Trust and Preferences: Evidence from Survey Data
41 Pages Posted: 3 May 2013
Date Written: April 24, 2013
This paper considers the role of preferences in explaining trust. By using the Bank of Italy’s Survey on Household Income and Wealth (SHIW), the paper shows that time preferences and risk preferences are key covariates of self-reported trust. They both predict negatively a measure of generalized trust; however, risk aversion is positively correlated with an index of particularized trusting behaviour (which refers to family and friends). Moreover, the results are robust to using a different data source to gauge the role of social preferences and personality traits. The study highlights that neglecting preferences when analysing the role of trust in explaining socio-economic outcomes might pose serious challenges in terms of omitted variables.
Keywords: trust, preferences, survey data
JEL Classification: D1, D8, Z1
Suggested Citation: Suggested Citation