Social Capital as Good Culture
To explain the extremely long-term persistence (more than 500 years) of positive historical experiences of cooperation (Putnam 1993), we model the intergenerational transmission of priors about the trustworthiness of others. We show that this transmission tends to be biased toward excessively conservative priors. As a result, societies can be trapped in a low-trust equilibrium. In this context, a temporary shock to the return to trusting can have a permanent effect on the level of trust. We validate the model by testing its predictions on the World Values Survey data and the German Socio Economic Panel. We also present some anecdotal evidence that differences in priors across regions are reflected in the spirit of the novels that originate from those regions.
We are grateful to Alberto Alesina, Alberto Bisin, Paola Giuliano , Eliana La Ferrara, Emir Kamenic and Guido Tabellini for very helpful comments on a previous draft. Luigi Guiso thanks the European University Institute, Paola Sapienza the Zell Center, and Luigi Zingales the Center for Research in Security Prices(CRSP), the Stigler Center, and the Initiative on Global Markets at the University of Chicago for financial support. We thank Niels Patrick Joaquin for excellent research assistance and Janice Luce for editorial help. The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research.