How do competing religions affect trust and economic exchange? Evidence from HaitiCity University, 3rd October 2013Emmanuelle AURIOL, Toulouse School of EconomicsDiego DELISSAINT, Toulouse School of Economics Maleke FOURATI, Toulouse School of EconomicsJosepa MIQUEL-FLORENSA, Toulouse School of EconomicsPaul SEABRIGHT, Toulouse School of Economics (TSE) and Institute for Advanced Study in Toulouse (IAST)

Outline of presentation:Part I: The setting

Religion and social trustThe Haitian context

Part II: Our experimental studyDescription of the studyResults of the experiments: do religious adherents behave differently from non-adherents?

Part III: Assessing external validity Principal components analysis to find measures of strength of adherenceEconomic determinants and consequences of religious adherence

2

Part I:The contribution of religion to social trust (i):

What is religion? Very difficult to define

Three elements commonly cited – none either necessary or sufficient

Belief in the existence of invisible spirits that intervene causally in the world and that can be influenced by appropriate appeals from human subjectsImportance of ritual activities, both collective and individualA distinction between the sacred and the profane

3

The contribution of religion to social trust (ii):

Religions potentially have characteristics that enable their members to have more mutual trust

Opportunities to observe the behavior of others; sharing of informationSanctions (exclusion etc) in case of breaches of trustFaith as a signal of belief in the presence of supernatural norms and sanctions

4

The contribution of religion to social trust (iii):

5

How to avoid hypocrisy? The answer: costly signaling

The genuinely trustworthy must be more willing than others to pay the cost of religious membership

Three kinds of mechanismPayments for membership (tithes etc)Behavioral restrictions (diet, lifestyle)Supernatural beliefs, genuinely held and impacting individual decisions

The contribution of religion to social trust (iv):

What can an experimental study contribute to understanding religion? The answer: studying genuine beliefs

Religious belief and practice in real life are complicated, multi-dimensional activitiesDifficult to disentangle genuine beliefs from behavior intended to be observed by othersAn experimental setting can distinguished genuine (truly anonymous) choices from those observed by others

6

The contribution of religion to social trust (v):

Empirical questions: Can we tell genuine from non-genuine religious adherents?Are genuine religious adherents more trustworthy than non-adherents? If so:Does religion change individual behavior or does it attract more trustworthy people?Are they more trustworthy towards everyone or just towards their co-religionists?

7

If religious adherents are more trustworthy than other people, four possible cases:

Religions lead their adherents to behave in a more trustworthy way than they would otherwise

Religions attract adherents who behave in a more trustowrthy way in most contexts

Religious adherents are more trustworthy just towards co-religionists

Theory of clubs Theory of coevolution of altruism and xenophobia

Religious adherents are more generally trustworthy, not just towards co-religionists

Theory of social norms sustained by natural or supernatural sanctions

Theory of costly signaling

If religious adherents are more trustworthy than other people, four possible cases:

Religions lead their adherents to behave in a more trustworthy way than they would otherwise

Religions attract adherents who behave in a more trustowrthy way in most contexts

Religious adherents are more trustworthy just towards co-religionists

Theory of clubs Theory of coevolution of altruism and xenophobia

Religious adherents are more generally trustworthy, not just towards co-religionists

Theory of social norms sustained by natural or supernatural sanctions

Theory of costly signaling

What we find

Religion in the Haitian context

Traditionally Catholic country in which protestant denominations have made large advances in recent years. Strong competition between denominations

Voodoo practices quite common among both Catholics and Protestants, but still shrouded in secrecy

Practices repressed by both indigenous and foreign authorities, denounced by churches, only accepted in last 10 years

Great pragmatism of both adherents and practitioners..

