Violence and social capital: Evidence of a microeconomic vicious circle

Leonardo Becchetti, Pierluigi Conzo and Alessandro Romeo ()
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Alessandro Romeo: University of Rome Tor Vergata & World Bank

No 197, Working Papers from ECINEQ, Society for the Study of Economic Inequality

Abstract: We test with a randomized experiment in the slums of Nairobi whether violence suffered during the 2007 political outbreaks affects trustworthiness learning when participants live group experiences and face opportunism and free riding in public good games (PGGs) between two subsequent trust games (TGs). Our findings document that participants move toward balanced reciprocity after the PGG with the exception of those who have experienced directly or indirectly physical violence and/or forced relocation who exhibit significantly less trustworthiness in the second TG round. Results are robust to several robustness checks controlling for selection into victimization. Since in a framework of asymmetric information and incomplete contracts, trust games mimic sequential economic exchanges whose functioning is crucial to economic growth, we argue that our results identify a microeconomic nexus among socio-political instability, violence and growth helping to solve identification problems of the cross-country literature on the subject.

Keywords: trust games; public good games; randomized experiment; social capital; socioeconomic instability and development. (search for similar items in EconPapers)
JEL-codes: C93 O12 Z13 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2011
New Economics Papers: this item is included in nep-cbe, nep-evo, nep-exp, nep-pbe and nep-soc
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Related works:
Journal Article: Violence, trust, and trustworthiness: evidence from a Nairobi slum (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:inq:inqwps:ecineq2011-197

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