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All for All: Equality, Corruption, and Social Trust

  • Bo Rothstein (a1) and Eric M. Uslaner (a2)

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The importance of social trust has become widely accepted in the social sciences. A number of explanations have been put forward for the stark variation in social trust among countries. Among these, participation in voluntary associations received most attention. Yet there is scant evidence that participation can lead to trust. In this article, the authors examine a variable that has not gotten the attention it deserves in the discussion about the sources of generalized trust, namely, equality. They conceptualize equality along two dimensions: economic equality and equality of opportunity. The omission of both these dimensions of equality in the social capital literature is peculiar for several reasons. First, it is obvious that the countries that score highest on social trust also rank highest on economic equality, namely, the Nordic countries, the Netherlands, and Canada. Second, these countries have put a lot of effort in creating equality of opportunity, not least in regard to their policies for public education, health care, labor market opportunities, and (more recently) gender equality. The argument for increasing social trust by reducing inequality has largely been ignored in the policy debates about social trust. Social capital research has to a large extent been used by several governments and policy organizations to send a message to people that the bad things in their society are caused by too little volunteering. The policy implications that follow from the authors' research is that the low levels of trust and social capital that plague many countries are caused by too little government action to reduce inequality. However, many countries with low levels of social trust and social capital may be stuck in what is known as a social trap. The logic of such a situation is the following. Social trust will not increase because massive social inequality prevails, but the public policies that could remedy this situation cannot be established precisely because there is a genuine lack of trust. This lack of trust concerns both “other people” and the government institutions that are needed to implement universal policies.

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1 J. F. Helliwell, “How's Life? Combining Individual and National Variables to Explain Subjective Weil-Being,” Working Paper 9065 (Cambridge, Mass.: National Bureau for Economic Research, 2002); Uslaner, Eric M., The Moral Foundations of Trust (New York: Cambridge University Press, 2002); Delhey, Jan and Newton, Kenneth, “Who Trusts? The Origins of Social Trust in Seven Societies,” European Societies 5, no. 2 (2003).

2 Beugelsdijk, Sjoerd, Henri de Groot, L. F., and Anton van Schaik, B. T. M., “Trust and Economic Growth: A Robustness Analysis,” Oxford Economic Papers New Series 56 (2004); Putman, Robert, Making Democracy Work: Civic Traditions in Modern Italy (Princeton: Princeton University Press, 1993); Uslaner (fn. 1); Zak, Paul J. and Knack, Stephen, “Trust and Growth” Economic Journal 111 (April 2001).

3 The number of articles published in scientific journals with “trust” as a keyword or in its abstract increased from 129 to 1,956 from 1990 to 2005. Adding the word “growth” to “trust” shows an increase from 1 to 42 articles, which indicates a stark increase in the use of this concept by political economists; ISI Web of Knowledge, http://www.isinet.com/.

4 World Value Surveys, http://wvs.isr.umich.edu/.

5 Jan Delhey and Kenneth Newton, “Social Trust: Global Patterns or Nordic Exceptionalism,” Working Paper (Wissenschaftzentrum Berlin fur Sozialforschung, 2004).

6 Uslaner (fn. 1), chap. 7.

7 There is a huge discussion in political philosophy of how to define “equality of opportunity.” It is certainly hard to imagine a society that would, in reality, create equal opportunity for all its citizens. We employ here a narrow definition that focuses on the establishment of public policies that are intended to create equal conditions for citizens regardless of their income, ethnic/religious background, sex, and race in areas such as health care, education, and social security and legal protection (“equality before the law”). Thus, central to our conceptualization of “equality of opportunity” is not whether there is “equality of opportunity” in general but whether the state does (or does not) promote equality of opportunity.

