In Climate We Trust. Climate Variability, Risk Sharing, and the Economic Origins of Generalized Trust

There is a general consensus among contemporary social scientists that social trust is important for economic and institutional development because it facilitates cooperation and collective action among the members of a community (Coleman, 1988; Putnam et. al., 1993). Yet, the historical determinants of trust remain relatively unexplored. In particular, the literature has generally overlooked the impact of environmental factors on the historical emergence of cultural norms of generalized trust. Previous research in cultural anthropology has emphasized the importance of social learning and the role of culture in human adaptation to the natural environment (Boyd and Richerson, 1995). The norms and values that members of a community adopt evolve according to which norms yield the highest payoff in terms of survival probabilities. These, in turn, depend on the external conditions they face, particularly on the risks and challenges of the natural environment they are exposed to. In this paper I propose and test a theory of the emergence of norms of cooperation and mutual trust based on insurance motives. In particular, I examine the historical role of climate variability in shaping individuals ’ incentives to participate in risk-sharing and mutual insurance mechanism