THE ECONOMIC IMPACTS OF ALTRUISM, TRUST AND RECIPROCITY: 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 different 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 effects on households' well-being. The effects of both altruism and trust are significantly positive in urban communities, whereas the effects of these same norms are weaker or negative in more traditional rural areas.