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Free to trust: Economic freedom and social capital
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Economics.
2006 (English)In: Kyklos (Basel), ISSN 0023-5962, Vol. 59, no 2, 141-169 p.Article in journal (Refereed) Published
Abstract [en]

We present new evidence on how generalized trust is formed. Unlike previous studies, we look at the explanatory power of economic institutions, we use newer data, we incorporate more countries, and we use instrumental variables in an attempt to handle the causality problem. A central result is that legal structure and security of property rights (area 2 of the Economic Freedom Index) increase trust. The idea is that a market economy, building on voluntary transactions and interactions with both friends and strangers within the predictability provided by the rule of law, entails both incentives and mechanisms for trust to emerge between people.

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2006. Vol. 59, no 2, 141-169 p.
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URN: urn:nbn:se:uu:diva-108630DOI: 10.1111/j.1467-6435.2006.00324.xOAI: oai:DiVA.org:uu-108630DiVA: diva2:236747
Available from: 2009-09-24 Created: 2009-09-24 Last updated: 2009-11-05Bibliographically approved

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