Part II: the purpose of our study

To study the role of religion in building social trust; Haiti is a country with low levels of social trust, poorly developed financial institutions and weak civil society outside religion

More specifically, to test experimentally the theory that religion is a costly signal of trustworthy behavior the theory that religion helps to reduce moral hazardthe theory that religion is a club good

Additionallyto find ways of diagnosing some characteristics of genuine religious beliefto see whether religion is associated with an ability to facilitate economic exchanges

Two phases of the study:

Phase 1 (April-July 2012): Questionnaire study250 subjects interviewed in 11 localities in 3 regions (in kreyol)Questions on economic activities and interactions, important life-cycle eventsUse of principal components analysis to understand beliefs and exchanges

Phase 2 (December 2012 - February 2013): Economic experiments

832 participants, 35 sessions, 6 regions; all experiments conducted in kreyolTwo experiments: lotteries and trust games Classic baseline versions and treatment with (costly) images Questions on social-economical-religious activities of the participants 12

Phase 1

5

6

63

3

2

6

Phase 2

4

Descriptive statistics from two phases of the study

TABLE: STATISTICAL DESCRIPTION

Variable name Percentage(HAITI PHASE 2) Percentage(HAITI PHASE 1)

female 32% 54.4%

illiterate/signature 10.2% 45.20%

end primary school 11.4% 17.20%

high school education 55.4% 37.60%

Higher education or Professional schools 22.33% .

unemployed 14.5% 3.20%

student 29.0% 9.60%

civil servant 9.0% 3.20%

peasant and fisherman 26.7% 40.8%

shopkeeper/businessman 2.9% 13.6%

streetseller 11.1% 16.4%

electricity access 57.9% 33.6%

Catholic 41.5% 58.4%

Protestant 49.1% 33.2%

Vodooist 6.3% 4.4%

own mobile 88.0% 71.2%

internet access 41.2% 18.0%

born in current place of residence 62.0% 66.4%

suffered physical violence in last 3 years 14.1% 7.6%

suffered theft in last 3 years 39.9% 32.8%

Mean

Age 31.5 42.9

Main differences between the phases

Phase 2 subjects contained fewer women, fewer illiterates, fewer elderly

More students, Protestants, owners of mobile phones and those with access to internet

Does this introduce bias? Maybe, but hard to see in which direction

Second phase of the study: ‘Field lab’

Subjects participated in sessions lasting 2-3 hours with 17 to 25 subjects per session; sessions in schools or village halls (not in religious institutions); recruitment by word of mouth via mayors etc

Anonymity among participants and towards the experimenters

Order of lottery and trust game varied across sessions, also order of image treatments. No influence of game order on results.

Closed answers questionnaires after the experiments were performed.

Payments based on points accumulated, totals between c.90-250 gourdes (€1.80 to €5)

17

Description of the experiments:

Lottery: Each subject has 10 tokensCan gamble 1 to 10 tokens, with probability 60% the stake is doubledA neutral baseline game, then three games with 7 or 8 tokens plus one image (price and image order randomized by session)A last game where subjects can choose which to play again

Trust game:Each subject has 5 tokens and can send to a trustee a sum that is tripled Trustees can keep sum or send a proportion back to the sender Neutral game as sender then receiver, plus one game with choice of image as sender Two games with images as receiver, 6 and 12 tokens, random image

19

The lottery

The images

Choose game that you want to play again

Trust game

Are image choices observed?Lottery:

Subjects choose in secret (in a closed box) and place the image in an opaque mug The try hard to hide the transfer of the image, suggesting they believe their choice is genuinely secretWe interpret this choice as indicative of “genuine” belief

Trust game:Subjects choose in secret, but they know their choice will be observed by the receiver of the money sent (the ‘trustee”)They may have a motive to choose an image to influence the decision of the other to return a higher proportion to themWe interpret this choice as potentially “strategic”

25

Results of the experiments in brief

Lots of subjects buy images – 75% in at least one game!

Image buyers are different from non-buyers (less risk averse, more trusting)

“Genuine” image buyers are more trustworthy than everyone else – and “strategic” image buyers less trustworthy

No difference between denominations

No club good effect

Are subjects who pay for images different from subjects who don’t?

