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Religion and Trust

Cultural Economics and Finance Seminar

Prof. Dr. Rieger Marc Oliver

Sirbu Marina
Benetazzo Greta
Bernardo Umberto

18/09/2021 Cultural economics and Finance Page 1

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Table of Contents

1. Introduction
2. Research Question
3. Dataset and Methodology
4. Trust and…
4.1. ... Religion
4.2. … Social Institutions
4.3. … Stocks
5. Limitations and Further Research
6. Conclusion
7. Appendix
8. References

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Introduction

The concept of social trust is linked to the idea that we share fundamental norms and values that can
influence our cooperation with others.
Religion, traditionally, played a key role in the formation of views on human nature, norms and values
about how to act as a good and decent person and it is, thus, often argued to be an important
correlate of social trust.

→ Therefore, we can expect that religions , based on a different moral-normative system, have a
different impact on the propensity of its members to trust or distrust other people.

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Research Question

In this paper we would like to examine the relationship between religious affiliation and trust.

The questions asked aim to investigate the relation between different religious groups and the
level of trust, among which we analysed either on a general level, towards family and friends,
towards unknown people and towards stock market.

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Dataset and Methodology

❏ The PANDA dataset provided us with a set of answers given by participants to the study
belonging to different religions.

❏ The study is based on a set of 2’481 - 2’497 observations, with 489 variables in the survey
table.

❏ The religions that are displayed in the study are Buddhism, Christianism, Taoism,
Confucianism, Marxism, Islam and Other Religion.

❏ We conducted our study using OLS regressions, and controlling for different variables as
income, gender, educational degree and region. We conducted in addition analysis of
Cronbach Alphas to check for reliability of the questionnaires.

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I. General Trust
In the section “Big 5” the participants were asked how much they agree
with the statement “I see myself as generally trusting”
– The representatives of Buddhism, Taoism, Confucianism and
Marxism religions were more likely to agree with the statement.
However, with statistically significant results only for the Buddhism.
– The participants representing Christianiaty and Islam were more
likely to disagree with the statement. In specific, we obtained
significant results only for the Christianiaty.
– Once controlling for the regional dummy, the coefficient on the
Christianity becomes statistically not different from zero
→ Banfield (1958) argues that Catholics have lower levels of social
trust because of “amoral familism,” or a tendency to be socially
oriented toward family and close friends, which may restrict their
perceived moral community and thus their generalized trust.

– In column 4, we added Hofstede cultural dimensions → the

coefficients on religions become statistically not different from zero.

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II. General Trust

In the “Job” section people were asked a similar question: “To what
extent you agree/disagree that most people can be trusted ?”
– We obtained a flipped sign for Buddhism. It is likely reflecting
Buddhism attitudes and interpretation of trust
→ based on direct experiences of reality: excessive attachment
to expectations of others’ behaviors or future actions can be the
direct cause of suffering through lack of trust ( Kālāmā Sutta)

– The members of Christianity and Islam (-0.647***) religions were

more likley to disagree that most people can be trusted.
→ several studies pointed out higher level of distrust in
hierarchical religions (Putnam 1992)
→ (La Porta, Rafael, et al, 1997) found that countries with
hierarchical religions have less efficient jurisdictions, higher
corruption, lower quality bureaucracy and lower rate of
participation in civic activities.
→ religions with strict affiliation may reduce the time available for
out-group bonding and the building of general trust.

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III. General Trust

In the “Job” section people were asked a similar question: “To what
extent you agree/disagree that most people can be trusted ?”
– The Confucianism, Taoism and Marxism participants more likely
agreed that most people can be trusted, with corresponding
statistically significant coefficients of 0.149, 0.138 and 0.255.

→ In Confucianism the notion of trust plays a key role, in

specific, the notion of “Trustworthiness”

→ Huhe (2014) finds that Chinese Communist Party members

tend to show a higher level of generalised trust towards
strangers than non-CCP members among rural residents

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Trust and Social Institutions

Cultures have their own attitudes relating to the in-group and out-group: when dealing with family members or close friends,
relationships are personal and direct, and will therefore be very different from the interaction with strangers, impersonal and
without face-to-face relationships. (Yeo, Wildman, Choi, 2017)
Moreover, the gap between the norms applied to the in-group and out-group is reduced the more a society is developed.

