DP12244 Return on trust is lower for immigrants

Author(s): Elena Cettolin, Sigrid Suetens
Publication Date: August 2017
Keyword(s): ethnic diversity, representative sample, taste-based discrimination, trust game, trustworthiness
JEL(s): C72, C9, D01, J15
Programme Areas: Labour Economics, Public Economics
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=12244

Trustworthiness is key for successful economic and social interactions. We conduct an experiment with a representative sample of the Dutch population to study whether trustworthiness depends on the ethnicity of the interaction partner. Native Dutch trustees play trust games with an anonymous other, who is either another native Dutch or an immigrant from non-Western descent. We find that the trustees reciprocate trust up to 13% less frequently if the trustor is a non-Western immigrant than if he/she is native Dutch. This percentage increases up to 23% for trustees who report disliking ethnic diversity in society in a survey that took place one year before the experiment. Since the decision to reciprocate does not involve behavioral risk, we take our results as evidence of taste-based discrimination. The implication is that the return on trust is lower for immigrants from non-Western descent than for native Dutch.