The Determinants of Trust: Evidence from Rural South India

55 Pages Posted: 20 Apr 2020

See all articles by Anne Hilger

Anne Hilger

Paris School of Economics (PSE)

Christophe Nordman

affiliation not provided to SSRN

Abstract

Trust and participation in social networks are inherently interrelated. We make use of India's demonetization policy, an unexpected and unforeseeable exogenous variation, to causally identify the effect of social networks in determining trust. We use first-hand quantitative and qualitative data from rural South India and control for individual characteristics (personality traits, cognitive ability) that could influence network formation and trust, finding that social interactions have a significant effect on trust among men, as well as across castes.Among lower castes, who live in homogeneous neighborhoods and relied on neighbors and employers to cope, extending one's network lowers trust in neighbors. Among middle castes, who live in more heterogeneous neighborhoods and relied predominantly on other caste members, a larger network size leads to greater trust placed in kin among employees but lesser in neighbors. This paper thus shows that social interactions can foster trust and highlights the importance of clearly defining in- and out-groups in trust measures within highly segregated societies.

Keywords: India, trust, social networks

JEL Classification: O12, D85, D91

Suggested Citation

Hilger, Anne and Nordman, Christophe, The Determinants of Trust: Evidence from Rural South India. Available at SSRN: https://ssrn.com/abstract=3579242 or http://dx.doi.org/10.2139/ssrn.3579242

Anne Hilger (Contact Author)

Paris School of Economics (PSE) ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

Christophe Nordman

affiliation not provided to SSRN

No Address Available

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