Do they gamble more than non-buyers even when playing without the presence of images? YES (though with images they gamble even more)

Do they trust more than non-buyers even without the presence of images? YES

Are they more trustworthy than non-buyers? DEPENDS ON THEIR MOTIVATION FOR BUYING THE IMAGE

Non-Buyers Buyers0

10

20

30

40

50

60

70

80

90

100

46.954.5

Amounts Gambled in Neutral Lottery by those who Buy or Do Not Buy Images in Later Game

(percent)

Percent of Endowment Gambled

Amounts Gambled by Image Buyers and Non Image Buyers

perc

ent

p = 0.14%

Non-Buyers Buyers0

1

2

3

4

5

6

2.663.03

Amounts Sent in Neutral Trust Game by those who Buy or Do Not Buy Images in Later Game

Amount Sent out of Endowment of 5

Mea

n

p = 2.4%

Amount Returned 6 Amount Returned 120

1

2

3

4

5

6

7

2.82

5.61

3.04

6.24

Amounts Returned (out of 6 received and 12 received) in Neutral Trust Game Lot-

tery by those who Buy or Do Not Buy Images in Later Game

Non-BuyersBuyers

Mea

n

p = 4.6%

p = 15.0%

Distinguish between different types who pay for images

Although 75.5% of subjects buy in at least one game, only 44.8% buy in both games

Subjects who choose same image in both games can be considered “Genuine” believers

Those who behave differently in the two games are “Strategic” buyers

Those who do not buy in either game are “Non-Buyers”

Genuine believers should reciprocate more than Strategics

Combinations of image choices

(Risk cost image = 2) Risk Image Choice

Trust image choice Protestant Catholic Vodou No Image Total

Protestant 115 7 6 41 169

Catholic 16 70 9 22 117

Voodoo 5 2 22 5 34

No Image 26 23 5 128 182

Total 162 102 42 196 502

Buyer types (percent) for the different costs

GENUINE STRATEGIC NO IMAGE0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

0.45

Cost = 2Cost = 3

GENUINE (N=320) STRATEGIC (N=267) NONBUYER (N=200)0

1

2

3

4

5

6

7

8

Differences in reciprocity by image buyer type

Return 6Return 12

GENUINE (N=320) STRATEGIC (N=267) NONBUYER (N=200)0

1

2

3

4

5

6

7

8

Differences in reciprocity by image buyer type

Return 6Return 12

p = 0.26%

p = 0.35%

p = 1.9%

p = 2.0%

Note: all interdenominational comparisons insignificant

GENUINE CATHOLIC

BUYER (N=70)

GENUINE PROTESTANT

BUYER (N=115)

GENUINE VOODOO

BUYER (N=22)

CATHOLIC SIGNALER

(N=32)

PROTESTANT SIGNALER

(N=47)

VOODOO SIGNALER

(N=20)

0

1

2

3

4

5

6

7

8

Amounts returned in neutral trust game, by denomination, gen/stra-

tegic, price=2

Return 6Return 12

Own Image Other Image No Image0

1

2

3

4

5

6

7

Not a Club Good: Amounts Returned by All Image Buyers to Own Denomination, Other Denomination

and No Image

Out of 6Out of 12

Own Image Other Image No Image0

1

2

3

4

5

6

7

8

Amounts Returned by Genuine Image Buyers Only to Own Denomination, Other

Denomination and No Image

Out of 6Out of 12

Conclusions of Part II

We have tested whether individuals who show a genuine willingness to pay for religious images are more trustworthy than those who do not – we have confirmed this conjecture

This strongly confirms the costly signaling hypothesis

We have found NO support for The moral hazard hypothesisThe club goods hypothesis

Part III: Assessing external validity

We use principal components analysis to measureReligious adherence via a range of indicative practices

Participation in borrowing networks

Do measures of religious adherence predict behavior in the experiment – is the experiment capturing recognizably religious behavior?

