Trust and Religion: Experimental Evidence from Rural Bangladesh By OLOF JOHANSSON-STENMAN,w MINHAJ MAHMUDz and PETER MARTINSSONw wUniversity of Gothenburg, Sweden zQueen’s University Belfast, UK Final version received 13 September 2007. Trust is measured using both survey questions and a trust experiment among a random sample of Muslim and Hindu household heads in rural Bangladesh. We found no significant effect of the social distance between Hindus and Muslims in the trust experiment in terms of the proportions sent or returned. However, the survey responses do indicate significant differences. Both Hindus and Muslims were found to trust others from their own religion more than they trust people from other religions. Moreover, Hindus, the minority, trust other people less in general, and Hindus trust Muslims more than Muslims trust Hindus. INTRODUCTION Whom shall I trust? This is a question that most of us ask ourselves almost on a daily basis. Trust in this sense refers to our expectation regarding the consequences of making ourselves vulnerable to subsequent actions and potential exploitation by someone else. At the social level there is much evidence that trust between people reduces transaction costs, fosters cooperation and is hence important for economic and social development; see e.g. Fukuyama (1995), Knack and Keefer (1997), Zak and Knack (2001), Beugelsdijk et al. (2004) and Bohnet et al. (2005). Easterly and Levine (1997) showed that, in terms of an ethnolinguistic fractionaliza- tion index, the degree of ethnic diversity can explain much of the observed cross-country differences in pro-growth policies and political stability. One possible explanation for this is differences in trust between people, which in turn may be related to the degree of social distance between them. The notion ‘social distance’ is here used according to the definition found in the Encyclopaedia of Psychology (Triandis 2000): ‘[t]he perceived distance between individuals and groups’, which is also how it is most often used in the literature (e.g. Akerlof 1997). 1 It is therefore important to investigate whether different religious affiliations reduce trust, and if so by how much. The objective of this paper is to test whether individuals are less inclined to trust people of a different religious belief. The paper is conducted within the context of the two main religions of Bangladesh, i.e. Islam (about 88% of the population) and Hinduism (about 11%), and uses both attitudinal trust questions and a so-called trust experiment involving a random sample from the general population in rural Bangladesh to test for differences in trust and trustworthiness on the basis of religious beliefs. We test four possible combinations: (i) Muslim sender and Muslim receiver, (ii) Muslim sender and Hindu receiver, (iii) Hindu sender and Hindu receiver and (iv) Hindu sender and Muslim receiver. As far as we know, this is the first study using a trust experiment to study religious discrimination based on a non-student sample. Although student samples are appropriate when analysing many tasks experimentally, the degree to which one can generalize the results from a student sample to the general population is questionable in terms of issues such as religious and ethnic discrimination. Economica (2009) 76, 462–485 doi:10.1111/j.1468-0335.2008.00689.x r The London School of Economics and Political Science 2008