Institutional Quality Causes Social Trust: Evidence from Survey and Experimental Data on Trusting Under the Shadow of Doubt

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.

The institutional foundations of surf break governance in Atlantic Europe

“…5 An associated discussion concerns the question, whether well-working legal systems crowd-out (Lowes et al 2017) or crowd-in (Herreros and Criado 2008) cooperative civic behavior. Broadly following the latter logic, Berggren and Jordahl (2006); Cassar et al (2014); Martinangeli et al (2020) find that legal quality predicts social trust. As such, well-working legal systems may not really be regarded as potential alternative dispute-resolution mechanisms for distributional conflicts over the common pool resource of surf waves, but they possibly could contribute to stronger dispositions toward mutual cooperation in the long run.…”

Economic freedom and academic freedom across nations

“…In addition to this ‘direct’ effect, one can add an ‘indirect’, cultural effect. For example, the rule of law has been shown to relate to social trust (Berggren and Jordahl, 2006; Cassar et al ., 2014; Martinangeli et al ., 2024), tolerance (Berggren et al ., 2019; Berggren and Nilsson, 2013, 2021), and respect for general human rights (Bjørnskov, 2024). If so, decision-makers could be expected to be less inclined to see free academic research as dangerous in a system of rule of law, with more trust and tolerance towards others.…”

Institutions as predictors of government discrimination

“…This also applies to public decision‐makers, as well as to citizens' voting behavior. There is indeed an emerging empirical literature documenting effects of this kind: for example, the rule of law and institutions enabling globalization have been shown to relate to social trust (Berggren & Bjørnskov, 2023; Berggren & Jordahl, 2006; Cassar et al, 2014; Martinangeli et al, 2023), and institutions, such as those encompassed under the rubric of economic freedom and the related phenomenon of globalization, are positively related to various indicators of tolerance (Berggren et al, 2019; Berggren & Nilsson, 2013, 2014, 2015, 2021; Eriksson et al, 2021). Enforcement institutions have been found to have cultural spillovers in a prosocial direction (Engl et al, 2021), and greater levels of prosociality follow from a higher degree of market integration and higher payoffs to cooperation (Henrich et al, 2005).…”