A Micro level study on Investment in Haiti

How do competing religions affect trust and
economic exchange? Evidence from Haiti
City University, 3rd October 2013
Emmanuelle AURIOL, Toulouse School of Economics
Diego DELISSAINT, Toulouse School of Economics
Maleke FOURATI, Toulouse School of Economics
Josepa MIQUEL-FLORENSA, Toulouse School of Economics
Paul SEABRIGHT, Toulouse School of Economics (TSE) and Institute for Advanced
Study in Toulouse (IAST)

Outline of presentation:
Part I: The setting
Religion and social trust
The Haitian context
Part II: Our experimental study
Description of the study
Results of the experiments: do religious adherents behave differently from
non-adherents?
Part III: Assessing external validity
Principal components analysis to find measures of strength of adherence
Economic determinants and consequences of religious adherence
2

Part I:
The contribution of religion to social trust (i):
What is religion? Very difficult to define
Three elements commonly cited – none either necessary or
sufficient
Belief in the existence of invisible spirits that intervene
causally in the world and that can be influenced by
appropriate appeals from human subjects
Importance of ritual activities, both collective and
individual
A distinction between the sacred and the profane
3

The contribution of religion to social trust (ii):
Religions potentially have characteristics that enable their
members to have more mutual trust
Opportunities to observe the behavior of others; sharing
of information
Sanctions (exclusion etc) in case of breaches of trust
Faith as a signal of belief in the presence of
supernatural norms and sanctions
4

The contribution of religion to social trust (iii):
5
How to avoid hypocrisy? The answer: costly signaling
The genuinely trustworthy must be more willing than others
to pay the cost of religious membership
Three kinds of mechanism
Payments for membership (tithes etc)
Behavioral restrictions (diet, lifestyle)
Supernatural beliefs, genuinely held and impacting
individual decisions

The contribution of religion to social trust (iv):
What can an experimental study contribute to
understanding religion? The answer: studying genuine
beliefs
Religious belief and practice in real life are
complicated, multi-dimensional activities
Difficult to disentangle genuine beliefs from behavior
intended to be observed by others
An experimental setting can distinguished genuine
(truly anonymous) choices from those observed by
others
6

The contribution of religion to social trust (v):
Empirical questions:
Can we tell genuine from non-genuine religious
adherents?
Are genuine religious adherents more trustworthy than
non-adherents? If so:
Does religion change individual behavior or does it
attract more trustworthy people?
Are they more trustworthy towards everyone or just
towards their co-religionists?
7

If religious adherents are more trustworthy than
other people, four possible cases:
Religions lead their
adherents to behave in a
more trustworthy way
than they would otherwise
Religions attract
adherents who behave in
a more trustowrthy way in
most contexts
Religious adherents are
more trustworthy just
towards co-religionists
Theory of clubs Theory of coevolution of
altruism and xenophobia
more generally trustworthy,
not just towards co-
religionists
Theory of social norms
sustained by natural or
supernatural sanctions
Theory of costly signaling

If religious adherents are more trustworthy than
other people, four possible cases:
Religions lead their
adherents to behave in a
more trustworthy way
than they would otherwise
Religions attract
adherents who behave in
a more trustowrthy way in
most contexts
more trustworthy just
towards co-religionists
Theory of clubs Theory of coevolution of
altruism and xenophobia
more generally trustworthy,
not just towards co-
religionists
Theory of social norms
sustained by natural or
supernatural sanctions
Theory of costly signaling
What we find

Religion in the Haitian context
Traditionally Catholic country in which protestant
denominations have made large advances in recent
years. Strong competition between denominations
Voodoo practices quite common among both Catholics
and Protestants, but still shrouded in secrecy
Practices repressed by both indigenous and foreign
authorities, denounced by churches, only accepted in
last 10 years
Great pragmatism of both adherents and practitioners..

