Published as "Economic inequality" in Svendsen, G. T. and Svendsen, G. L. H. (eds.), Handbook of Social Capital, Edward Elgar, 2009
22 Pages Posted: 10 Sep 2007 Last revised: 2 Feb 2017
Date Written: August 21, 2007
This paper reviews the literature on economic inequality and trust. Cross-country studies, within-country studies, and experiments all suggest that economic inequality exerts a negative influence on trust. Four mechanisms are proposed to explain the negative relationship: social ties (or networks), inference on social relationships (to see inequality as a signal of untrustworthy behavior), conflicts over resources, and opportunity cost of time. Social ties receive the strongest empirical support, but there is also some evidence in favor of inference on social relationships. Conflicts over resources and opportunity cost of time are contradicted by important pieces of evidence.
Keywords: Trust, Inequality, Social Capital, Social Ties, Networks
JEL Classification: C23, D31, Z13
Suggested Citation: Suggested Citation
Jordahl, Henrik, Inequality and Trust (August 21, 2007). Published as "Economic inequality" in Svendsen, G. T. and Svendsen, G. L. H. (eds.), Handbook of Social Capital, Edward Elgar, 2009; IFN Working Paper No. 715. Available at SSRN: https://ssrn.com/abstract=1012786 or http://dx.doi.org/10.2139/ssrn.1012786