Was Banfield right? New insights from a nationwide laboratory experiment.

Since the pioneering study by Banfield, the North‐South gap in Italian social capital has been considered by international scholars as an example of how cultural diversity within a country can generate different developmental outcomes. Most studies, however, suffer from limited external validity and measurement error. This paper exploits a new and representative online lab‐experiment to assess social‐capital patterns in Italy. Unlike previous experiments, we do not inform participants about the geographic origins of their counterparts. This feature allows us to assess the North‐South gap in universal, as opposed to parochial, behavior. Results suggest that Southerners and Northerners do not systematically differ in generalized prosocial preferences. Only trustworthiness is higher among. Northerners, while they are statistically similar to Southerners in many other economic preferences such as cooperation, trust, expected trustworthiness, altruism, and risk tolerance. We also show that the gap in trustworthiness stems from the lower reciprocity of Southerners in response to large transfers, and it is characterized by the intergenerational transmission of norms. Possible policy implications are discussed. [ABSTRACT FROM AUTHOR]