Part II: the purpose of our study
To study the role of religion in building social trust; Haiti is a country
with low levels of social trust, poorly developed financial institutions
and weak civil society outside religion
More specifically, to test experimentally
the theory that religion is a costly signal of trustworthy behavior
the theory that religion helps to reduce moral hazard
the theory that religion is a club good
Additionally
to find ways of diagnosing some characteristics of genuine religious belief
to see whether religion is associated with an ability to facilitate economic
exchanges

Two phases of the study:
Phase 1 (April-July 2012): Questionnaire study
250 subjects interviewed in 11 localities in 3 regions (in kreyol)
Questions on economic activities and interactions, important life-cycle events
Use of principal components analysis to understand beliefs and exchanges
Phase 2 (December 2012 - February 2013): Economic experiments
832 participants, 35 sessions, 6 regions; all experiments conducted in kreyol
Two experiments: lotteries and trust games
Classic baseline versions and treatment with (costly) images
Questions on social-economical-religious activities of the participants
12

Descriptive statistics from two phases of the study
TABLE: STATISTICAL DESCRIPTION
Variable name Percentage(HAITI PHASE 2) Percentage(HAITI PHASE 1)
female 32% 54.4%
illiterate/signature 10.2% 45.20%
end primary school 11.4% 17.20%
high school education 55.4% 37.60%
Higher education or Professional schools 22.33% .
unemployed 14.5% 3.20%
student 29.0% 9.60%
civil servant 9.0% 3.20%
peasant and fisherman 26.7% 40.8%
shopkeeper/businessman 2.9% 13.6%
streetseller 11.1% 16.4%
electricity access 57.9% 33.6%
Catholic 41.5% 58.4%
Protestant 49.1% 33.2%
Vodooist 6.3% 4.4%
own mobile 88.0% 71.2%
internet access 41.2% 18.0%
born in current place of residence 62.0% 66.4%
suffered physical violence in last 3 years 14.1% 7.6%
suffered theft in last 3 years 39.9% 32.8%
Mean
Age 31.5 42.9

Main differences between the phases
Phase 2 subjects contained fewer women, fewer
illiterates, fewer elderly
More students, Protestants, owners of mobile phones and
those with access to internet
Does this introduce bias? Maybe, but hard to see in which
direction

Second phase of the study: ‘Field lab’
Subjects participated in sessions lasting 2-3 hours with 17 to 25
subjects per session; sessions in schools or village halls (not in
religious institutions); recruitment by word of mouth via mayors etc
Anonymity among participants and towards the experimenters
Order of lottery and trust game varied across sessions, also order of
image treatments. No influence of game order on results.
Closed answers questionnaires after the experiments were
performed.
Payments based on points accumulated, totals between c.90-250
gourdes (€1.80 to €5) 17

Description of the experiments:
Lottery:
Each subject has 10 tokens
Can gamble 1 to 10 tokens, with probability 60% the stake is doubled
A neutral baseline game, then three games with 7 or 8 tokens plus one image
(price and image order randomized by session)
A last game where subjects can choose which to play again
Trust game:
Each subject has 5 tokens and can send to a trustee a sum that is tripled
Trustees can keep sum or send a proportion back to the sender
Neutral game as sender then receiver, plus one game with choice of image
as sender
Two games with images as receiver, 6 and 12 tokens, random image 19

Choose game that you want to play again

Are image choices observed?
Lottery:
Subjects choose in secret (in a closed box) and place the image in an opaque
mug
The try hard to hide the transfer of the image, suggesting they believe their
choice is genuinely secret
We interpret this choice as indicative of “genuine” belief
Trust game:
Subjects choose in secret, but they know their choice will be observed by the
receiver of the money sent (the ‘trustee”)
They may have a motive to choose an image to influence the decision of the
other to return a higher proportion to them
We interpret this choice as potentially “strategic”
25

Results of the experiments in brief
Lots of subjects buy images – 75% in at least one game!
Image buyers are different from non-buyers (less risk averse,
more trusting)
“Genuine” image buyers are more trustworthy than everyone
else – and “strategic” image buyers less trustworthy
No difference between denominations
No club good effect

Are subjects who pay for images different
from subjects who don’t?
Do they gamble more than non-buyers even when playing
without the presence of images? YES (though with images
they gamble even more)
Do they trust more than non-buyers even without the
presence of images? YES
Are they more trustworthy than non-buyers? DEPENDS
ON THEIR MOTIVATION FOR BUYING THE IMAGE

46.9
54.5
0
10
20
30
40
50
60
70
80
90
100
Non-Buyers Buyers
percent
Amounts Gambled by Image Buyers and Non Image Buyers
Amounts Gambled in Neutral Lottery by those who Buy or
Do Not Buy Images in Later Game (percent)
Percent of Endowment Gambled
p = 0.14%

