Does Terrorism Reduce Trust?: Empirical Evidence from Pakistan

ABSTRACT

The literature on social capital and its economic implications shows that trust plays a significant role in the transaction of goods and services. However, few studies empirically investigate the evolution of trust over time. In this paper, we show how individuals’ trust in Pakistan is affected by the persistent shock of terrorism. By matching the country representative survey data with district-level terrorist attacks, we observe that exposure to terrorism is associated with lower levels of interpersonal trust. This finding is robust to various robustness checks including different indicators of terrorism risk and trust. Furthermore, our results are also consistent with the IV identification strategy.

KEYWORDS:

• Trust
• terrorism
• pakistan

JEL CLASSIFICATION:

• D74
• D90
• K42
• O17

Acknowledgments

We are grateful to Karl Kaltenthaler for helping us with the survey data on trust. We thank the editor and two anonymous reviewers for insightful comments. Any remaining errors are solely attributable to the authors.

Disclosure Statement

No potential conflict of interest was reported by the authors.

Data Availability

The data and material that support the findings of this study are available from the corresponding author upon reasonable request.

Notes

1. Despite definitional complexities, we use terrorism, conflict, and violence interchangeably in this study.

2. Rehman and Vanin (2017) and Gaibulloev, Oyun, and Younas (2019) also study the effects of persistent terrorism, where the former explores the correlation between terrorism and democratic preferences and the latter analyzes association between terrorism and subjective financial well-being.

3. For project details, please visit https://www.eurekalert.org/pub_releases/2012-10/uoa-hdp101512.php/

4. We call the former a direct measure of trust or direct trust while the latter an indirect measure of trust or indirect trust throughout the study. We make this distinction in both of the measures because the former measure of trust is constructed from the question which makes a direct inquiry about the respondent’s trust on different groups. However, the latter measure of trust is derived from the question which only indirectly refers to the trust on different groups as it asks the respondent about likelihood of getting the dropped money from different groups.

5. American National Election Studies, [Data file, 2008], www.electionstudies.org/studypages/2008prepost/2008prepost.html

6. see Rehman and Vanin (2017) for the details.

7. Through this approach, terrorists will not only serve their objective (i.e., spread fear), but also avoid the possible reaction from the strong community which would have negatively impacted their narrative.

8. It is worth noting that Rohner, Thoenig, and Zilibotti (2013a) also use distance to Sudan as an instrument to study the impact of civil conflict on trust in Uganda.

9. To save space, we only report the most preferred specification in Table 5.

10. Table 1 also show that average of trust on Westerners, Afghans and Indians is very low.

11. As mentioned above, it is referred as indirect trust because ‘trust’ is not explicitly mentioned in the question, as in the case of previous question. World Values Survey (2016), the survey which has been extensively used by the researchers, also use the same indirect question to quantify the trust as we do in this section.

12. Although there is no study which is directly related to our analysis. However, many studies show the heterogeneous effects of shocks on females. For example, Hoddinott and Kinsey (2000) finds that females bear more burden of droughts than males. Similarity, Sandanger et al. (2004) concludes, ‘women’s mental health is more susceptible than men’s to the influence of surrounding stress’.

13. Unfortunately, we do not have adequate information to empirically test this explanation.

14. We only report the results of full specification for robustness analysis. Remaining results, which are in-line to the baseline evidence, are available upon request.

15. Majority of the population in bordered districts of Pakistan is Pashtun. They share language, culture, heritage, and religion with people living on the other side of the border. So, it is plausible to presume that distance to Afghanistan border positively correlates with trust on Afghans. We also dropped ‘trust of Afghans’ from aggregated measure of trust for our baseline analysis and findings are similar to those presented above. These results are available on demand for the interested readers.

Additional information

Funding

We received no funding to execute this research.