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10.
Trust and Social Capital
Yann Algan
This chapter discusses the role of trust for social progress and people’s well-being. It reviews the different definitions and types of trust, including rational trust, moral trust, and social preferences, as well as the state of existing statistics on trust. The chapter argues in favor of the definition of trust provided by the OECD Guidelines on Measuring Trust as “a person’s belief that another person or institution will act consistently with their expectations of positive behaviour.” It looks at why trust matters for the well-being of people and the country where they live, and assesses the available evidence on its role in supporting social and economic relations. It analyzes trust between individuals (inter-personal trust) and trust in institutions (institutional trust) as determinants of economic growth, social cohesion, and well-being, as a crucial component for policy reform and for the legitimacy and sustainability of any political system. Finally, the chapter stresses the importance of integrating survey measures of trust into the routine data collection activities of National Statistical Offices, and of implementing quasi-experimental measures of trust and other social norms based on representative samples of the population as a complement to traditional survey questions.
Yann Algan is Professor of Economics at Sciences-Po Paris. The author wishes to thank Elizabeth Beasley, Axelle Charpentier, Angus Deaton, Martine Durand, Lara Fleischer, Sergei Guriev, Alan B. Krueger, Marco Mira D’Ercole, Fabrice Murtin, Joseph E. Stiglitz, and Yang Yao as well as participants in the HLEG workshop on “Measuring Trust and Social Capital,” held on June 10, 2016, in Paris and organized in collaboration with Sciences-Po, the European Research Council, and the OECD. Yann Algan also thanks the European Community’s Horizon H2020 Programme (H2020-ERC-2014-CoG Grant Agreement n° 647870) for its financial support of the SOWELL project. The opinions expressed and arguments employed in the contributions below are those of the author and do not necessarily reflect the official views of the OECD or of the governments of its member countries.
Introduction
Social capital, broadly understood as the set of shared norms and values that contribute to well-being (OECD, 2013a), has received a huge amount of academic and policy interest in the last quarter century as a key driver of social progress and well-being. The term “social capital” conveys the idea that cooperative human relations are crucial for improving various aspects of people’s life, and that it consists of a stock that should be preserved and developed for the sustainability of well-being. This is why the influential report of the Commission on the Measurement of Economic Performance and Social Progress made specific recommendations to develop better measures of social connections and social capital (Stiglitz, Sen, and Fitoussi, 2009). Several initiatives since 2009 have advanced our understanding of social capital and of the data resources available for this effort. For example, the OECD has included aspects of social capital in the framework underpinning its bi-annual report How’s Life? (OECD, 2011), while other international task forces have underscored the need to develop better measures of social capital for evaluating the sustainability of well-being over time (UNECE, 2013).
Given the very broad and heterogeneous nature of social capital, it is important to narrow and deepen the analysis of its various aspects one at a time, in order to make progress on its measurement and to document its policy relevance. This chapter focuses on the role of “trust” for social progress and well-being. While trust is only one component of social capital (see the “Social Capital and Trust” sidebar on the different definitions and dimensions of social capital), research shows that this dimension is indispensable for social and economic relations. Trust between individuals (inter-personal trust) and trust in institutions (institutional trust) have been shown to be a decisive determinant of economic growth, social cohesion, and well-being. They have also been shown to be a crucial component for policy reform and for the legitimacy and sustainability of any political system. These are also the two types of trust addressed by the OECD Guidelines on Measuring Trust (see the “OECD Guidelines on Measuring Trust” sidebar).
SOCIAL CAPITAL AND TRUST
Despite the high level of interest in social capital, there is little agreement about the best way to define and measure it. This has slowed down its incorporation in official statistics and hampered the development of internationally comparable data collection since the 2009 Stiglitz, Sen, and Fitoussi report. OECD (2001) defined social capital as the “networks together with shared norms, values and understandings that facilitate cooperation within or among groups,” while Scrivens and Smith (2013) distinguish four main aspects of social capital:
• Personal relationships refer to people’s networks (i.e., the people they know) and the social behaviors that contribute to establishing and maintaining those networks, such as spending time with others or exchanging news. This category concerns the extent, structure, density, and components of individuals’ social networks.
• Social network support is a direct outcome of the nature of people’s personal relationships and refers to the resources—emotional, material, practical, financial, intellectual, or professional—that are available to each individual through their personal social networks.
• Civic engagement measures activities through which people contribute to civic and community life, such as volunteering, political participation, group membership, and different forms of community action. High levels of volunteering and civic action can contribute to institutional performance as well as being a driver of trust and cooperation.
• Trust and cooperation. Following Coleman (1990), “an individual trusts if he or she voluntarily places resources at the disposal of another party without any legal commitment from the latter, but with the expectation that the act of trust will pay off.” The different types of trust are discussed in this chapter.
OECD GUIDELINES ON MEASURING TRUST
The Guidelines on Measuring Trust address both producers and users of trust data (OECD, 2017) and are modeled after the successful OECD Guidelines on Measuring Subjective Well-Being (OECD, 2013b). They cover trust in both other people (also known as inter-personal trust) and in public institutions (institutional trust).
These Guidelines represent the first attempt to provide international recommendations on collecting, publishing, and analyzing trust data to encourage their use by National Statistical Offices. They describe why measures of trust are relevant for monitoring and policy-making, and why national statistical agencies have a critical role to play in enhancing the usefulness of existing measures. Besides establishing what is known about the reliability and validity of measures of trust, the OECD Guidelines describe best approaches for measuring it in a reliable and consistent way, and provide guidance for reporting, interpretation and analysis.
The OECD Guidelines also include a number of prototype survey modules on trust that national and international agencies can readily use in their household surveys. Five core measures were selected on the basis of their statistical quality and ability to capture the underlying concepts of trust, building on previous use in household surveys. While this core module is recommended to be used in its entirety, its first question on generalized interpersonal trust is considered as a “primary measure” that should be implemented at the very minimum, on account of the solid evidence available on its validity. The five questions are as follows:
1. And now a general question about trust. On a scale from zero to ten, where zero is not at all and ten is completely, in general how much do you trust mo
st people?
2. On a scale from zero to ten, where zero is not at all and ten is completely, in general how much do you trust most people you know personally?
Using this card, please tell me on a score of 0–10 how much you personally trust each of the institutions I read out. 0 means you do not trust an institution at all, and 10 means you have complete trust.
3. [COUNTRY’S] Parliament?
4. The police?
5. The civil service?
Why Does Trust Matter?
The academic research on trust has highlighted a number of relations between trust and a range of outcomes that matter for the well-being of people and of the country in which they live.
Trust matters for economic activity and GDP growth. Countries with higher levels of trust tend to have higher income. Figure 10.1 illustrates this relationship by plotting income per capita over 1980–2009 against average generalized inter-personal trust (i.e., trust in people in general) over 1981–2008 for a sample of 106 countries. The correlation is steady: one-fifth of the cross-country variation in income per capita is related to differences in generalized trust. As discussed later in the chapter, research carried out since 2009 has shown that this relationship is likely to be causal (Algan and Cahuc, 2010).
Figure 10.1. Cross-Country Correlation Between Average Income per Capita and Generalized Inter-personal Trust
Note: Average income per capita (1980–2009) has been obtained from the Penn World Tables 7.0. Trust is computed as the country average from responses to the trust question in the five waves of the World Values Survey (1981–2008), the four waves of the European Values Survey (1981–2008), and the third wave of the Afrobarometer (2005). The question asks, “Generally speaking, would you say that most people can be trusted or that you need to be very careful in dealing with people?” Trust is equal to 1 if the respondent answers “Most people can be trusted” and 0 otherwise.
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