Abstract

We consider the concept of poverty from the asset-accumulation approach and propose an integrated framework, building upon existing theories, to describe how the interconnected factors of trust (or lack thereof) and social distance can reinforce poverty traps. Social distance is influenced by choice, while trust is the symptom that defines the strength of social ties on a group. We look at how an absence of trust influences how households make decisions about the use and accumulation of assets in ways that could perpetuate poverty. Weak trust also affects how groups interact with each other in a society, creating “trust clusters” within homogeneous groups and antagonism across groups, which in turn affects aspirations and leads to an erosion of the basis of a social contract. For more effective and sustainable poverty reduction, we need to understand these linkages and address them systematically.