Institutional Quality Causes Social Trust: Evidence from Survey and Experimental Data on Trusting Under the Shadow of Doubt
CeCAR Working Paper Series No. 10
Working Paper of the Max Planck Institute for Tax Law and Public Finance No. 2020-04
42 Pages Posted: 8 Dec 2020
There are 2 versions of this paper
Institutional Quality Causes Social Trust: Experimental Evidence on Trusting Under the Shadow of Doubt
Institutional Quality Causes Social Trust: Evidence from Survey and Experimental Data on Trusting Under the Shadow of Doubt
Date Written: Dece 1, 2020
Abstract
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