Income, Wealth, and Socialization in Argentina: Provocative Responses from Individuals

This study has two objectives: (1) to establish a baseline measurement of "social capital" in Argentina; and (2) to identify its empirical determinants. The survey questionnaire designed for this study provides individuallevel data about the population's participation in social organizations and its willingness to trust members of their community. Probit models are estimated to explain the individual's decision to participate and to trust strangers, where individual-household and community characteristics are used as explanatory variables. Potential simultaneity and endogeneity problems afflicting the empirical models are examined. The main determinants of the probability of participation in Argentina are age, age squared, household income (and perhaps income squared), rural communities (perhaps due to lower probabilities of migration among rural residents, since most migrants live in urban centers), perhaps community or provincial unemployment rates, and the individual's trust itself. In contrast, the main determinants of trust are age and age squared, but with the opposite signs to those exhibited by probability of participation, household wealth (but not its squared term nor household income), participation itself (as demonstrated by the SUR Probit results concerning the cross-correlation between the two social capital models), and especially the community or provincial unemployment rates and income inequality. It is also noteworthy that the common question on trust used in the U.S. General Social Survey and in the World Values Survey yields results where communities with higher "trust" rates actually have lower social participation rates. Finally, participation in organizations with participatory leadership selection mechanisms are more likely to produce interpersonal trust than other forms of participation. JEL Classification: N3, O1, Z0. 1 The opinions expressed in this paper do not represent the views of the World Bank. The team at Sofres-Ibope, Argentina, led by Enrique Zuleta, did a wonderful job with the implementation of the survey, and I thank them for their contributions to the design of the survey. Irene Novacovsky and Sandra Cessilini also provided useful guidance for the design and implementation of the survey in Argentina. Ana Maria Menendez provided research assistance in the initial stages. Kathy Bain, Robert Cull, Wendy Cunningham, Norman Hicks, Guillermo Perry, Norbert Schady, Claudia Sepulveda, and Maurice Schiff provided useful comments. All errors and omissions are my responsibility.