2.66
3.03
0
1
2
3
4
5
6
Non-Buyers Buyers
Mean
Amount Sent out of Endowment of 5
Amounts Sent in Neutral Trust Game by those who Buy or
Do Not Buy Images in Later Game
p = 2.4%

2.82
5.61
3.04
6.24
0
1
2
3
4
5
6
7
Amount Returned 6 Amount Returned 12
Mean
Amounts Returned (out of 6 received and 12
received) in Neutral Trust Game Lottery by those
who Buy or Do Not Buy Images in Later Game
Non-Buyers
Buyers
p = 4.6%
p = 15.0%

Distinguish between different types who pay for images
Although 75.5% of subjects buy in at least one game, only
44.8% buy in both games
Subjects who choose same image in both games can be
considered “Genuine” believers
Those who behave differently in the two games are
“Strategic” buyers
Those who do not buy in either game are “Non-Buyers”
Genuine believers should reciprocate more than Strategics

Combinations of image choices
(Risk cost image = 2) Risk Image Choice
Trust image choice Protestant Catholic Vodou No Image Total
Protestant 115 7 6 41 169
Catholic 16 70 9 22 117
Voodoo 5 2 22 5 34
No Image 26 23 5 128 182
Total 162 102 42 196 502

Buyer types (percent) for the different costs
0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
0.40
0.45
GENUINE STRATEGIC NO IMAGE
Cost = 2
Cost = 3

0
1
2
3
4
5
6
7
8
GENUINE (N=320) STRATEGIC (N=267) NONBUYER (N=200)
Differences in reciprocity by image buyer
type
Return 6
Return 12

0
1
2
3
4
5
6
7
8
GENUINE (N=320) STRATEGIC (N=267) NONBUYER (N=200)
Differences in reciprocity by image buyer
type
Return 6
Return 12
p = 0.26%
p = 0.35%
p = 1.9%
p = 2.0%

Note: all interdenominational comparisons insignificant
0
1
2
3
4
5
6
7
8
GENUINE
CATHOLIC
BUYER (N=70)
GENUINE
PROTESTANT
BUYER (N=115)
GENUINE
VOODOO BUYER
(N=22)
CATHOLIC
SIGNALER (N=32)
PROTESTANT
SIGNALER (N=47)
VOODOO
SIGNALER (N=20)
Amounts returned in neutral trust game,
by denomination, gen/strategic, price=2
Return 6
Return 12

0
1
2
3
4
5
6
7
Own Image Other Image No Image
Not a Club Good:
Amounts Returned by All Image Buyers to Own
Denomination, Other Denomination and No Image
Out of 6
Out of 12

0
1
2
3
4
5
6
7
8
Own Image Other Image No Image
Amounts Returned by Genuine Image Buyers
Only to Own Denomination, Other Denomination
and No Image
Out of 6
Out of 12

Conclusions of Part II
We have tested whether individuals who show a genuine
willingness to pay for religious images are more trustworthy
than those who do not – we have confirmed this conjecture
This strongly confirms the costly signaling hypothesis
We have found NO support for
The moral hazard hypothesis
The club goods hypothesis

Part III: Assessing external validity
We use principal components analysis to measure
Religious adherence via a range of indicative practices
Participation in borrowing networks
Do measures of religious adherence predict behavior in the
experiment – is the experiment capturing recognizably
religious behavior?
Does adherence predict borrowing – is there a trust effect
on economic outcomes?

Principal components analysis:
Useful for reducing the dimensionality of a multi-dimensional
measure, on condition that there is a significant correlation between
the values on the different dimensions
Consist in finding a weighting of dimensions that explains the
maximum proportion of the variance between the observations.
Cannot resolve the problem of how to choose dimensions nor the
“optimal” weighting of dimensions if some are more objectively
important than others
But can give a measure of central tendency of multiple partial
measures of a complex phenomenon, without giving a definition
41

Our measures of voodoo belief and general
religiosity:
24 questions on various practices related to important life events; 11 we interpreted
as diagnostic of voodoo beliefs, 13 as more general religiosity
Example of voodoo question: “what do you do to protect your child against harmful
magic?”, with replies “bath” or “mystical object (Djok belt etc)”
Example of general religiosity question: “do you clean the tomb of your ancestors
every year?”
PCA yields
19.3% of variance due to first PC of voodoo beliefs, 43.7% due to first 3
17.6% of variance due to first PC of general religiosity, 39.0% due to first 3
Dimensions that are only weakly correlated with the others have little weight in the
first principal component
42

