Abstract
Subjective wellbeing maximization is a possible goal of government or public policies, and it is often considered the goal of individual life. This paper proposes an estimation using the Wellbeing Valuation Approach (WVA) to estimate the monetized effect of trust in government. Using a cross-country panel data set for 97 countries in the period from 2011 to 2019, we arrive at three main findings. First, there is a positive relationship between trust in national government and average life satisfaction. Second, trust in the national government has a global median value of Intl$ 5649 per person a year in foregone income. Third, trust affects life satisfaction directly as well as indirectly through per capita GDP. This indirect effect is considered relatively small compared to the direct effect, being approximately six times smaller. This study contributes to the policy evaluation literature by providing an evaluation of trust in government to be used as a proxy to plan future investment or policy assessment.
Highlights
This paper provides novel findings by applying the Wellbeing Valuation Approach (WVA) to measure the monetary valuation of trust in government and hopes to be a good reference for a country’s public policy decision-making, during the COVID-19 pandemic period
The Seemingly Unrelated Regression (SUR) regression explains that the total effect of trust in government on life satisfaction can be decomposed into direct and indirect effects
This paper explores whether there is a relationship between trust in national government and national average life satisfaction and aims to evaluate trust in government
Summary
Trust in government is identified as an essential element that determines the government’s efficiency and effectiveness; with less trust in government, enforcement and transaction costs tend to increase because of uncertainties [1]. Comparing 2019 to the previous year, the Gallup World Poll (GWP) shows erosion of trust in government in many countries such as Chile (−54%), Ecuador (−48%), Costa Rica (−41%), Slovakia (−30%), Belgium (−26%), and Thailand (−23%). This decline of trust may threaten countries’ capacity to tackle some of the key challenges for inclusive growth and wellbeing. In order to generate the shadow price of trust in government using the WVA, firstly the relationship between trust and subjective wellbeing has to be investigated. The rest of the paper is organized as follows: Section 2 presents a literature review of trust measurements and the relationships between trust and subjective wellbeing, Section 3 presents the methodology and outlines the data and variables, Section 4 presents the empirical analysis results, discussions are set out in Section 5, and the final section summarizes our main findings
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