The questionnaire separates the analysis in two channels:

- Trust towards people close to the participants (group-in)
- Trust towards people that participants do not know (group-out)

The three performed regressions differentiate for the different controls added:
- The first controls for “age”, “income”, “gender”, “bachelor”.
- The second adds the control for the dummy variable “EU_cntry”
- The third for Hofstede dimensions of Individualism, Uncertainty Avoidance, Masculinity and Power Distance

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Trust and Social Institutions: trust-in

In the “trust-in” section, we control for the attitude towards family and close friends:

- Islam and Christianity are the most trusting religions, (coefficients of 1.372 and 1.178)
→This data is interesting, as opposite to what we found in the section “General Trust”.
→High trust is posed in close friends and family.

→For Islam, this may be due to a positive response to TI1 and TI3, showing a higher
level of trust than others groups, with coefficients of respectively 0.144 and 0.389.
In the Islamic religion, people are thought to have trust in other believers.

- Buddhism is the religion with the lowest coefficient of -0.377*

→The low level of trust among Buddhist participants may be due in particular to the first
and second questions: the negative coefficients seem to be driven by a negative
response to the trusting question TI1 (-0.025), and by a positive one to the
non-trusting TI2 (0.262) statistically significant at the 1% level.

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Trust and Social Institutions: trust-in

- Confucianism also turned out to be positive about trust in their family and close friends
→For every control variable the coefficient stayed positive and did not undergo big
changes; for the questions that show distrust they show negative coefficients, while
positive in the trusting ones, being the only religious group with this characteristic.
→Within Confucianism, in-group means primary relationships and destiny, more than
common interests: relationships are formed on strong values such as family, locality,
and education, or past connections of destiny (Choi, Wildman, Yeo 2017).

- Marxism has a stable positive and significant coefficient through the regressions
→The foundation of contract theory is the confidence that power is exercised in the
people's interest, therefore people are to be trusted. There is a view of man's natural
sociability and importance is placed upon social and personal trust as a principle of
social order. (Lewis and Weigert 1985:971)
→Marxists are generally trusting towards people with whom they have close relationships,
with negative coefficients for the questions TI2 and TI4 related to low trust.

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Trust and Social Institutions: trust-out

In the “trust-out” section we analysed trust towards people not familiar to the participants.

- Christians and Muslims turned out to be the most trusting, but when we added the control for
EU countries for the Hofstede dimensions, this result significantly dropped.
→The Bible says that all humans are sinful, and trust will be broken in relationships, but this
is not a reason not to trust, but rather should help people to set their expectations in
others to a more human level (Romans 3:23).
→Christians and Muslims trust those of higher religiosity, but only if they are of the same
religion (Thunstrom, Ritten et al., 2021).

- Confucianists show low trust in unknown people, and negative coefficients in the regressions
→The gap is very wide: there is great trust for the in-group and mistrust for the out-group.
→Confucianism values loyalty and family in close groups, but there are no mentions of
norms for the social community outside of the family (Hood, 1998), tending to be hostile
toward people with no ties of trust, loyalty, and love.
→This is reflected in negative answers to TO1 and TO2 and positive ones in TO2 and TO4.

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Trust and Social Institutions: trust-out

- Marxism has a positive and constant coefficient (0.933***), indicating that participants
are trusting in strangers, as can be observed by the positive coefficient of TO1 (0.310***)
and negative coefficient of TO2 (-0.337*** ).
→"Without the general trust that people have in each other, society itself would
disintegrate, for very few relationships are based entirely upon what is known with
certainty about another person, and very few relationships would endure if trust
were not as strong as or stronger than rational proof or personal observation"
(Simmel1978:179).