8 In theory, one could imagine a society with huge economic inequality but with perfect equality of opportunity. In practice, it seems as if these two types go together. For example, in contrast to the United States, the Nordic states provide all citizens who qualify for college with tuition-free education and provide benefits like universal health care and elderly care. One measure of the equality of opportunity is the level of educational inequality in a country. Using a measure of the standard deviation of educational attainment provided by Daniel Lederman of the World Bank, we found a modest correlation (r =.367, N = 62) with the Gini index of economic inequality. The correlation is attenuated by greater economic inequality than predicted for African and Latin American countries and lower economic equality than expected for countries in the Indian subcontinent. We found almost identical results using a Gini index of educational inequality (r =.364, N = 55) estimated by Vinod Thomas, Yan Wang, and Xibo Fan, “Measuring Economic Inequality: Gini Coefficients of Education” (Washington, D.C.: World Bank Institute, Office of the Vice President, and Economic Policy and Poverty Reduction Division, January 2001).

9 Rothstein, Bo, Just Institutions Matter: The Moral and Political Logic of the Universal Welfare State (Cambridge: Cambridge University Press, 1998).

10 Katz, Michael B., “In the Shadow of the Poorhouse: A Social History of Welfare in America,” in Gilens, Martin, ed., Why Americans Hate Welfare: Race, Media, and the Politics of Antipoverty (Chicago: University of Chicago Press, 1999).

11 For examples, see Rothstein (fn. 9), chap. 6.

12 Uslaner (fn.l).

13 Gustafsson, Björn and Johansson, M., “In Search of Smoking Guns: What Makes Income Inequality Vary over Time in Different Countries?” American Sociological Review 84, no. 4 (1999); Atkinson, Anthony B., “The Distribution of Income in the UK and OECD countries in the Twentieth Century” Oxford Review of Economic Policy 15 (Winter 1999); Korpi, Walter and Palme, Joakim, “New Politics and Class Politics in the Context of Austerity and Globalization: Welfare State Regress in 18 Countries, 1975–95” American Political Science Review 97 (August 2003); Gottschalk, Peter and Smeeding, Timothy M., “Cross-national Comparisons of Earnings and Income Inequality” Journal of Economic Literature 35 (June 1997).

14 Korpi, Walter and Palme, Joakim, “The Paradox of Redistribution and Strategies of Equality: Welfare State Institutions, Inequality, and Poverty in the Western Countries” American Sociological Review 63 (October 1998).

15 Pierson, Paul, “Increasing Returns, Path Dependence, and the Study of Politics” American Political Science Review 94 (June 2000).

16 Delhey and Newton (fn. 5), 27.

17 Brehm, John and Rahn, Wendy, “Individual Level Evidence for the Causes and Consequences of Social Capital” American Journal of Political Science 41 (July 1997); Uslaner (fn. 1), chap. 4.

18 Seligman, Adam B., The Problem of Trust (Princeton: Princeton University Press, 1997), 3637, 41.

19 For the logic explaining why we eliminate countries with a legacy of communism, see Uslaner (fn. 1), 228–30.

20 This is not an issue of case selection, since we get an R2 of.560 of the regression of the Galbraith measure on trust for the thirty cases with nonmissing values on both Gini coefficents.

21 The R2 for the 1963 measure with levels of trust in the 1990s is.653 (N = 33) compared to.560 for the 1996 index of inequality. The regression coefficients (.022 and.020, respectively) are almost identical.

22 Eric M. Uslaner, “The Bulging Pocket and the Rule of Law: Corruption, Inequality, and Trust” (Paper presented at the conference “The Quality of Government: What It Is, How to Get It, Why It Matters,” The Quality of Government Institute, Department of Political Science, Göteborg University, Göteborg, Sweden, November 17—19, 2005), at http://www.qog.pol.gu.se/conferences/novem-ber2005/papers/Uslaner.pdf

23 Uslaner (fn. 1), 233–36.

24 Uslaner (fn. 1), 186–89; Uslaner, Eric M. and Brown, M. Mitchell, “Inequality, Trust, and Civic Engagement” American Politics Research 31 (November 2005).

