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Costs of Mistrust between Ethnic Majority and Minorities: Evidence from Israel

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  • Miki Malul
  • Mosi Rosenboim
  • Tal Shavit

Abstract

Trust and ethnic diversity are important variables that may impact and explain different economic decisions. This paper presents theoretical models accompanied by a survey that deals with the relation between mistrust and risky economic activity (e.g., the postponement of receiving and paying for a risky asset). Using the theoretical models and surveys as a basis, we suggest that subjective discount rates and bids for a lottery can be used to measure levels of mistrust. The surveys are used to measure the level of mistrust between the Israeli majority (Jews) and minority groups (Israeli Arabs, Bedouins, and Palestinians), and between Israeli Jews from different districts. Based on the survey results we demonstrate the theoretical implications of the effect of mistrust (MT) on economic growth and resource allocation between the majority and minorities. We conclude that MT leads to inefficient resource allocation, which subsequently leads to low economic growth rates.

Suggested Citation

  • Miki Malul & Mosi Rosenboim & Tal Shavit, 2010. "Costs of Mistrust between Ethnic Majority and Minorities: Evidence from Israel," Review of Social Economy, Taylor & Francis Journals, vol. 68(4), pages 447-464.
    • Handle: RePEc:taf:rsocec:v:68:y:2010:i:4:p:447-464
    DOI: 10.1080/00346760903480541
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    Citations

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    Cited by:

    1. Bradley J. Ruffle & Arie Sherman & Zeev Shtudiner, 2020. "Good-Looking Prices," Working Paper series 20-17, Rimini Centre for Economic Analysis.
    2. Elsner, Wolfram & Schwardt, Henning, 2012. "Trust and Arena Size. Expectations, Trust, and Institutions Co-Evolving, and Their Critical Population and Group Sizes," MPRA Paper 40393, University Library of Munich, Germany.
    3. Maya Haran Rosen & Orly Sade, 2022. "The Disparate Effect of Nudges on Minority Groups," The Review of Corporate Finance Studies, Society for Financial Studies, vol. 11(3), pages 605-643.
    4. Eyal Lahav & Mosi Rosenboim & Tal Shavit, 2015. "Financial literacy's effect on elicited subjective discount rate," Economics Bulletin, AccessEcon, vol. 35(2), pages 1360-1368.
    5. Israel, Avi & Rosenboim, Mosi & Shavit, Tal, 2021. "Time preference under cognitive load - An experimental study," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 90(C).
    6. Naveh Eskinazi & Miki Malul & Mosi Rosenboim & Tal Shavit, 2023. "Do you still trust me? An experimental study on the effect of uncertainty, complexity and anchors in a trust game," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(2), pages 892-905, March.
    7. Wilfred Dolfsma & Deborah Figart & Robert McMaster & Martha Starr, 2012. "Promoting Research on Intersections of Economics, Ethics, and Social Values: Editorial," Review of Social Economy, Taylor & Francis Journals, vol. 70(2), pages 155-163, June.
    8. Israel, Avi & Rosenboim, Mosi & Shavit, Tal, 2014. "Using priming manipulations to affect time preferences and risk aversion: An experimental study," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 53(C), pages 36-43.
    9. Ruffle, Bradley J. & Sherman, Arie & Shtudiner, Zeev, 2022. "Gender and beauty price discrimination in produce markets," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 97(C).

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