How well do these measures predict image choice?
A nested logit approach
Does subject choose an image in the lottery?
If so, which image?
No
Yes
Catholic Protestant Voodoo

Prediction of image choice in lottery by principal
components analysis: first node
Nested logit estimation: Whether Image Chosen
Variable: Some Image Chosen
Cost of image -0.173
(Z-value) (-1.23)
High school education -0.351* -0.352*
(Z-value) (-1.90) (-1.90)
Higher or professional education -0.421* -0.415*
(Z-value) (-1.84) (-1.81)
Rural area 0.366** 0.403***
(Z-value) (2.39) (2.58)
Female -0.290* -0.288*
(Z-value) (-1.84) (-1.83)
LR test for IIA, p-value 0.0008 0.435
N 832 832

Prediction of image choice in lottery by principal components
analysis: second node
Nested logit estimation: Which Image Chosen
Variable: Catholic Protestant Voodoo
1st p.c. general 0.278** -0.408** 0.134*
(Z-value) (2.37) (-2.51) (1.70)
2nd p.c. general -0.178** 0.076 -0.146*
(Z-value) -(2.08) (0.88) (-1.82)
1st p.c. voodoo -0.083 0.086 0.106*
(Z-value) (-0.95) (1.24) (1.65)
LR test 0.435 0.435 0.435
N 832 832 832

Now use a general measure of religiosity
from PCA of all indicators
We define “overall religiosity” as sum of first three principal
components of the whole set of (voodoo plus general)
indicators
However, results reported in following slides are broadly
robust to choice of indicator, in the sense that religiosity
predicts borrowing when using
First p.c. of general religiosity (p < 5%)
Second p.c. of general religiosity (p < 5%)
First p.c. of voodoo belief (p < 10%)

Determinants of overall religiosity
OLS estimation of overall religiosity
OLS IV
Variables:
Internet user -0.919*** -0.334 -2.265*** -1.561***
(t-ratio) (-5.13) (-1.73) (-4.67) (-3.40)
Female -0.449** -0.850*** -0.696***
(t-ratio) (-2.48) (-3.57) (-3.20)
Rural area 1.057*** 0.746*** 0.870***
(t-ratio) (5.71) (3.39) (4.09)
Regional controls included
(and education for OLS) NO YES NO YES
Excluded instruments
electricity,
education
electricity,
education
Sargan test p-value 0.534 0.96
N 823 823 823 823

Understanding borrowing behavior
We use a PCA of four indicators of borrowing (from friends,
from neighbors, from relatives, from others)
We use overall religiosity as a regressor, plus economic
controls
But religiosity may be endogenous, so we instrument with
electricity, access to television, and gender (which is highly
significant for religiosity but not otherwise for borrowing)
Religiosity is significant under OLS, but much more important
under IV

Relation of overall religiosity to borrowing behavior
Determinants of 1st p.c. of borrowng
OLS IV
Variables:
Overall religiosity 0.055*** 0.041*** 0.232** 0.368**
(t-ratio) (3.89) (2.70) (2.22) (2.26)
Higher or prof education 0.318** 0.432*** 0.421***
(t-ratio) (2.52) (2.87) (2.71)
Internet user 0.173** 0.226** 0.285**
(t-ratio) (2.01) (2.31) (2.52)
Rural -0.020 -0.315* -0468**
(t-ratio) (-0.23) (-1.69) (-1.90)
Protestant 0.983**
(t-ratio) (2.18)
Dummies for North and Central Plateau
included; also age, age squared, high
school education NO YES YES YES
Excluded Instruments
Female, electricity,
television
Female, electricity,
television
Sargan test p-value 0.402 0.595
N 833 817 817 817

Summary….
Our measures of religious belief have broadly plausible
associations with economic variables: a likely interpretation
is that religiosity captures perceived trustworthiness
Two remaining problems:
Our belief measures are more effective at explaining choice
between images than at choice of image versus no image
Why do people buy trust images when they do not influence
behavior of receivers?
Lots of work still to do…

