The Social Scar of the Pandemic: Impacts of COVID-19 Exposure on Interpersonal Trust

This paper employs a difference-in-differences strategy to examine the causal effect of exposure to the COVID-19 pandemic on interpersonal trust in China. Using a nationally representative panel survey, we find that COVID-19 exposure led to a decrease in the levels of generalized trust. We also show that the change in interpersonal trust varied across domains. Specifically, COIVD-19 exposure significantly decreased trust in parents, neighbors, and local government officials, but had small and insignificant effects on trust in doctors, strangers, and Americans. Empirical tests suggest that changes in income and physical health status are not likely to be potential channels. We provide some evidence for the mechanism of deteriorated mental health status and pessimistic expectations.