Andrew Leigh

Chapter 2 of a thesis submitted in partial fulfillment of the requirements for the degree of Doctor of Philosophy in the subject of Public Policy, Harvard University, May 2004

May 2004

Abstract

In understanding the relationship between inequality and trust across countries, it is also necessary to consider the effect of ethnic, religious and linguistic fractionalization. Using only high-quality inequality data, and a new dataset on fractionalization, I analyze a group of sixteen mostly OECD countries. Both inequality and fractionalization are negatively associated with trust, and when both are included in the model, inequality is the more significant factor. Using instrumental variables, I show that a one standard deviation increase in inequality (a 6 point rise in the gini) causes a 13 percentage point fall in trust. Both rich and poor people tend to be less trusting in unequal countries, and little of the effect seems to be related to crime.

Information on the author

Dr Andrew Leigh is an economist in the Research School of Social Sciences at the Australian National University. His current research is in the fields of labour economics, public finance and political economy. He holds a PhD from Harvard University, and has previously worked as a lawyer, a political adviser, and a think-tank researcher. He has published over 20 journal articles, 50 opinion pieces and 2 books.

Related works

• Trust, Inequality, and Ethnic Heterogeneity, Economic Record, forthcoming 2006

• Lies and Statistics (on trust and diversity), Australian Financial Review, 23 July 2005

• Does Equality Lead to Fraternity?, Shorter revised version, July 2005

• Costello's call on social capital, Canberra Times, 24 July 2003

• Political vision required to spur a new kind of public spirit, Sydney Morning Herald, 15 February 2002

• Reviving Community: What policy-makers can do to build social capital in Britain and America (with Robert Putnam). Renewal. 10(2). 2002

• Bowling Along. Australian Policy Online. May 2002