My slides from APCS2017: The Moldable Young: How institutions impact social trust

1. The moldable young: How
institutions impact social trust
Andreas Bergh, Lund university & IFN
Richard Öhrvall, Liköping University & IFN

2. What is social trust?
• Social trust is the individual attitude or belief that
“most people” can be trusted.
• Typically measured by asking
• Generally speaking, would you say that most
people can be trusted or that you need to be
very careful in dealing with people?

3. Why should we care?
• Every transaction requires trust (Arrow 1972)
• Survey answers do correlate with behavior eg.
Wallet-drop experiments (Knack and Keefer,
1997) and lab experiments (Thöni et al. 2012)
• Several strong country level correlations
• Using IV-estimation and US-immigration, trust
has been causally linked to
• Welfare state size (Bergh&Bjørnskov 2011, Bjørnskov &
Svendsen 2012)
• Growth (Algan & Cahuc 2010)

4. Trust
+ +
Government
size
Growth
–
?
Trust is crucial for economic
development
• Trust helps us understand ‘the bumble bee
paradox’ of the Nordic welfare states (Bergh &
Bjørnskov 2016).

5. Where does trust come from?
How robust is it?
• Cultural view: Trust is inherited and helps to
explain institutions (Putnam 1994, Uslaner 2002).
• Institutional view: Trust is caused by impartial
institutions (eg. economic freedom, rule of law,
welfare state universality) (Berggren and Jordahl 2006,
Kumlin & Rothstein 2005)

6. Namn
Sida 6

7. Can migration inform about
causality?
• Nannestad et al (2014) (and more papers)
• Migration from low to high trust countries
• Comparisons with matched individuals
• Find substantial (yet incomplete) adjustment of
trust upwards.

8. Example

9. Our contribution
• Examine the impact of institutions on trust
• Using survey data on Swedish expats around the
world
• In countries with inferior institutions, time spent
in the new country should associate negatively
with trust
• Reverse causality implausible
• Self-selection potentially problematic

10. Self-selection
• Swedish expats are a highly trusting sub-sample
of a highly trusting population
• If self-selection is similar over time, time spent in
the new country gives an exogenous variation in
exposure to the new country
• We can also test our controls to see if they
capture why expats are more highly trusting
• (they do. It’s about subjective health)

11. Social trust over time in Sweden

12. Data
• Email survey by the Swedish SOM-institute to
expats 18 and 75 years of age.
• Representative sample, 27% response rate ->
2,668 answers, our baseline.
• 57 percent reside in the 12 most common
countries,
• the rest scattered in 98 other different countries.

13. Share of
respondents
Share of
emigrants
2014
Norway 9 11.4
USA 9 6.3
UK 8 7.1
Germany 5 4.8
Schwitzerland 5 1.3
Denmark 4 8.2
France 4 1.7
Spain 3 2.4
Finland 3 5.1
Thailand 3 1.4
Australia 2 1.9
Brazil 2 0.4
Table 1. Residence of Swedish expatriates
Source: The SOM Insitute’s Swedish Expatriate Survey 2014.

14. Expats 0.3 units
more trusting (0-
10 scale), driven
entirely by
better subjective
health.
Model
Variables (1) (2) (3) (4)
Expatriate 0.32* 0.31* 0.08 -0.09
(0.17) (0.18) (0.17) (0.18)
High
education
0.77*** 0.65*** 0.61***
(0.07) (0.06) (0.11)
Age/10 0.00 0.02 0.07**
(0.02) (0.02) (0.03)
Age squared 0.00 0.00 -0.00*
(0.00) (0.00) (0.00)
Female 0.11* 0.18*** 0.17
(0.07) (0.06) (0.11)
Married 0.43*** 0.33*** 0.15
(0.08) (0.08) (0.14)
Employed 0.39*** 0.03 -0.04
(0.14) (0.13) (0.24)
Unemployed -0.68*** -0.76*** -0.72*
(0.23) (0.22) (0.38)
Retired -0.06 -0.29* -0.28
(0.18) (0.17) (0.31)
Left-right
position
-0.01 -0.06** 0.03
(0.03) (0.03) (0.05)
Health status 0.31*** 0.31***
(0.02) (0.03)
Religious -0.23**
(0.11)
Constant 6.65*** 5.21*** 2.99*** 2.16***
(0.03) (0.39) (0.39) (0.69)
Observations 4,602 4,225 4,206 1,412
R2 0.00 0.07 0.15 0.15

15. Main analysis!
• Is trust lower for those who have lived longer in a
country with
• More (perceived) corruption? (Transparency
International)
• Less economic freedom? (Fraser institute)
• Less average social trust? (WVS/EVS et cet)
• Analysis using interaction effects and by dividing
the sample in to ‘best’, medium and ‘worst’
institutions.

16. Results:
• Interacting time with institutional indicator
suggest that institutions do affect trust, but the
effect is really small.
• Splitting the sample into thirds suggest the same
results, and the effect is only visible in the ‘worst’
third of the countries.

17. Trust of expats who have moved
to the most corrupt third of the
countries

18. Comparison

19. Next:
Divide sample into older and
younger then 30 at arrival

21. Summary
• Yes, institutions can destroy social trust
• Affects only the young
• Happens during the first 5 years
• The effect is very small (1/3 std deviation)
• Swedish expats who have lived 30+ years in the
most corrupt countries, are still as trusting as
Swedes in Sweden

22. • Kumlin, Staffan and Bo Rothstein. 2005. "Making and Breaking Social Capital: The Impact of Welfare-State
Institutions." Comparative Political Studies 38(4):339-65.
• Uslaner, Eric M. 2002. The Moral Foundations of Trust. Cambridge: Cambridge University Press.
• Berggren, Niclas and Henrik Jordahl. 2006. "Free to Trust: Economic Freedom and Social Capital." Kyklos
59(2):141-69. doi: 10.1111/j.1467-6435.2006.00324.x.
• Arrow, Kenneth J. 1972. "Gifts and Exchanges." Philosophy & Public Affairs 1(4):343-62.
• Thöni, Christian, Jean-Robert Tyran and Erik Wengström. 2012. "Microfoundations of Social Capital."
Journal of Public Economics 96(7–8):635-43.
• Bergh, Andreas and Christian Bjørnskov. 2011. "Historical Trust Levels Predict the Current Size of the
Welfare State." Kyklos 64(1):1-19.
• Bjørnskov, Christian and GertTinggaard Svendsen. 2012. "Does Social Trust Determine the Size of the
Welfare State? Evidence Using Historical Identification." Public Choice:1-18.
• Algan, Yann and Pierre Cahuc. 2010. "Inherited Trust and Growth." American Economic Review
100(5):2060-92.
• Putnam, Robert D., Robert Leonardi, och Raffaella Y. Nanetti. 1994. Making Democracy Work: Civic
Traditions in Modern Italy. Princeton University Press.
• Nannestad, Peter, Gert Tinggaard Svendsen, Peter Thisted Dinesen and Kim Mannemar Sønderskov.
2014. "Do Institutions or Culture Determine the Level of Social Trust? The Natural Experiment of Migration
from Non-Western to Western Countries." Journal of Ethnic & Migration Studies 40(4):544-65.