The Economic Impacts of Trust and Altruism: An Experimental Approach to Social Capital¤

This paper experimentally measures the ‘social capital’ of altruism, trust and reciprocity and empirically explores the impact of these norms on economic well-being. Using an experimental design that distinguishes trust and reciprocity from altruism, data were collected from individuals in a random sample of South African communities. Analyzed at the community level, these data suggest that while related, trust and reciprocity are clearly di¤erent from altruism. Moreover, the relatively strong correlation between trust and reciprocity indicates that communities are in a sort of normative equilibrium, with trust strongest where reciprocity norms are most active. Finally, analysis of household living standard data drawn from these same communities shows that these norms have real economic e¤ects on households’ well-being. The e¤ects of both altruism and trust are signi...cantly positive in urban communities, whereas the e¤ects of these same norms are weaker or negative in more traditional rural areas. ¤We thank the MacArthur Foundation for ...nancial support. We also thank Jeanine Anderson, Jim Andreoni, Abigail Barr, Jean-Paul Chavas, Adolfo Figueroa, Larry Samuelson and seminar participants at Michigan State University and the University of Wisconsin for their comments.