Trust and the Economic Crisis of 2008

Abstract

The economic crisis of 2008 led to a loss in confidence in financial institutions and to government more generally. However, public perceptions of the economic stimulus plan were marked by beliefs that wealthy businesspeople were getting special treatment while ordinary Americans were not. Perceptions of increasing inequality are not typically linked with confidence in government or business as much as they are with trust in people more generally, which is a key element in social cohesion in any society. A survey by the Pew Research Center in 2004 asked whether business is more concerned with making a profit or balancing profits with public service. While most Americans see business as striking a balance, there are clear concerns for how people might see business after the economic crisis. Factors that underlie trust in other people include whether success in life is determined by hard work, whether the rich get richer and the poor get poorer, and whether success is determined by factors outside your control – and they also shape the belief that businesses balance profits and public service. I also show a strong connection between both trust and honesty and the level of inequality in American society. With greater inequality comes less trust and with less trust comes a lack of willingness to compromise to achieve a larger social purpose. The legacy of the financial crisis and the economic inequality that it has left in its wake (both actual and perceived) is a hardening of both ideological and partisan lines, making it more difficult to enact legislation that might help the economic recovery.