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

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Abstract

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 rustworthiness are influenced by an individuals 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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  • Jeffrey Milyo & Jennifer M. Mellor & Lisa R. Anderson, 2005. "An Experimental Study of the Effects of Inequality and Relative Deprivation on Trusting Behavior," Working Papers 0502, Department of Economics, University of Missouri.
  • Handle: RePEc:umc:wpaper:0502
    Note: Length: 35 pgs.
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    File URL: https://economics.missouri.edu/working-papers/2005/wp0502_milyo.pdf
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    Cited by:

    1. Sandra Maximiano & Randolph Sloof & Joep Sonnemans, 2007. "Gift Exchange in a Multi-Worker Firm," Economic Journal, Royal Economic Society, vol. 117(522), pages 1025-1050, July.
    2. Jeffrey Milyo & Jennifer M. Mellor & Lisa Anderson, 2005. "Did the Devil Make Them Do It? The Effects of Religion and Religiosity in Public Goods and Trust Games," Working Papers 0512, Department of Economics, University of Missouri.

    More about this item

    Keywords

    Trust; social capital; heterogeneity; inequality; experiment;

    JEL classification:

    • C9 - Mathematical and Quantitative Methods - - Design of Experiments
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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