Preferences, trust, and performance in youth business groups.

Stein T Holden,Mesfin Tilahun,Pablo Brañas-Garza

doi:10.1371/journal.pone.0257637

Stein T Holden, Mesfin Tilahun + Show 1 more

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https://doi.org/10.1371/journal.pone.0257637

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Abstract

We study how social preferences and norms of reciprocity are related to generalized (outgroup) and particularized (ingroup) trust among members of youth business groups in northern Ethiopia. The Ethiopian government promotes youth employment among land-poor rural youth by allocating them rehabilitated communal lands for the formation of sustainable businesses. The typical sustainable production activities that the groups can invest in include apiculture, forestry, horticulture, and livestock production. Our study used incentivized experiments to elicit social preferences, trust, and trustworthiness. We use data from 2427 group members in 246 functioning business groups collected in 2019. Altruistic and egalitarian preferences were associated with stronger norms to reciprocate, higher outgroup and ingroup trustworthiness and trust while spiteful and selfish preferences had opposite effects. The social preferences had both direct and indirect effects (through the norm to reciprocate) on trustworthiness and trust. Ingroup trust was positively correlated with a number of group performance indicators.

Highlights

The pressures on the natural resource base from population growth, economic development, and climate change are increasing and making it harder for people to carve out sustainable livelihoods within vulnerable agro-ecologies
Altruistic and egalitarian preferences were associated with stronger norms to reciprocate, higher outgroup and ingroup trustworthiness and trust while spiteful and selfish preferences had opposite effects
Our study of social preferences, the norm of reciprocity and trust in youth business groups in northern Ethiopia has demonstrated that substantial shares of poor and young rural youth exhibit other-regarding preferences and norms of reciprocity both in the generalized and particularized contexts

Summary

Introduction

The pressures on the natural resource base from population growth, economic development, and climate change are increasing and making it harder for people to carve out sustainable livelihoods within vulnerable agro-ecologies. Such pressures are increasing in parts of Sub-Saharan Africa where population densities are high, and rainfall is limited and variable [1]. One policy initiative in northern Ethiopia has been to allocate rehabilitated communal lands to groups of landless and land-poor youth that aim to establish a livelihood in their rural home community.

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