Does adherence predict borrowing – is there a trust effect on economic outcomes?

Principal components analysis:

Useful for reducing the dimensionality of a multi-dimensional measure, on condition that there is a significant correlation between the values on the different dimensions

Consist in finding a weighting of dimensions that explains the maximum proportion of the variance between the observations.

Cannot resolve the problem of how to choose dimensions nor the “optimal” weighting of dimensions if some are more objectively important than others

But can give a measure of central tendency of multiple partial measures of a complex phenomenon, without giving a definition 41

Our measures of voodoo belief and general religiosity:24 questions on various practices related to important life events; 11 we interpreted as diagnostic of voodoo beliefs, 13 as more general religiosity

Example of voodoo question: “what do you do to protect your child against harmful magic?”, with replies “bath” or “mystical object (Djok belt etc)”

Example of general religiosity question: “do you clean the tomb of your ancestors every year?”

PCA yields 19.3% of variance due to first PC of voodoo beliefs, 43.7% due to first 317.6% of variance due to first PC of general religiosity, 39.0% due to first 3

Dimensions that are only weakly correlated with the others have little weight in the first principal component

42

How well do these measures predict image choice?

A nested logit approach

Does subject choose an image in the lottery?

If so, which image?

No

Yes

Catholic Protestant Voodoo

Prediction of image choice in lottery by principal components analysis: first node

Nested logit estimation: Whether Image ChosenVariable: Some Image Chosen     Cost of image   -0.173(Z-value)   (-1.23)     High school education -0.351* -0.352*(Z-value) (-1.90) (-1.90)     Higher or professional education -0.421* -0.415*(Z-value) (-1.84) (-1.81)     Rural area 0.366** 0.403***(Z-value) (2.39) (2.58)     Female -0.290* -0.288*(Z-value) (-1.84) (-1.83)          LR test for IIA, p-value 0.0008 0.435N 832 832

Prediction of image choice in lottery by principal components analysis: second node

Nested logit estimation: Which Image ChosenVariable: Catholic Protestant Voodoo       1st p.c. general 0.278** -0.408** 0.134*(Z-value) (2.37) (-2.51) (1.70)       2nd p.c. general -0.178** 0.076 -0.146*(Z-value) -(2.08) (0.88) (-1.82)       1st p.c. voodoo -0.083 0.086 0.106*(Z-value) (-0.95) (1.24) (1.65)                           LR test 0.435 0.435 0.435N 832 832 832

Now use a general measure of religiosity from PCA of all indicators

We define “overall religiosity” as sum of first three principal components of the whole set of (voodoo plus general) indicators

However, results reported in following slides are broadly robust to choice of indicator, in the sense that religiosity predicts borrowing when using

First p.c. of general religiosity (p < 5%)Second p.c. of general religiosity (p < 5%)First p.c. of voodoo belief (p < 10%)

Determinants of overall religiosity  OLS estimation of overall religiosity  OLS IVVariables:                 Internet user -0.919*** -0.334 -2.265*** -1.561***(t-ratio) (-5.13) (-1.73) (-4.67) (-3.40)         Female -0.449** -0.850*** -0.696***(t-ratio) (-2.48) (-3.57) (-3.20)       Rural area 1.057*** 0.746*** 0.870***(t-ratio) (5.71) (3.39) (4.09)                

Regional controls included (and education for OLS) NO YES NO YES

Excluded instruments    electricity, education

electricity, education

Sargan test p-value     0.534 0.96N 823 823 823 823

Understanding borrowing behavior

We use a PCA of four indicators of borrowing (from friends, from neighbors, from relatives, from others)

We use overall religiosity as a regressor, plus economic controls

But religiosity may be endogenous, so we instrument with electricity, access to television, and gender (which is highly significant for religiosity but not otherwise for borrowing)