25 Uslaner (fn. 22).

26 For the measurement, see Uslaner (fn. 22).

27 Jong-Sung You, “A Comparative Study of Income Inequality, Corruption and Social Trust: How Inequality and Corruption Reinforce Each Other and Erode Social Trust” (Ph.D. diss., John F. Kennedy School of Government, Harvard University, 2005), chap. 5, esp. 165, at http://ksghome.harvard.edu/~youjong/dissertation%20contents.htm

28 Huber, Evelyne and Stephens, John D., Development and Crisis of the Welfare State (Chicago: University of Chicago Press, 2001).

29 Uslaner (fn. 1), chaps. 2, 4.

30 Kinder, Donald R. and Kiewiet, D. Roderick, “Economic Discontent and Political Behavior: The Role of Personal Grievances and Collective Economic Judgments in Congressional Voting,” American Journal of Political Science 23, no. 3 (1979).

31 Boix, Carles and Posner, Daniel N., “Social Capital: Explaining Its Origins and Effects on Government Performance” British Journal of Political Science 28 (October 1998), 693.

32 Putnam, Robert D., Bowling Alone: The Collapse and Revival of American Community (New York: Simon and Schuster, 2000), 359 ff. and chap. 15.

33 Ibid., chap. 24.

34 Neckerman, Katherine, Social Inequality (New York: Russell Sage Foundation, 2004); cf. Skocpol, Theda, Diminished Democracy: From Membership to Management in American Civic Life (Norman: University of Oklahoma Press, 2003).

35 Hacker, Jacob S., “Privatizing Risk without Privatizing the Welfare State: The Hidden Politics of Social Policy Entrenchment in the United States” American Political Science Review 98 (May 2004).

36 Braithwaite, Valerie and Levi, Margaret, eds., Trust and Governance (New York: Russell Sage Foundation, 1998); Cook, Karen S., ed., Trust in Society (New York: Russell Sage Foundation, 2001); Ostrom, Elinor and Walker, James, eds., Trust and Reciprocity: Interdisciplinary Lessons from Experimental Research (New York: Russell Sage Foundation, 2003).

37 Hardin, Russell, Trust and Trustworthiness (New York: Russell Sage Foundation, 2002); Tyler, Tom R. and Huo, Yuen J., Trust in the Law (New York: Russell Sage Foundation, 2002); Cook, Karen, Hardin, Russell, and Levi, Margaret, Cooperation without Trust? (New York: Russell Sage Foundation, 2005).

38 Knack, Stephen and Zak, Paul, “Building Trust: Public Policy, Interpersonal Trust and Economic Development,” Supreme Court Economic Review 10 (2002).

39 Putnam, Robert D. and Feldstein, Lewis D., Better Together: Restoring the American Community (New York: Simon and Schuster, 2003). See also, for example, the reports from the Irish Government 2003, “The Policy Implications of Social Capital”; and from the Swedish Government 2002; “En uthallig demokrati. SOU 2002:1” (Stockholm: Fritzes Offentliga Publikationer). On Australia, see Winter, I., ed., Social Capital and Public Policy in Australia (Melbourne: Australian Institute of Family Studies, 2002). The World Bank has also been very active in this area; see Woolcook, M. and Narayan, D., “Social Capital: Implications for Development Theory, Research and Policy” World Bank Research Boserver 15 (August 2000).

40 Uslaner (fn. 22).

41 Gambetta, Diego, The Sicilian Mafia: The Business of Private Protection (Cambridge: Harvard University Press, 1993).

42 Tanzi, Vito, “Corruption around the World: Causes, Consequences, Scope and Cures,” IMF Staff Papers 45 (Washington, D.C.: International Monetary Fund, 1998).

43 Paolo Mauro, “Why Worry about Corruption?” Washington: International Monetary Fund (February 1997), 7.

44 Hanousek, Jan and Palda, Filip, “Quality of Government Services and the Civic Duty to Pay Taxes in the Czech and Slovak Republics, and Other Transition Countries” Kyklos 57 (May 2004).

45 Uslaner, Eric M., “Trust and Corruption,” in Lambsdorf, Johann Graf, Taube, Markus, and Schramm, Matthias, eds., Corruption and the New Institutional Economics (London: Routledge, 2004); Uslaner (fn. 22).