- Taoism have positive and stable coefficients in “trust-in” (0.275), and in “trust-out” one
the coefficients remain positive except for being lower (0.095).
→This can be explained by the positive coefficient of 0.166* relative to TO2
→Taoist idea of trusting others is related to trusting the Tao since the Tao encloses
everyone and everything. The world is viewed as not separate from the self: "The
perfect man has no self" (Zhuangzi). Trusting oneself and seeing the world as part
of it results in trusting the world and everything that happens.

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Trust and Stocks

In the section “General Finance” the participants were asked how much they agree with the
statement “How likely is it that you would invest money in stocks or funds in the
future, provided you had a reasonable amount of savings?”
→"Less trusting individuals are less likely to buy stocks and, conditional on buying
stocks, they will buy less” (Guiso, Sapienza and Zingales, 2008).

- The participants representing Buddhism, Taoism and Confucianism were more likely to
agree with the statement. Only the results for Buddhism and Taoism are significant.

- The representatives of Christianity, Islam and Marxisms generally disagreed with the
statement. All three results are statistically significant.

- Once controlling for the regional dummy, the coefficients of Buddhism, Christianity and
Taoism become statistically insignificant.

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Limitations and Further Research

- By conducting a reliability analysis of the questionnaire (Cronbach's Alpha) we found overall pretty
low/moderate values (≈0.53 - 0.55) suggesting moderate and questionable consistency of the
questionnaires results
- At the individual level, one has to consider the degree of believing, attending religious services,
belonging to a congregation, as well as the religious denomination a person belongs to.
- Endogeneity problem: some personal characteristics might be correlated with trust and religion

→ Would be interesting to study the relationship between religion and trust also at the country level,
by taking into consideration religiosity and religious participation but also religious fractionalisation
and the religious denominations that are dominating
→ Additional data from other countries could affect our results differently

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Conclusion
- Overall we can see that in case of general trust the religion has a significant impact on trust. In all the
cases income, gender and education influence our dependent variable. However, we cannot conclude
that results have high external validity due to missing variables of interest, reliability of the questionnaire
and missing data on other countries.

- When considering the social dimension of trust, we can distinguish between trust-in and trust-out, and
we can observe how this results in substantially different attitudes among religions. We once again can
observe how religion seems to be a crucial variable in the determination of the level of trust, and how it
is a big discriminant between interpersonal relationships, depending on whether these are among family
and friends or with strangers. However, once again we have to take into account the limitations of the
variables indicated in the previous point.
- There is a consistency of result between tendency of religions to trust and invest in stock markets.
However, it is more likely that other variables could change our results.

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Thank you for the attention!

Any questions?

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Appendix

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References
Banfield, Edward C. (1958). The moral basis of a backward society. New York: Free Press.

Choi, S., Wildman, J. and Yeo, K. (2017). The Effects of Confucian Values on Interpersonal Trust, Justice, and Information Sharing of Korean Workers: A
Multilevel Analysis. Journal of Pacific Rim Psychology

Dingemans, E. and Van Ingen, E. (2021). Does Religion Breed Trust? A Cross-National Study of the Effects of Religious Involvement, Religious Faith, and
Religious Context on Social Trust. Journal for the scientific study of Religion

Guiso, L., Sapienza, P., Zingales,L. (2008). Trusting the Stock Market. The journal of finance

Huhe, N. (2014). Understanding the multilevel foundation of social trust in rural China: evidence from the China, General Social Survey. Social Science
Quarterly, 95, 581–597.

Koehn, D. (2001). Confucian Trustworthiness and The Practice of Business in China. Business Ethics Quarterly, 11(3), 415–429.
https://doi.org/10.2307/385784

La Porta, R. (1997). “Trust in Large Organizations. The American Economic Review, vol. 87, no. 2, American Economic Association,
http://www.jstor.org/stable/2950941.

Misztal, B.A. (1992). The Notion of Trust in Social Theory. Policy, Organisation and Society, 5:1, 6-15, DOI: 10.1080/10349952.1992.11876774

Putnam, R., Leonardi, R. and Nanetti, R. (1992). Making democracy work. Princeton, N.J.: Princeton University Press.

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