Abstract
Since trust correlates with economic development and in turn economic development associates with political regime, we conjecture that there may be a relationship between trust and political regime. Without looking for any casual inference, we investigate if trust aggregated on the country level correlates with the country's political regime. Specifically, we are interested whether trust correlates positively with the level of democracy in cross-sectional observations. We analyse data on trust from 76 countries using the Global Preference Survey and investigate the correlations with five separate democracy indices (Polity2, Economist Intelligence Unit’s Index of Democracy, Freedom House, MaxRange and Unified Democracy Score). We do not find any significant association, with or without taking into account other factors (e.g., regional location, economic development, geographic conditions, culture) as well. Trust does not correlate with cornerstones of democracy either, measured by five components of the EIU index. A robustness check using an alternative measure of trust from the World Values Survey reaches the same results. The present study supersedes the working paper version (Khayouti et al., 2020).
Highlights
Simmel (1950:p.326) claims that "trust is one of the most important synthetic forces within society"
Since trust correlates with economic development and in turn economic development associates with political regime, we conjecture that there may be a relationship between trust and political regime
In Appendix A, we report the same figure with the other political regime indices
Summary
Simmel (1950:p.326) claims that "trust is one of the most important synthetic forces within society". A testament to this statement is the empirical finding that trust associates with economic development. Knack and Keefer (1997), Whiteley (2000), Dincer and Uslaner (2010) and Beugelsdijk et al (2004) provide evidence on the correlation between trust and national income (or economic growth), while Algan and Cahuc (2010) show that the relationship is causal. Regarding the mechanisms behind the previous findings, Zak and Knack (2001) offer theoretical and empirical support that trust affects the rate of investment, while Bjørnskov (2012) documents the effect of trust on schooling and the rule of law. On the other hand, Acemoglu et al (2019) claim that democracy has a significant positive effect on income. On the other hand, Acemoglu et al (2019) claim that democracy has a significant positive effect on income. Weede (1996) suggests that the variance in growth rates is larger among autocracies than among democracies. Leblang (1996) claims that the political regime affects economic development indirectly through its commitment to property right
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