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An Experimental Study of the Effects of Inequality and Relative Deprivation on Trusting Behavior

  • Lisa R. Anderson

    ()

    (Department of Economics, College of William and Mary)

  • Jennifer M. Mellor

    ()

    (Department of Economics, College of William and Mary)

  • Jeffrey Milyo

    ()

    (Department of Economics and Truman School of Public Affairs, University of Missouri)

Several non-experimental studies report that income inequality and other forms of population-based heterogeneity reduce levels of trust in society. However, recent work by Glaeser et al. (2000) calls into question the reliability of widely used survey-based measures of trust. Specifically, survey responses regarding trust attitudes did not reflect subjects' actual behavior in a trust game. In this paper, we conduct a novel experimental test of the effects of inequality on trust and trustworthiness. Our experimental design induces inequality by varying the show-up fees paid to subjects, in contrast to previous experiments that focus on broad cultural or national differences in trust. We do not find robust support for the hypothesis that inequality per se dampens trusting behavior among all subjects; however, we do find some evidence that trust and trustworthiness are influenced by an individual's relative position in the group. Finally, we confirm previous findings that common survey-based measures of social trust are not associated with actual trusting behavior.

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Paper provided by Department of Economics, College of William and Mary in its series Working Papers with number 14.

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Length: 36 pages
Date of creation: 13 Jan 2005
Date of revision:
Handle: RePEc:cwm:wpaper:14
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  1. Bellemare, C. & Kroger, S., 2003. "On Representative Trust," Discussion Paper 2003-47, Tilburg University, Center for Economic Research.
  2. Chaim Fershtman & Uri Gneezy, 2001. "Discrimination in a Segmented Society: An Experimental Approach," The Quarterly Journal of Economics, Oxford University Press, vol. 116(1), pages 351-377.
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  4. François Cochard & Phu Nguyen Van & Marc Willinger, 2004. "Trusting Behavior in a Repeated Investment Game," Post-Print hal-00459746, HAL.
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  7. 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.
  8. La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei & Vishny, Robert, 1999. "The Quality of Government," Journal of Law, Economics and Organization, Oxford University Press, vol. 15(1), pages 222-79, April.
  9. Knack, Stephen, 2003. " Groups, Growth and Trust: Cross-Country Evidence on the Olson and Putnam Hypotheses," Public Choice, Springer, vol. 117(3-4), pages 341-55, December.
  10. Alvin E. Roth & V. Prasnikar & M. Okuno-Fujiwara & S. Zamir, 1998. "Bargaining and market behavior in Jerusalem, Liubljana, Pittsburgh and Tokyo: an experimental study," Levine's Working Paper Archive 344, David K. Levine.
  11. Angus Deaton, 2001. "Relative deprivation, inequality, and mortality," Working Papers 275, Princeton University, Woodrow Wilson School of Public and International Affairs, Center for Health and Wellbeing..
  12. Lisa R. Anderson & Jennifer M. Mellor & Jeffrey Milyo, 2004. "Inequality and Public Good Provision: An Experimental Analysis," Working Papers 12, Department of Economics, College of William and Mary.
  13. Edward L. Glaeser & David I. Laibson & José A. Scheinkman & Christine L. Soutter, 2000. "Measuring Trust," The Quarterly Journal of Economics, Oxford University Press, vol. 115(3), pages 811-846.
    • Glaeser, Edward Ludwig & Laibson, David I. & Scheinkman, Jose A. & Soutter, Christine L., 2000. "Measuring Trust," Scholarly Articles 4481497, Harvard University Department of Economics.
