Social Trust and the Quality of Government: Evidence for a Reciprocal Relationship

Abstract

This study theorizes that the relationship between social trust and governmental quality is reciprocal. Examining the relationship in one direction, we utilize socioeconomic conditions as a performance measure of governmental quality and assess their impact on social trust. Going in the other direction, we examine the effects of social trust on political behavior as a determinant of governmental quality. We merge data from the ‘Socioeconomic Panel’ (SOEP) with data from the ‘Socioeconomic Disparities Report’, which assigns the 400 German districts into five distinct socioeconomic clusters based on multiple indicators. We find that socioeconomic conditions positively influence social trust, with some evidence for causality provided by the partly exogenous nature of the clustering of districts. Social trust significantly reduces right-wing and non-voting, while its effect on left-wing voting is U-shaped. Moreover, social trust is associated with a broadening of respondents’ views toward global political concerns and reduced egocentric and national in-group thinking. In combination, the results of our study validate the existence of a vicious cycle where poor governmental quality lowers social trust which, in turn, further reduces governmental quality. Our findings offer a mechanism to reduce political polarization and disengagement, turning the vicious cycle into a virtuous one.