Trust Doesn’t Explain Regional U.S. Economic Development and Five Other Theoretical and Empirical Problems with the Trust Literature

January 6, 2020 • Working Paper No. 57

Economists have developed a vast empirical literature on how cultural traits like generalized trust affect economic output. Much of this literature finds a positive causal relationship between measures of generalized trust, as gathered by international surveys, and economic output. However, the trust literature commits five deadly empirical and theoretical sins that undermine its findings. From the quality of the survey questions and responses to the paucity of theoretical models used to explain how trust affects economic outcomes to the radically different results from experimental evidence, the trust literature is riven with poor methods and bad data that undermine its conclusions. Even so, applying the best methods in the trust literature to regional level analysis in the United States reveals no statistically significant correlation between economic output and trust. We see no reason to trust the findings of the trust literature.

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About the Authors
Alex Nowrasteh

Director of Immigration Studies and the Herbert A. Stiefel Center for Trade Policy Studies