  14. Bellemare, C. & Kroger, S., 2004. "On Representative Social Capital," Discussion Paper 2004-57, Tilburg University, Center for Economic Research.
  15. Anderhub, Vital & Güth, Werner & Engelmann, Dirk, 1999. "An experimental study of the repeated trust game with incomplete information," SFB 373 Discussion Papers 1999,97, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
  16. Gachter, Simon & Herrmann, Benedikt & Thoni, Christian, 2004. "Trust, voluntary cooperation, and socio-economic background: survey and experimental evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 55(4), pages 505-531, December.
  17. repec:dgr:kubcen:200347 is not listed on IDEAS
  18. Lisa Anderson & Jennifer Mellor & Jeffrey Milyo, 2004. "Social Capital and Contributions in a Public Goods Experiment," Working Papers 0317, Harris School of Public Policy Studies, University of Chicago.
  19. Fehr, Ernst & Fischbacher, Urs & Schupp, Jürgen & von Rosenbladt, Bernhard & Wagner, Gert Georg, 2003. "A Nationwide Laboratory Examining Trust and Trustworthiness by Integrating Behavioural Experiments into Representative Surveys," CEPR Discussion Papers 3858, C.E.P.R. Discussion Papers.
  20. Ernst Fehr & Urs Fischbacher & Bernhard von Rosenbladt & Jürgen Schupp & Gert G. Wagner, 2003. "A Nation-Wide Laboratory. Examining Trust and Trustworthiness by Integrating Behavioral Experiments into Representative Survey," CESifo Working Paper Series 866, CESifo Group Munich.
  21. Alesina, Alberto F & La Ferrara, Eliana, 2000. "Who Trusts Others?," CEPR Discussion Papers 2646, C.E.P.R. Discussion Papers.
  22. Abigail Barr, 1999. "Familiarity and trust: an experimental investigation," Economics Series Working Papers WPS/1999-23, University of Oxford, Department of Economics.
  23. Bouckaert, Jan & Dhaene, Geert, 2004. "Inter-ethnic trust and reciprocity: results of an experiment with small businessmen," European Journal of Political Economy, Elsevier, vol. 20(4), pages 869-886, November.
  24. Fahr, Rene & Irlenbusch, Bernd, 2000. "Fairness as a constraint on trust in reciprocity: earned property rights in a reciprocal exchange experiment," Economics Letters, Elsevier, vol. 66(3), pages 275-282, March.
  25. Andrew Leigh, 2006. "Trust, Inequality and Ethnic Heterogeneity," The Economic Record, The Economic Society of Australia, vol. 82(258), pages 268-280, 09.
  26. Nancy Buchan & Rachel Croson, 1999. "Gender and Culture: International Experimental Evidence from Trust Games," American Economic Review, American Economic Association, vol. 89(2), pages 386-391, May.
  27. Buchan, Nancy & Croson, Rachel, 2004. "The boundaries of trust: own and others' actions in the US and China," Journal of Economic Behavior & Organization, Elsevier, vol. 55(4), pages 485-504, December.
  28. Abigail Barr, 2003. "Trust and expected trustworthiness: experimental evidence from zimbabwean villages," Economic Journal, Royal Economic Society, vol. 113(489), pages 614-630, 07.
  29. Danielson, Anders J. & Holm, Hakan J., 2007. "Do you trust your brethren?: Eliciting trust attitudes and trust behavior in a Tanzanian congregation," Journal of Economic Behavior & Organization, Elsevier, vol. 62(2), pages 255-271, February.
  30. Engle-Warnick, Jim & Slonim, Robert L., 2004. "The evolution of strategies in a repeated trust game," Journal of Economic Behavior & Organization, Elsevier, vol. 55(4), pages 553-573, December.
  31. Sheryl Ball & Catherine Eckel & Philip J. Grossman & William Zame, 2001. "Status in Markets," The Quarterly Journal of Economics, Oxford University Press, vol. 116(1), pages 161-188.
  32. BOUCKAERT, Jan & DHAENE, Geert, 2002. "Inter-ethnic trust and reciprocity: Results of an experiment with small business entrepreneurs," Working Papers 2002022, University of Antwerp, Faculty of Applied Economics.
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