Trust Doesn’t Explain Regional U.S. Economic Development and Five Other Theoretical and Empirical Problems with the Trust Literature

27 Pages Posted: 6 Dec 2019

See all articles by Alex Nowrasteh

Alex Nowrasteh

Cato Institute - Center for Global Liberty and Prosperity

Andrew Forrester

Cato Institute - Center for Global Liberty and Prosperity

Date Written: October 8, 2019

Abstract

Economists have developed a vast empirical literature on how cultural traits like generalized trust affect economic output. Much of this literature finds a positive causal relationship between measures of generalized trust, as gathered by international surveys, and economic output. However, the trust literature commits five deadly empirical and theoretical sins that undermine its findings. From the quality of the survey questions and responses to the paucity of theoretical models used to explain how trust affects economic outcomes to the radically different results from experimental evidence, the trust literature is riven with poor methods and bad data that undermine its conclusions. Even so, applying the best methods in the trust literature to regional level analysis in the United States reveals no statistically significant correlation between economic output and trust. We see no reason to trust the findings of the trust literature.

Keywords: economic study methods, trust economy, economic output

JEL Classification: A1, A10, A11, A13, A14, B4, B40, B41

Suggested Citation

Nowrasteh, Alex and Forrester, Andrew, Trust Doesn’t Explain Regional U.S. Economic Development and Five Other Theoretical and Empirical Problems with the Trust Literature (October 8, 2019). Cato Working Paper No. 57, Available at SSRN: https://ssrn.com/abstract=3490878

Alex Nowrasteh (Contact Author)

Cato Institute - Center for Global Liberty and Prosperity ( email )

1000 Massachusetts Avenue, N.W.
Washington, DC 20001-5403
United States

Andrew Forrester

Cato Institute - Center for Global Liberty and Prosperity ( email )

1000 Massachusetts Avenue, N.W.
Washington, DC 20001-5403
United States

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