Trust and livelihood adaptation: evidence from rural Mexico

This paper explores the relationship between trust and household adaptation strategies for a sample of respondents in a Mexican agrarian community. In particular, we analyze how levels of personalized, generalized, and institutionalized trust shape the adaptation strategies of smallholders, and find that households characterized by low levels of generalized and institutionalized trust are less likely to be involved in a diversified livelihood strategy. Instead, they tend to continue with the traditional activity of maize production. In contrast, high levels of personalized trust are associated with a livelihood strategy that focuses on cattle breeding and pasture growing. We argue that trust explains why some people more readily 'catch up' with opportunities created by an expanding market, while others lag behind in poverty. This paper thus seeks to contribute to the debate on the role of trust in economic actions and decision-making processes of smallholders.