Do%20Welfare%20Programs%20Damage%20Interpersonal%20Trust%3F%20Experimental%20Evidence%20from%20Representative%20Samples%20for%20Four%20Latin%20American%20Cities

Working Papers

Do Welfare Programs Damage Interpersonal Trust? Experimental Evidence from Representative Samples for Four Latin American Cities


CODE: WP-668
AUTHOR(s): Chong, Alberto , Ñopo, Hugo , Ríos, Vanessa
PUBLISHED: January 2009
LANGUAGE: English
RELATED TOPICS: Poverty Reduction and Labor
DOWNLOAD FILE IN: English

Abstract:

This paper argues that welfare programs are linked with the destruction of social capital, as measured by interpersonal trust in laboratory games. The paper employs experimental data for representative samples of individuals in four Latin American capital cities (Bogota, Lima, Montevideo, and San Jose), finding that participation in welfare programs damage trust. This result is robust to the inclusion of individual risk measures and a broad array of controls. The findings also support the notion that low take-up rates may be due to stigma linked with trust and social capital, rather than transaction costs.

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