46 Eric M. Uslaner and Gabriel Badescu, “Making the Grade in Transition: Equality, Transparency, Trust, and Fairness” (Manuscript, University of Maryland—College Park, 2005). The data on Estonia have not been reported in any publication. They will be discussed in Uslaner, “The Bulging Pocket and the Rule of Law: Corruption, Inequality, and Trust” (Book manuscript in preparation).

47 Daniel Eek and Bo Rothstein, “Exploring a Causal Relationship between Vertical and Horizontal Trust” (Paper presented at the conference “Trust and Democracy: A Multidisciplinary Perspective,” Department of Economics, Department of Political Science, and Department of Psychology, Göteborg University, Göteborg, Sweden, May 19–20, 2005). The report itself has data only about Swedish students. The data from our scenario experiments with the Romanian students have just been analyzed and confirm the result from the experiments conducted in Sweden.

48 Stoyanov, Alexander, Pavlikianova, Maragarita, Nontchev, Andrej, and Krasteva, Galja, “Bulgaria: Political and Economic Crisis; Democratic Consolidation,” in Mason, David S. and Kluegel, James L., eds., Marketing Democracy (Lanham, Md.: Rowman and Littlefield, 2000).

49 James R. Kluegel and David S. Mason, “Market Justice in Transition,” in Mason and Kluegel (fn. 48), 167; cf. Antal Orkeney, “Trends in Perceptions of Social Inequality in Hungary, 1991–1996,” in Mason and Kluegel, 109.

50 Csepeli, György, Orkeney, Antal, Szekelyi, Maria, and Barna, Ildikó, “Blindness to Success: Social Psychological Objectives along the Way to a Market Economy in Eastern Europe,” in Kornai, J., Rothstein, B., and Rose-Ackerman, S., eds., Creating Social Trust in Post-Socialist Transition (New York: Palgrave/Macmillan, 2004).

51 Orkeney, Antal and Szekelyi, Maria, “Views on Social Inequality and the Role of the State: Post transformation Trends in Eastern and Central Europe,” Social Justice Research 13 (2000), 206, 208.

52 Csepeli et al. (fn. 50).

53 Uslaner and Badescu (fn. 46).

54 Larry Rother, “Where Taxes Aren't So Certain,” New York Times, March 21, 1999, 3.

55 Janos Kornai, “Hidden in an Envelope: Gratitude Payments to Medical Doctors in Hungary” (2000), at http://www.colbud.hu/honesty-trust/kornai/pub01.PDF.

56 Rafael DiTella and Robert MacCuIloch, “Why Doesn't Capitalism Flow to Poor Countries?” (Manuscript, Harvard Business School, 2003).

57 Flora, Peter, ed., Growth to Limits: The Western European Welfare States since World War II, vol. 1 (Berlin: de Gruyter, 1986); cf. Tilly, Charles, Coercion, Capital, and European States, AD 990–1900 (Ox ford: Blackwell, 1992).

58 Tilly (fn. 57), 27.

59 Knudsen, Tim, Dansk statsbygning (Copenhagen: Jurist- og Økonomforbundets Forlag, 1995).

60 Knudsen, Tim and Rothstein, Bo, “State-Building in Scandinavia” Comparative Politics 26 (January 1994); Knudsen, Tim and Tamm, Ditlev, eds., Dansk forvaltningshistorie indtil 1901 (Copenhagen: Jurist- og Økonomforbundets Forlag, 2000).

61 Cf. Olsson, Sven E., Social Policy and Welfare State in Sweden (Lund: Arkiv, 1993).

62 Elvander, Nils, Scandinavian Social Democracy: Its Strength and Weakness (Stockholm: Almqvist & Wiksell International, 1979).

