Trust, Membership in Groups, and Household Welfare: Evidence from KwaZulu‐Natal, South Africa

Abstract

Unfortunately these two literatures have remained largely unconnected. The group and network literature concludes that participation has important economic benefits even when the stated function of the group is noneconomic. In most cases however the mechanisms by which groups and networks achieve this are unclear. The determinants-of-trust and participation-in-groups literature highlights the importance of income and social homogeneity. What remains less understood is whether—and how—trust can be generated for example via participation in groups. This article links the empirical literatures referenced above by exploring the relationship between membership in groups and trust. Specifically using longitudinal data from KwaZulu-Natal Province South Africa we examine (1) the importance of trust in the decision to join groups; (2) the subsequent ability of groups to generate trust; and (3) the effect of group membership and trust on a measure of well-being per capita household income. In addition we disaggregate groups into financial and nonfinancial and we categorize “trust in people” by agent or actor. Therefore we can explore whether trust in different kinds of actors is important for participation in different kinds of groups and whether participation in different kinds of groups is important for generating trust in different kinds of actors. (excerpt)