03 February 2021

Uncertainty In A Community Builds Trust In the Long Run

Cultures are different from each other in important, adaptive way that flow from historical economic and survival pressures that their historic members faced.
This paper examines the relationship between economic risk and the evolution of social cooperation. We hypothesize that trust developed in pre-industrial times as a result of experiences of cooperation aimed at coping with climatic risk. We document that European regions with higher pre-industrial climatic variability display higher levels of trust today. This effect is driven by variability in the growing season months and is more pronounced in agricultural regions. Regarding possible mechanisms, our results indicate that climatic risk favored inter-community exchange and the early adoption of inclusive political institutions which is associated with higher quality of local governments today.
Johannes C Buggle, Ruben Durante, "Climate Risk, Cooperation, and the Co-Evolution of Culture and Institutions" The Economic Journal, ueaa127 (January 20, 2021) https://doi.org/10.1093/ej/ueaa127

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