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Causes and Consequences
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From the course by Universiteit Leiden
Political Economy of Institutions and Development
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From the lesson
Trust
Trust. Argues for the centrality of trust in explanations of differences in wealth and poverty between nations but highlights difficulties in measuring it and in explaining the direct of causality.
Meet the Instructors
Richard Thomas GriffithsProf. dr.
Faculty of Humanities
Hi there. In the previous video,
we looked at the results of the trust question.
And to be fair, we were pretty critical about large surveys in general and
about the trust question in particular.
Well, in this video,
we're going to look at what social scientists actually do with the results.
We'll look at some of the assumption that they make.
We'll examine some of the plausible hypotheses about the role of trust in
society.
Now there's a large body of literature on what determines trust and
it's divided itself into three mutually incompatible rival schools of thought.
There are those who argue that trust is deeply culturally rooted.
That it belongs almost to the values learned in early childhood.
Among the evidence they cite to support this claim,
is that trust levels in immigrant group reflect those in the home country.
Rather than the host country, even after several generations.
Other social scientists believe that trust is a learned phenomenon that is part
of one's process of socialization.
Robert Putnam is one of these.
He and others cite the evidence of a link between trust and
institutional membership and participation in civic society.
As there's yet another group that also believes that trust is learned, but
they contend that the mechanism is not socialization but one of confidence.
They point to the evident relationship between well-ordered societies and
recorded levels of interpersonal trust.
The world value survey collates the results
of the trust question in the form of a single index on a separate webpage.
Some of the observations date from the turn of the millennium,
they're 15 years old.
Does this matter?
Well it doesn't matter if you believe that trust attitudes are relatively constant
and fluctuate at the most within a small range.
And that seems to be the assumption underlying their use.
Culturalist spans their expectations over generations.
Institutionalists discuss changes taking place over decades.
And the only breach that the governance school has discovered,
is the deep changes in trust accompanying
major regime changes such as the collapse of communism at the end of the 1990s.
But does this belief withstand closer examination of the recent data?
In many instances, the latest world value survey results do indeed
coincide well with the results of earlier surveys.
But there are exceptions.
And here are some examples.
The Netherlands, for example, which is drifting in an economic malaise since
the financial crisis of 2008 has actually improved its index by a whole 25 points.
Thailand, which once formed part of the explanation that
high trust level is reflected in its traditional Buddhist values,
fell by 18 points, no doubt because of the political problems in the country.
But there again, Egypt, which has been through at least one social and
political revolution since the Arab Spring, remains almost unchanged.
By contrast, Jordan, possibly under the impact of the Syrian refugee crisis,
has seen its trust go up by 34 points.
And the largest change of all is the collapse of trust in Ecuador,
from 72.7 to 14.5, taking them from 22nd in the world rankings,
right down to seventh from bottom.
A second assumption made by social scientists is that there is a direct link
between interpersonal trust and
generalized trust, faced in government institutions.
The evidence for the latter is not as widely available as for the former, nor
over a similar time span.
But there is support in local and regional studies for this assumption.
I, however, have a sneaking suspicion that those answering this question will have
difficulty in separating the institution of government
from the actual government in power.
Now, throughout this lecture,
we've argued the pivotal role played by trust in society.
Well now, let's try to operationalize that assumption with a series of hypotheses.
These hypotheses will follow a track
leading from homogeneity in society to levels of trust.
From levels of trust to the quality of governance.
And from the quality of governance to economic growth and prosperity.
First, we could argue that the more homogeneous a society is,
in terms of ethnic composition, religious diversity and income and
wealth equality, the higher is likely to be its level of trust.
Large differences within society make it more difficult to engage in activities
that allow the creation of bridging capital.
And the presence of a clearly defined outsider pushes people
into associations that encourage inward-looking bonding capital.
Second, we could argue the higher the levels of trust,
the better the quality of governance.
In a high trust society, you will allow non-group members to act on your behalf,
in the belief that they will act in the interest of society as a whole and
not for the narrow sectional interest of their own.
Thirdly, we could argue that good governance
will lead to better economic performance.
The fact that governments will operate efficiently and predictably, will create
conditions of confidence and alter the planning scenarios for investment.
Citizens will be willing to defer immediate consumption in the form of
savings or taxation, for the certain expectation of returns in the future.
Investment scenarios by business will improve and the extra capital will act as
a transmission belt for economic growth and prosperity.
Of course we can always reverse the causation.
Prosperity allows society to divert more resources to good governance.
Economic growth allows greater expenditure of government
without competing with current consumption.
Extra levels of public provision,
especially in education, also contribute to higher levels of trust.
Moreover, knowing that institutions work, removes the need for bribery and
corruption.
And this too would filter back into enhancing levels of interpersonal trust.
A confidence in good governance in terms of openness and transparency, as well
as the efficient provision of public goods, would also reduce the incentive for
social groups, however defined, to grab shares for themselves.
And this again will reduce the relevance of homogeneity
as an operational factor in society.
Let's sum up then.
In this video,
we've looked at the assumptions made about the causes of interpersonal trust.
We've looked at whether trust levels are stable and
whether interpersonal and generalized trust are linked.
We've also examined the causal chain linking homogeneity to trust,
to governance and to economic progress.
And we've looked at the reverse causation.
Now in this video, we continually talked about links between factors.
Such links may be logical.
But the foundation amongst social science and particularly politically economy,
is that they are also statistically verifiable.
In the next video, we'll examine how this is done.
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