Institutional Quality Causes Social Trust: Experimental Evidence on Trusting Under the Shadow of Doubt
22 Pages Posted: 17 Nov 2020 Last revised: 4 Feb 2021
Date Written: November 16, 2020
Social trust is a crucial ingredient for successful collective action. What causes social trust to develop, however, remains poorly understood. The quality of political institutions has been proposed as a candidate driver and has been shown to correlate with social trust. We show that this relationship is causal. We begin by documenting a positive correlation between quality of institutions, measured by embezzlement, and social trust using survey data. We then take the investigation to the laboratory: We ﬁrst exogenously expose subjects to diﬀerent levels of institutional quality in an environment mimicking public administration embezzlement. We then measure social trust among the participants using a trust game. Coherent with our survey evidence, individuals exposed to low institutional quality trust signiﬁcantly less.
Keywords: Social trust, quality of government, corruption
JEL Classification: D63, D73
Suggested Citation: Suggested Citation