3.28
2.62 2.69
3.18
2.98
7.04
5.63
5.93 5.93
6.19
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
GENUINE SIGNALER RISKONLY INCONSISTENT NONBUYER
(Return 6)
(Return 12)
Differences in reciprocity by image buyer type
(price=2)
p = 1.4%
p = 1.3%
p = 7.6%

Table 2 a)
Amounts Gambled in Lotteries with Images by Type of Buyer: CATHOLIC
Variable name Coefficient Standard Errors T Value P Value
Constant 1.41 0.17 7.99 0.000
Risk Neutral 0.49 0.02 19.81 0.000
Genuine Catholic 0.09 0.20 0.47 0.642
Signaler Catholic -0.15 0.29 -0.51 0.613
Some Image 0.50 0.16 3.14 0.002
R-squared 0.34
Total observations 832

Table 2 b)
Amounts Gambled in Lotteries with Images by Type of Buyer: PROTESTANT
Variable name Coefficient Standard Errors T Value P Value
Constant 1.19 0.16 7.16 0.000
Risk Neutral 0.50 0.02 21.52 0.000
Genuine Protestant 0.24 0.16 1.48 0.139
Signaler Protestant -0.13 0.22 -0.57 0.570
Some Image 0.68 0.16 4.34 0.000
R-squared 0.39

Table 2 c)
Amounts Gambled in Lotteries with Images by Type of Buyer: Vodou
Variables name Coefficient Standard Errors T Value P Value
Constant 1.45 0.18 8.00 0.000
Risk Neutral 0.47 0.02 18.45 0.000
Genuine Vodooist 0.52 0.32 1.60 0.109
Signaler Vodooist 0.68 0.57 1.19 0.234
Some Image 0.29 0.16 1.81 0.071
R-squared 0.31

(Risk cost image = 3)
Trust image choice Protestant Catholic Vodou No Image Total
Protestant 64 5 2 27 98
Catholic 3 36 1 20 60
Voodoo 1 2 13 4 20
No Image 16 11 8 72 107
Total 84 54 24 123 285
Risk Image Choice

Do people who feel cheated in the trust game retaliate by
returning nothing? (The FAQu effect)
Probit estimation
Zero returned in second round
Variable
Maximum sent in first
round 0.337*** 1.139***
(Z-value) (2.57) (7.08)
Amount sent in first round -0.366***
(Z-value) (-7.68)
Constant -1.06*** -0.282**
(Z-value) (-17.45) (-2.46)
N 787 787

Proportions of zeroes and maxima
TRUST GAME Zeros Maximum
Neutral player A 78 (9.91%) 141 (17.92%)
Return (box 6) 126 (16.1%) 150 (19.06%)
Return (box 12) 99 (12.58%) 135 (17.15%)
Image player A 133 (16.49%)
Return (6 + im) 161 (20.46%) 181 (23%)
Return (12 + im) 143 (18.17%) 170 (21.6%)

Proportions of zeroes and maxima
RISK GAME Zeros Maximum
Neutral 49 (5.89%) 73 (8.77%)
Catholic (2) 50 (9.14%) 82 (14.99%)
Voodoo (2) 56 (10.24%) 59 (10.79%)
Protestant (2) 45 (8.23%) 73 (13.35%)
Catholic (3) 24 (8.42%) 43 (15.09%)
Voodoo (3) 30 (10.53%) 46 (16.14%)
Protestant (3) 22 (7.72%) 45 (15.97%)

Controling for ordering effect: 6 sessions per
region
Session number S1 S2 S3 S4 S5 S6
Order of games
Risk
Trust
Risk
Trust
Risk
Trust
Trust
Risk
Trust
Risk
Trust
Risk
Cost of protection 2/10 2/10 3/10 2/10 2/10 3/10
Order of risk games
Voodoo
Protestant
Catholic
Protestant
Catholic
Voodoo
Catholic
Voodoo
Protestant
Voodoo
Protestant
Catholic
Protestant
Catholic
Voodoo
Catholic
Voodoo
Protestant
Neutral Trust game:
Order return boxes
6
12
12
6
6
12
12
6
6
12
12
6
Image Trust game:
Order return boxes
And controls images
6 Cat
12 Vod
12 Vod
6 Cat
6 Vod
12 Prot
12 Prot
6 Vod
6 Prot
12 Cat
12 Cat
6 Prot

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