Trust me

Tim Harford:

Economists Kerwin Charles and Patrick Kline have tried to put their fingers on the arbitrariness of personalized trust by looking at car pooling and race. They argue that car pooling is a good measure of trust: can you trust your fellow travelers not to be late, drive badly or murder you and leave your body in a ditch?

Charles and Kline predict that, for example, African-Americans will find it easier to car pool if they live in an area with lots of other African-Americans. The statistics seem to bear them out.
. . .
Meanwhile, experimental research by economists Ed Glaeser, David Laibson and Bruce Sacerdote shows that the way people trust each other simply isn't fair. The researchers organized a "trust game." Two students met ahead of time to size each other up socially, then they played the game. The first student could give up to fifteen dollars to the second student; the experimenters doubled the gift, and then the second student had to decide how much to give back. The game is a measure of trust because the first player has the power to double the size of the pie, but only at the risk of getting nothing back from the second player. What was striking is how much social factors such as race and status encouraged the second player to be trustworthy.

"If the first player has a sexual partner, the second player will send back 17% more than they otherwise would have done," observes David Laibson, a professor at Harvard. Since the second player doesn't know about the existence of a boyfriend or girlfriend, Professor Laibson thinks that it's a proxy for charm, status and social capacity.

The second student will also send more money if the first student drinks more beer--suggesting sociability--or if he or she is of the same race. Pure status matters too. Students who have fathers with a college degree, or who don't have to work to fund their studies, receive significantly more money.

"And America is supposed to be a classless society," comments Professor Laibson. Trust matters, but if you really want to bask in its effects, make sure you start at the top of the heap.

Robert "Bowling Alone" Putnam's most recent contribution on trust (pdf):

Diversity, immigration and social capital. Robert D. Putnam's 2006 Skytte Prize lecture concerning this issue will be published in Scandinavian Political Studies in early 2007. He emphasized three key points: 1) increased diversity and immigration are essential, inevitable and generally strengthens advanced nations; 2) but in the short-term, diversity and immigration challenges community cohesion; and 3) longer-term, successful immigrant societies overcome these challenges by building a broader sense of "we". This can be done through popular culture, education, national symbols, or common experiences (like national service). The 10/8/06 Financial Times had two misleading articles on this research Harvard study paints bleak picture of ethnic diversity and a slightly more balanced Research shows disturbing picture of modern life. The FT distorted our research by only focusing on how diversity and immigration challenge community cohesion and painting this in an apocalyptic light; this letter to the editor corrects the record, and this FT editorial: No Veil on Debate is a thoughtful rejoinder.

Meanwhile, Arnold Kling distrusts Putnam.