63 This is how the agents of the time, both union leaders and the leaders from the employers' federation, described what happened in the mid-1930s; see Rothstein, Bo, Social Traps and the Problem of Trust (Cambridge: Cambridge University Press, 2005), chap. 7. Of particular importance was that the leaders of the Social Democratic Party could make “credible commitments” toward the Employers' Federation that they would not use their political power over the state administration to favor the union side, for example, in labor disputes.

64 Rothstein (fn. 63); cf. Katzenstein, Peter J., Small States in World Markets: Industrial Policy in Europe (Ithaca, N.Y.: Cornell University Press, 1985).

65 Rothstein (fn. 9); Korpi and Palme (fn. 14).

66 Swank, Duane, Global Capital, Political Institutions, and Policy Change in Developed Welfare States (New York: Cambridge University Press, 2002).

67 Äberg, Rune, “Distributive Mechanism of the Welfare State” European Sociological Review 5 (April 1989); Moene, Karl-Ove and Wallerstein, Michael, “Targeting and Political Support for Welfare Spending,” Economics of Governance 2 (March 2001).

68 Korpi and Palme (fn. 14); Swank (fn. 66).

69 Rothstein (fn. 9); Swank (fn. 66).

70 Kumlin, Staffan and Rothstein, Bo, “Making and Breaking Social Capital: The Impact of Welfare State Institutions” Comparative Political Studies 38 (May 2005).

71 Soss, Joe, “Lessons of Welfare: Policy Design, Political Learning, and Political Action” American Political Science Review 93 (June 1999).

72 Soss, Joe, Unwanted Claims: The Politics of Participation in the U.S. Welfare System (Ann Arbor: University of Michigan Press, 2000), 46.

73 Ibid., 99.

74 Ibid., 144–45, 154.

75 Uslaner (fn. 1), 100. The model is based upon Uslaner (fn. 1), 100. We dropped trust in government as a predictor since it is likely endogenous to receipt of means-tested benefits; see Soss (fn. 71). For a description of the measures, see Uslaner (fn. 1), 99–101.

76 Rothstein, Bo and Stolle, Dietlind, “Social Capital, Impartiality, and the Welfare State: An Institutional Approach,” in Hooghe, M. and Stolle, D., eds., Generating Social Capital: The Role of Voluntary Associations, Institutions and Government Policy (New York: Palgrave/Macmillan, 2003).

77 Kumlin and Rothstein (fn 70).

78 Svallfors, S., “Worlds of Welfare and Attitudes to Redistribution: A Comparison of Eight Western Nations,” European Sociological Review 13, no. 3 (1997), 283304.

79 Swank (fn. 66); Huber, Evelyne and Stephens, John D., Development and Crisis of the Welfare State (Chicago: University of Chicago Press, 2001).

80 Lars Osberg and Timothy Smeeding, “Social Values for Equality and Preferences for State Intervention in the USA and Europe” (Manuscript, Center for Policy Research, Maxwell School, Syracuse University, 2005).

81 Brehm and Rahn (fn. 17); Knack and Zak (fn. 38); Putnam, Robert D., “Bowling Alone: America's Declining Social Capital” Journal of Democracy 6 (January 1995), 6578; Uslaner (fn. 1), chap. 4; Uslaner, Eric M., “Trust and Civic Engagement in East and West,” in Badescu, Gabriel and Uslaner, Eric M., eds., Social Capital and the Transition to Democracy (London: Routledge, 2003).

82 Christian Bjornskov, “Social Trust and the Growth of Schooling” (Manuscript, Aarhus School of Business, Aarhus University, Denmark, 2004).

83 Hartz, Louis, The Liberal Tradition in America (New York: Harcourt, Brace, and World, 1955).

84 Alesina, Alberto and Glaeser, Edward, Fighting Poverty in the U.S. and Europe: A World of Difference (New York: Oxford University Press, 2004).

85 Hacker (fn. 35), 255.

86 Gilbert M. Gaul, “Bad Practices Net Hospitals More Money,” Washington Post, July 24, 2005, Al, A12, A13.

87 See http://www.washingtonpost.com/wp-dyn/content/custom/2005/07/22/CU2005072201387.html. Details of the statistical analysis below are available from the authors.