Religiosity is significant under OLS, but much more important under IV

Relation of overall religiosity to borrowing behavior

  Determinants of 1st p.c. of borrowng  OLS IVVariables:                 Overall religiosity 0.055*** 0.041*** 0.232** 0.368**(t-ratio) (3.89) (2.70) (2.22) (2.26)         Higher or prof education 0.318** 0.432*** 0.421***(t-ratio) (2.52) (2.87) (2.71)       Internet user 0.173** 0.226** 0.285**(t-ratio) (2.01) (2.31) (2.52)       Rural -0.020 -0.315* -0468**(t-ratio) (-0.23) (-1.69) (-1.90)       Protestant     0.983**(t-ratio)     (2.18)         

Dummies for North and Central Plateau included; also age, age squared, high school education NO YES YES YES

Excluded Instruments    Female, electricity, 

televisionFemale, electricity, 

televisionSargan test p-value     0.402 0.595N 833 817 817 817

Summary….

Our measures of religious belief have broadly plausible associations with economic variables: a likely interpretation is that religiosity captures perceived trustworthiness

Two remaining problems: Our belief measures are more effective at explaining choice between images than at choice of image versus no image

Why do people buy trust images when they do not influence behavior of receivers?

Lots of work still to do…

How do competing religions affect trust and economic exchange? Evidence from HaitiCity University, 3rd October 2013Emmanuelle AURIOL, Toulouse School of EconomicsDiego DELISSAINT, Toulouse School of Economics Maleke FOURATI, Toulouse School of EconomicsJosepa MIQUEL-FLORENSA, Toulouse School of EconomicsPaul SEABRIGHT, Toulouse School of Economics (TSE) and Institute for Advanced Study in Toulouse (IAST)

Extra slides….

GENUINE SIGNALER RISKONLY INCON-SISTENT

NONBUYER0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

3.28

2.62 2.69

3.182.98

7.04

5.635.93 5.93

6.19

(Return 6)

(Return 12)

Differences in reciprocity by image buyer type (price=2)

