Corruption Aversion, Social Capital, and Institutional Trust in a Dysfunctional Institutional Framework: Evidence from a Palestinian Survey

Abstract

Studying the inter-play between social capital and corruption aversion in a context subject to institutional dysfunctions like the Palestinian Territories may help understand mechanisms of governance and institutional legitimacy. By using a unique survey conducted in 2007 in the Palestinian Territories, we find that corruption aversion increases with civic spirits and is lower among individuals involved in voluntary activities. Furthermore, corruption aversion and social capital increase with institutional trust and the importance of the rule of law. These results are integrated within the current debate on the role that identity-based motivations of moral solidarity play in supporting institutional legitimacy.

Introduction to the special issue on institutions and culture in economic contexts

“…It is also a symbol bridging the illegal behaviour with the moral dimension as it distinguishes the 'wrong' from the 'right' (Brennan and Buchanan, 1985). Empirical works in the literature of tax morale and corruption aversion, for instance, report that citizens consider tax evasion and corruption more immoral in contexts with a stronger rather than a weaker rule of law in both high-income and low-income countries (Andriani, 2021;Frey and Torgler, 2007;Torgler, 2005). This literature supports the perspective that effective formal institutions can transmit stronger values of law abidance and civic duty.…”

“…In individualistic value-oriented societies, individuals' behaviour is driven by self-determination and people are expected to be responsible for their actions and decisions. In contrast, in collectivistic value-oriented societies, individuals are expected to act in the interests of their small reference group, even though this implies higher moral and economic cost for the entire collective (Andriani, 2021).…”