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A road to trust

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  • Labonne, Julien
  • Chase, Robert S.

Abstract

We explore the relationship between transaction costs and generalized trust. Using panel data from 2100 households in 135 poor rural communities of the Philippines, we show that where costs of interactions are reduced there is an increase in generalized trust. These results have implications for the literature on the links between trust and growth. Indeed, rather than being an input to economic growth, trust might be a product of reduced costs of interactions which also favors growth. Specifically, we find that the individuals most likely to engage in exchange exhibit an increase in trust after road construction.

Suggested Citation

  • Labonne, Julien & Chase, Robert S., 2010. "A road to trust," Journal of Economic Behavior & Organization, Elsevier, vol. 74(3), pages 253-261, June.
    • Handle: RePEc:eee:jeborg:v:74:y:2010:i:3:p:253-261
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    Cited by:

    1. Yusong Liu & Linyi Zheng & Wenrong Qian, 2023. "How Rural Residents Access News and Its Influence on Social Trust: Based on the Data of the China Family Panel Studies," Sustainability, MDPI, vol. 15(4), pages 1-20, February.
    2. Fischer, Justina A.V., 2012. "Globalization and Political Trust," Papers 285, World Trade Institute.
    3. Antoci, Angelo & Sabatini, Fabio & Sodini, Mauro, 2011. "Economic Growth, Technical Progress, and Social Capital: the Inverted U Hypothesis," MPRA Paper 30326, University Library of Munich, Germany.
    4. Rahman, Muhammad Habibur & Lee, Grace H.Y. & Shabnam, Nourin & Jayasinghe, Susantha, 2020. "Weathering trust," Journal of Economic Behavior & Organization, Elsevier, vol. 178(C), pages 449-473.
    5. Behrooz Hassani-Mahmooei & Brett W. Parris, 2014. "Dynamics of effort allocation and evolution of trust: an agent-based model," Computational and Mathematical Organization Theory, Springer, vol. 20(2), pages 133-154, June.
    6. Wahl, Fabian, 2012. "Why it matters what people think: Beliefs, legal origins and the deep roots of trust," FZID Discussion Papers 52-2012, University of Hohenheim, Center for Research on Innovation and Services (FZID).
    7. Hassani Mahmooei, Behrooz & Parris, Brett, 2012. "Dynamics of effort allocation and evolution of trust: an agent-based model," MPRA Paper 44919, University Library of Munich, Germany.

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