust: Evidence from China

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  • Deng, Xin
  • Yu, Mingzhe

Abstract

How do the economic characteristics of regions affect social trust? This article tries to answer this question using a dynamic game model with empirical testing. People in regions with a larger scale of economic activity are usually made up of groups with different historical or cultural backgrounds. The dynamic game with incomplete information will lead to misperceptions among groups and will reduce the mutual trust level. The results of OLS regression reveal that city's economic scale and residents' average social trust are negatively correlated based on the Chinese General Social Survey (CGSS) with a sample size of 40,360 and Map Apps data. This study overcomes the endogeneity problem by using the distance from a city to Beijing and Shanghai as the instrumental variable. Results from the 2SLS analysis confirm that the prior negative correlation remains. A 1% increase in economic scale drops the trust level by 0.05%. In addition, women in large cities have lower trust levels than their male counterparts. Policymakers should aim to reduce the probability of misunderstanding among the groups to increase the level of social trust.

Suggested Citation

  • Deng, Xin & Yu, Mingzhe, 2021. "Scale of cities and social trust: Evidence from China," International Review of Economics & Finance, Elsevier, vol. 76(C), pages 215-228.
    • Handle: RePEc:eee:reveco:v:76:y:2021:i:c:p:215-228
    DOI: 10.1016/j.iref.2021.06.008
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