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GINI DP 20: Does Income Inequality Negatively Affect General Trust? Examining three potential problems with the inequality-trust hypothesis

Author

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  • Sander Steijn

    () (AISSR, University of Amsterdam)

  • Bram Lancee

    () (Research unit Migration, Integration, Transnationalization, Social Science Research Center Berlin (WZB))

Abstract

Many studies on the consequences of income inequality find that where inequality is high, trust is low. There are, however, reasons to examine the relation between inequality and trust more closely. First, previous research does not differentiate between the effect of income inequality and that of national wealth. Furthermore, the underlying mechanism is often unclear. Finally, the association might be dependent on non-Western countries where income inequality is extremely high. In this paper, we evaluate whether there is a relation between income inequality and trust in a sample of Western developed economies when taking into account national wealth. Theoretically, we distinguish between stratification effects and perception effects of inequality. Empirically, besides actual income inequality and national wealth, we include a measurement of perceived inequality on the basis of individual level earnings estimations for stereotypical jobs. We find no significant effect of inequality on trust when taking into account national wealth, suggesting that in Western countries the amount of resources rather than its distribution explains trust. Key words: trust, income inequality, perceived inequality, national wealth, comparative research.

Suggested Citation

  • Sander Steijn & Bram Lancee, 2011. "GINI DP 20: Does Income Inequality Negatively Affect General Trust? Examining three potential problems with the inequality-trust hypothesis," GINI Discussion Papers 20, AIAS, Amsterdam Institute for Advanced Labour Studies.
  • Handle: RePEc:aia:ginidp:20
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    References listed on IDEAS

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    1. Gustavsson, Magnus & Jordahl, Henrik, 2008. "Inequality and trust in Sweden: Some inequalities are more harmful than others," Journal of Public Economics, Elsevier, pages 348-365.
    2. Alberto Alesina & Eliana La Ferrara, 2000. "Participation in Heterogeneous Communities," The Quarterly Journal of Economics, Oxford University Press, pages 847-904.
    3. Andrew Leigh, 2006. "Trust, Inequality and Ethnic Heterogeneity," The Economic Record, The Economic Society of Australia, vol. 82(258), pages 268-280, September.
    4. Delhey, Jan & Newton, Kenneth, 2004. "Social trust: Global pattern or nordic exceptionalism?," Discussion Papers, Research Unit: Inequality and Social Integration SP I 2004-202, Social Science Research Center Berlin (WZB).
    5. Jordahl, Henrik, 2007. "Inequality and Trust," Working Paper Series 715, Research Institute of Industrial Economics.
    6. Brown, Malcolm C., 1994. "Using gini-style indices to evaluate the spatial patterns of health practitioners: Theoretical considerations and an application based on Alberta data," Social Science & Medicine, Elsevier, vol. 38(9), pages 1243-1256, May.
    7. Natalia Letki, 2008. "Does Diversity Erode Social Cohesion? Social Capital and Race in British Neighbourhoods," Political Studies, Political Studies Association, vol. 56, pages 99-126, March.
    8. Gustavsson, Magnus & Jordahl, Henrik, 2006. "Inequality and Trust: Some Inequalities are More Harmful than Others," Working Paper Series 2006:3, Uppsala University, Department of Economics.
    9. repec:aph:ajpbhl:10.2105/ajph.2009.189134_6 is not listed on IDEAS
    10. Alesina, Alberto & La Ferrara, Eliana, 2002. "Who trusts others?," Journal of Public Economics, Elsevier, vol. 85(2), pages 207-234, August.
    11. Delhey, Jan & Newton, Kenneth, 2002. "Who trusts? The origins of social trust in seven nations," Discussion Papers, Research Unit: Social Structure and Social Reporting FS III 02-402, Social Science Research Center Berlin (WZB).
    12. repec:aph:ajpbhl:1997:87:9:1491-1498_6 is not listed on IDEAS
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    Cited by:

    1. Javier Olivera, 2015. "Changes in Inequality and Generalized Trust in Europe," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 124(1), pages 21-41, October.
    2. Javier Olivera, 2013. "On changes in general trust in Europe," Working Papers 201301, Geary Institute, University College Dublin.

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