The Determinants of Trust

Abstract:     
Both individual experiences and community characteristics influence how much people trust each other. Using data drawn from US localities we find that the strongest factors that reduce trust are: i) a recent history of traumatic experiences, even though the passage of time reduces this effect fairly rapidly; ii) belonging to a group that historically felt discriminated against, such as minorities (black in particular) and, to a lesser extent, women; iii) being economically unsuccessful in terms of income and education; iv) living in a racially mixed community and/or in one with a high degree of income disparity. Religious beliefs and ethnic origins do not significantly affect trust. The latter result may be an indication that the American melting pot at least up to a point works, in terms of homogenizing attitudes of different cultures, even though racial cleavages leading to low trust are still quite high.

JEL Classifications: H00

Working Paper Series