p = 1.4%

p = 1.3%

p = 7.6%

Table 2 a) Amounts Gambled in Lotteries with Images by Type of Buyer: CATHOLIC

Variable name Coefficient Standard Errors T Value P Value

Constant 1.41 0.17 7.99  0.000 

Risk Neutral 0.49 0.02   19.81  0.000 

Genuine Catholic 0.09  0.20    0.47   0.642 

Signaler Catholic -0.15  0.29  -0.51  0.613 

Some Image 0.50   0.16  3.14  0.002 

R-squared 0.34

Total observations 832

Table 2 a) Amounts Gambled in Lotteries with Images by Type of Buyer: CATHOLIC

Variable name Coefficient Standard Errors T Value P Value

Constant 1.41 0.17 7.99  0.000 

Risk Neutral 0.49 0.02 19.81 0.000 

Genuine Catholic 0.09  0.20    0.47   0.642 

Signaler Catholic -0.15  0.29  -0.51  0.613 

Some Image 0.50   0.16  3.14  0.002 

R-squared 0.34

Total observations 832

Table 2 b) Amounts Gambled in Lotteries with Images by Type of Buyer: PROTESTANT

Variable name Coefficient Standard Errors T Value P Value

Constant 1.19 0.16   7.16   0.000 

Risk Neutral 0.50  0.02  21.52   0.000 

Genuine Protestant 0.24  0.16  1.48  0.139 

Signaler Protestant -0.13  0.22   -0.57  0.570 

Some Image 0.68  0.16  4.34  0.000 

R-squared 0.39

Total observations 832

Table 2 b) Amounts Gambled in Lotteries with Images by Type of Buyer: PROTESTANT

Variable name Coefficient Standard Errors T Value P Value

Constant 1.19 0.16   7.16   0.000 

Risk Neutral 0.50 0.02 21.52  0.000 

Genuine Protestant 0.24  0.16  1.48  0.139 

Signaler Protestant -0.13  0.22   -0.57  0.570 

Some Image 0.68  0.16  4.34  0.000 

R-squared 0.39

Total observations 832

Table 2 c) Amounts Gambled in Lotteries with Images by Type of Buyer: Vodou

Variables name Coefficient Standard Errors T Value P Value

Constant  1.45 0.18  8.00  0.000 

Risk Neutral 0.47   0.02  18.45  0.000 

Genuine Vodooist 0.52  0.32  1.60  0.109 

Signaler Vodooist 0.68  0.57   1.19   0.234 

Some Image 0.29  0.16  1.81 0.071 

R-squared 0.31

Total observations 832

Table 2 c) Amounts Gambled in Lotteries with Images by Type of Buyer: Vodou

Variables name Coefficient Standard Errors T Value P Value

Constant  1.45 0.18  8.00  0.000 

Risk Neutral 0.47 0.02 18.45 0.000 

Genuine Vodooist 0.52 0.32  1.60  0.109 

Signaler Vodooist 0.68 0.57   1.19   0.234 

Some Image 0.29 0.16  1.81 0.071 

R-squared 0.31

Total observations 832

(Risk cost image = 3)Trust image choice Protestant Catholic Vodou No Image TotalProtestant 64 5 2 27 98Catholic 3 36 1 20 60Voodoo 1 2 13 4 20No Image 16 11 8 72 107Total 84 54 24 123 285

Risk Image Choice

(Risk cost image = 3)Trust image choice Protestant Catholic Vodou No Image TotalProtestant 64 5 2 27 98Catholic 3 36 1 20 60Voodoo 1 2 13 4 20No Image 16 11 8 72 107Total 84 54 24 123 285

Risk Image Choice

Do people who feel cheated in the trust game retaliate by returning nothing? (The FAQu effect)

  Probit estimation  Zero returned in second roundVariable         Maximum sent in first round 0.337*** 1.139***(Z-value) (2.57) (7.08)     Amount sent in first round   -0.366***(Z-value)   (-7.68)     Constant -1.06*** -0.282**(Z-value) (-17.45) (-2.46)     N 787 787

Proportions of zeroes and maxima

TRUST GAME Zeros Maximum Neutral player A

78 (9.91%) 141 (17.92%)

Return (box 6) 126 (16.1%) 150 (19.06%)Return (box 12)

99 (12.58%) 135 (17.15%)

Image player A

133 (16.49%)

Return (6 + im)

161 (20.46%) 181 (23%)

Return (12 + im)

143 (18.17%) 170 (21.6%)

Proportions of zeroes and maxima

RISK GAME Zeros MaximumNeutral 49

(5.89%)73 (8.77%)

Catholic (2) 50 (9.14%) 82 (14.99%)

Voodoo (2) 56 (10.24%)

59 (10.79%)

Protestant (2) 45 (8.23%) 73 (13.35%)

Catholic (3) 24 (8.42%) 43 (15.09%)

Voodoo (3) 30 (10.53%)

46 (16.14%)

Protestant (3) 22 (7.72%) 45 (15.97%)

Controling for ordering effect: 6 sessions per region

Session number S1 S2 S3 S4 S5 S6

Order of games RiskTrust

RiskTrust

RiskTrust

TrustRisk

TrustRisk

TrustRisk

Session number S1 S2 S3 S4 S5 S6

Cost of protection 2/10 2/10 3/10 2/10 2/10 3/10

Order of risk gamesVoodoo

ProtestantCatholic

ProtestantCatholicVoodoo

CatholicVoodoo

Protestant

VoodooProtestantCatholic

ProtestantCatholicVoodoo

CatholicVoodoo

Protestant

Session number S1 S2 S3 S4 S5 S6

Neutral Trust game:Order return boxes

612

126

612

126

612

12 6

Image Trust game:Order return boxes And controls images

6 Cat12 Vod

12 Vod6 Cat

6 Vod12 Prot

12 Prot6 Vod

6 Prot12 Cat

12 Cat6 Prot