How Stable are Measures of Trust?

Trust is an important economic variable that may, however, be subject to measurement error, leading to econometric issues such as attenuation bias and spurious correlation. We use a test/retest protocol to assess idiosyncratic noise in the two main tasks that are used to elicit trust, namely survey questions and experimental games. We find that trust measures based on the trust game entail substantial random measurement error (with up to 15% of noise), while there is virtually no noise in stated trust measures. Given the specificity of our subject pool (students in top Engineering schools) and the short period of time between the test and the retest, we consider these noise percentages as lower bounds. We also provide a sub-group analysis based on measures of cognitive ability and effort. We find substantial heterogeneity across sub-groups in trust-game behavior, but not in the survey questions. We finally discuss which measure of trust should be used, and the estimation strategies that can be applied to limit the effect of random measurement error