Hi there. In the last video, we examined income and wealth inequality. In earlier videos, we've also looked at fragmentation along ethnic, linguistic and religious lines. Now what I want to do is examine how they relate backwards to the phenomenon of trust. Now, remember it's always easy with hindsight to view a situation of a dysfunctional government or of an economic stagnation and to find some societal disconnect that could be used as an explanation. The object of exercising quantification is to establish whether there are gradients in inequality and fragmentation, and whether these are statistically comparable to gradients in the performance of other variables such as trust or governance or growth. These measures must also be remembered, also reflect the choice of mechanism, whether we're interested in generally the inequality, whether we're focusing on polarization of the extremes, or whether we're interested in populations that are mixed, or whether they are living geographically separate. In each case, there will be a separate measure available for the calculation. Bear in mind too, and this is very important, that the trust data is suspect, that the governance indicators all contain error margins, and that the national income data, and therefore the growth data for poorer countries, are all extremely dubious. And much of the analysis is about poorer countries. So put all of these observations and reservations together, it'll be no surprise to learn that surveys of the literature confirm the different fragmentation indices, and different samples of countries, and different time periods all yield different results. So, I suggest that we dispense with these statistical models and exercises and concentrate on the mechanisms by which these phenomena affect levels of trust in society. But just because we ignore the outcomes of statistical analysis, does not mean that there is no real mechanism underpinning these societal relationships. It's just that we don't actually have the statistics to prove it. Okay, let's start with income and wealth inequality and work backwards towards trust. Income and wealth inequality may be expected to influence trust levels in several ways. At one level the poor in society may look at the rich with a degree of powerlessness, not to say resentment. And this may prompt them to disengage from civic organizations. Alternatively, if society is more equal, its members will look at each other with a degree of mutual recognition. This will generate an image of a shared fate. This shared image may make its members feel more disposed towards taking common action to solve problems and this in turn will promote trust. If we look at other elements in fragmentation, then different ethnic groups may exhibit different material cultures that express themselves in different styles of clothing, in different foods and in prohibitions on certain types of food. And this will react directly on trust by reinforcing images of difference. Similarly, differences in languages will inhibit communication, most obviously, in direct person to person exchange but the differences will go deeper. Different language groups will have access to different news media, will get exposed to different political messages. And this again, will enhance and perpetuate cultural differences that inhibit the construction of trust. Finally, if we look at religiosity, the links to trust can run in two directions. There is a positive side, religious teachings emphasize the benefits of generosity and reciprocity towards others, and they disapprove of anti-social behavior like dishonesty and theft. And these teachings will be internalized and passed through the generations and in such a way they'll contribute to expectations of similar behavior in others. Another mechanism lies in the repeated attendance of rituals which helps create a shared sense of community and therefore also to enhance trust. On the other hand, it's possible to envisage other mechanisms that militate against trust creation. At first, is that religious teachings prescribe a route to salvation for its members and provide the believers with a sort of sacred umbrella that's not shared by nonbelievers and members of other faiths. And this will create a clear divide between insiders on the one hand, and outsiders reinforcing bonding trust at the expense of breaching trust. A second link runs through the attitude of the outsiders themselves towards the spectacle of groups united by exclusive belief systems and engaging in strange and unfamiliar rituals. There'll be a tendency to view members of other religions with suspicion, distrust. Now before leaving this lecture, there's one issue that needs to be addressed. Almost all the analysis that we have examined assumes that inequality and diversity are endogenous. It means that they can be explained entirely from within the explanatory model, but this isn't always true. Income inequality, for example, may derive purely from the operation of capitalist market forces but it may equally be the outcome of societal preferences deriving from other historical and cultural factors. It could be that these factors explain not only the differences in redistributive policies but also the differences in trust levels that produced them in the first place. Equally, it's possible that some of the ethnic and linguistic diversity may have stemmed from geographical considerations. That early in history, for example, land endowment and resources determined where the population settled and acquired layers of cultural attributes or whether they migrated and formed a more dispersed pattern of ethnic identity. On the other hand, many ethnic differences within countries, especially in Africa, came not from something internally in the definition itself but by the definition of national borders and these were drawn by the imperialist powers in the 19th century which country got for a tribal composition of the areas. In addition, the impact of ethnic divisions may have been not so much in the statistical variables of fractionalization or polarization, but the way in which colonial institutions favored some tribes above others or favored settlers at the expense of the existing populations. And this in many ways brings us to our final consideration. The impact of ethnic, religious and linguistic fractionalization depends to some extent on real or perceived differences in welfare. What we need, but what we don't yet have, is international comparative data integrating income and wealth inequality with these different variables. Let's sum up then. In this lecture, we've looked at the diversity and inequality in society and we've traced their relationship to trust. We've seen that trust is intimately bound with the question of governance. And so next week, we're going to turn our attention to the phenomenon of governance and it's link to economic growth, welfare and prosperity.
