In a recent study, Nun (2008) examines the long-term impacts of Africans slave trade. He finds that the slave trade, which occurred over a period of more than 400 years, had a significant negative effect on long-term economic development. Although the paper arguably identifies a negative causal relationship between the slave trade and income today, the analysis is unable to pin down the exact causal mechanisms underlying the reduced form relationship documented in the paper. In this paper, we examine one of the channels through which the slave trade may affect economic development today. Ins fine-grained individual-level survey data, we test whether the slave trade caused a culture of mistrust to develop within Africa.

Early in the slave trade, slaves were primarily captured through State organized raids and warfare. By the end of the trade, because of the environment of ubiquitous insecurity that had developed, individuals even friends and family members – began to turn on one another, kidnapping, tricking, and selling each other into slavery (e. G. , Koehler, 1854, Hair, 1965, Pit, 1996).We hypothesize that in this environment, where everyone had to constantly be on guard against Ewing sold or tricked into slavery by those around them, a culture of mistrust may have evolved, and that this mistrust may continue to persist today. Our hypothesis builds on the well-established result from cultural anthropology that in environments where information acquisition is either costly or imperfect, the use of heuristic decision making strategies or ‘rules- of-thumb’ can be an optimal strategy (Boyd and Richardson, 1 985, 1995).These general rules or beliefs about what the ‘right’ action is in different situations saves the individual from the costs of information acquisition.

Of course, these norms or rules-of-thumb do not develop in a vacuum, but evolve according to which norms yield the highest payoff. Our view is that in areas more exposed to the slave trade, rules-of-thumb or beliefs based on the mistrust of others would have been more beneficial relative to norms of trust and therefore would have become more prevalent over time.In other words, our hypothesis is that the slave trade would have engendered a culture of mistrust. Because these beliefs and norms persist, particularly in environments where they remain optimal, the relationship between these arms and a history of the slave trade may still exist in the data today almost 1 00 years after the slave trade has ended. Alternatively, the culture of mistrust that was a consequence of the slave trade may be an outcome that is stable. In other words, the slave trade may have caused a permanent change in the level 1 of mistrust in the society.Recent contributions, like Tableland (2008) and Guise, Sapience, and Singles (coco), provide models that show how this can occur.

To test our hypothesis, we use data from the 2005 round of the Barometers survey and examine whether individuals belonging to an ethnic group that was heavily targeted in the past are less trusting of others today. Because of the richness of the Barometers survey, we are able to test for the effect of the slave trade on the amount of trust that each respondent places in different individuals.Specifically, we examine the effects of the slave trade on individuals’ trust in (I) their relatives, (ii) their neighbors, and (iii) their local government council. We find that individuals, belonging to ethnicities that were exposed to the slave trades, today exhibit lower levels of rust in their relatives, neighbors, and their local government. This finding is consistent with the historical fact that by the end of the slave trade, it had become very common for individuals to be sold into slavery by neighbors, friends, and family members.An alternative explanation for our finding is that more slaves were supplied by ethnic groups that initially had lower levels of trust of those around them, and that these lower levels of trust continue to persist today. We pursue a number of strategies to identify the direction of causality in our OILS estimates.

One strategy we pursue is to use the historic distance from the coast Of an ethnic group as an instrument for the number Of slaves taken from that ethnic group. There is ample historical evidence suggesting that the instrument is relevant, but it is far less clear that it satisfies the necessary exclusion restriction.The most likely reason why the exclusion restriction may fail is that the historic distance from the coast of an individual’s ancestors is correlated with the current distance from the coast of the respondent, and his in turn is negatively correlated with income (Rapport and Cash, 2003), which is positively correlated with trust (Lasing and La Ferreira, 2002). 1 For this reason, in our IV estimates, where we use the historic distance from the coast of a respondent’s ancestors as an instrument, we also control for the respondent’s current distance from the coast.The IV estimation produces estimates very similar to the OILS estimates. They provide evidence that the slave trade caused the descendants of those targeted by the trade to be less trusting today. As is generally the case with instruments, it is possible that despite our second stage controls, our instrument still does not satisfy the necessary exclusion restriction.

For this reason, we also perform a number of falsification exercises to assess the validity of our identification strategy.We 1 Note that this actually results in IV estimates that are biased towards zero. 2 examine the reduced form relationship between distance from the coast and trust within Africa and in two samples outside of Africa using data from Theodore Values Surveys and the Spectrometer. Within Africa, we find a throng positive relationship between distance from the coast and trust. This is expected given our IV estimates. Places further from the coast had less slaves taken in the past, and therefore exhibit higher levels of trust today.Our IV strategy relies on the assumption that the distance from the coast only affects trust through the slave trade.

Therefore, if our exclusion restriction is satisfied, then when we examine the reduced form relationship between distance from the coast and trust outside of Africa where there was no slave trade, we expect to see no relationship. This is exactly what we find, In our samples outside of Africa, we estimate a statistically insignificant relationship between distance from the coast and trust.We also perform a similar exercise looking within Africa. We find that within the regions of Africa that were not exposed to the slave trade, no relationship exists between an individual’s distance from the coast and trust today. We also find that the relationship increases the more exposed a region was to the slave trade. After establishing that the slave trade had an adverse effect on trust, we then urn to the task of distinguishing between the two most likely channels through which this could have occurred.One channel, which is the focus of our paper, is that the slave trade altered the cultural norms of the ethnic groups exposed to the trade, making them inherently less trusting.

However, there is also a second channel, which a priori is as plausible and as important. The slave trade resulted in a longer deterioration of legal and political institutions, and such weak institutions enable citizens to cheat others more easily and, for this reason, individuals are less trusting of those around them.We undertake two exercises that attempt to identify the relative importance of these two channels. First, we look more closely at the determinants of respondents’ trust in their local government. We examine how the estimated effect of the slave trade changes when we control for a number of measures of individuals’ perceptions about the quality of their local government. By doing this, we attempt to control for differences in the external environment of each respondent and more closely isolate the beliefs and values internal to the individual.

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