Trust, assocational life, and economic performance

Assuming that J. S. Mill and others are correct in their belief that trust matters for the economic performance of nations, the determinants of trust become important. Section 2 discusses the sources of trust and briefly summarizes empirical evidence. Section 3 builds on Fukuyama’s concept of the “radius of trust” to identify the type of trust which should be advantageous to national economic performance. Section 4 addresses measurement issues. Evidence on trust and economic performance relies heavily on the use of a single survey indicator of trust: in light of the potential for translation problems and other sources of measurement error, can this indicator be trusted? Section 5 presents empirical evidence on trust and economic performance, for a 25-nation OECD sample and for a larger 40-country sample. Section 6 presents evidence on the relationship between associational life and economic performance, testing the conflicting theoretical perspectives of Putnam (1993) and Olson (1982). Section 7 briefly concludes.