Does social trust increase willingness to pay taxes to improve public healthcare? Cross-sectional cross-country instrumental variable analysis

Abstract

The purpose of this paper is to investigate the effect of social trust on the willingness to pay more taxes to improve public healthcare in post-communist countries. The well-documented association between higher levels of social trust and better health has traditionally been assumed to reflect the notion that social trust is positively associated with support for public healthcare system through its encouragement of cooperative behaviour, social cohesion, social solidarity, and collective action. Hence, in this paper, we have explicitly tested the notion that social trust contributes to an increase in willingness to financially support public healthcare. We use micro data from the 2010 Life-in-Transition survey (N = 29,526). Classic binomial probit and instrumental variables ivprobit regressions are estimated to model the relationship between social trust and paying more taxes to improve public healthcare. We found that an increase in social trust is associated with a greater willingness to pay more taxes to improve public healthcare. From the perspective of policy-making, healthcare administrators, policy-makers, and international donors should be aware that social trust is an important factor in determining the willingness of the population to provide much-needed financial resources to supporting public healthcare. From a theoretical perspective, we found that estimating the effect of trust on support for healthcare without taking confounding and measurement error problems into consideration will likely lead to an underestimation of the true effect of trust.