88 Klaus Deininger and Lyn Squire, “A New Data Set Measuring Income Inequality,” World Bank Economic Review 10, no. 3 (1996), 565–91.

89 The data can be obtained at http://utip.gov.utexas.edu/web/.

90 Rosser, J. Barkley, Rosser, Marina V., and Ahmed, Ehsan, “Income Inequality and the Informal Economy in Transition Countries,” Journal of Comparative Economics 28, no. 1 (2000).

91 Petr Mateju, “Beliefs about Distributive Justice and Social Change: Czech Republic 1991–1995,” Working Paper from the research project Socialni Trendy/Social Trends (Prague, June 1997), 4–5.

92 Uslaner (fn. 1), chaps. 4–8.

93 Uslaner (fn. 1), chaps. 4, 6; Uslaner (fn. 85); cf. Rose-Ackerman, Susan, “Public Participation in Consolidating Democracies: Hungary and Poland,” in Kornai, J. and Rose-Ackerman, S., eds., Building a Trustworthy State in Post-Socialist Transition (New York: Palgrave/Macmillan, 2004).

94 Serge Schemann, “In Going Legit, Some Russian Tycoons Resort to Honesty,” New York Times, January 12, 2003, at http://www.nytimes.com/2003/01/12/weekinreview/12SCHM.html (accessed January 14, 2003); Sabrina Tavernise, “Russia Is Mostly Unmoved by the Troubles of Its Tycoons,” New York Times (Washington edition), November 3, 2003, A3.

95 European Commission Employment and Social Affairs, Social Protection in the 13 Candidate Countries: A Comparative Analysis (Luxembourg: European Commission Directorate-General for Employment and Social Affairs Unit E.2, 2003), available at http://europa.eu.int/comm/employment social/publications/2004/ke5103649 en.pdf.

96 Rothstein (fn. 63).

97 If we had a choice, governments in high inequality/low social trust societies should opt for highquality universal education programs. There are several reasons for this. One is that universal public education both creates a sense of equal opportunity and generates more economic equality. Second, it should give parents a sense of optimism for the future or their children, and since optimism is strongly connected to social trust, this would have positive effects. Third, such programs would bring children and young people from different ethnic, religious, and social groups together. Results from social psychology show that this is one important generator of social trust; Yamagishi, Toshio, “Trust as a Form of Social Intelligence,” in Cook, K. S., ed., Trust in Society (New York: Russell Sage Foundation, 2001).

98 Ahuja, Vinod, Bidani, Benu, Ferreira, Francisco, and Walton, Michael, Everyone's Miracle? Revisiting Poverty and Inequality in East Asia (Washington, D.C.: World Bank, 1997).

99 Uslaner (fn. 1).

100 Uslaner (fn. 2).

* Part of this research was supported by a grant to Rothstein from the Swedish Science Council (421–2003–1929) and from the Swedish Council for Working Life and Social Research (F0925/1999). Rothstein is also grateful for the support from the Society-Opinion-Media Institute at Göteborg University and in particular to its leaders Sören Holmberg, Lennart Nilsson, and Lennart Weibull. Part of this research was also supported by a grant to Uslaner from the Russell Sage Foundation and the Carnegie Corporation under the Social Dimensions of Inequality Project. Some of the data come from the Inter-University Consortium for Political and Social Research, which is not responsible for any of the authors' interpretations. Uslaner is also grateful to the General Research Board, University of Maryland-College Park, for support on related projects and to assistance from M. Mitchell Brown and crucial discussions on Central and Eastern Europe with Gabriel Badescu of Babes-Bolyai University, Cluj-Napoca, Romania. Both Rothstein and Uslaner would like to thank Janos Kornai and Susan Rose-Ackerman for making it possible for them to participate in the research project “Trust and Honesty in the Light of Post-Socialist Transition” at the Collegium Budapest Institute for Advanced Study. They are also grateful to Markus Crepaz and to the anonymous reviewers and editors for helpful comments.

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