Hi there.

In the previous video, we looked at

the results of the trust question.
And to be fair we were pretty critical
about land surveys in general,
and about the trust
question in particular.
Well, in this video,
we're going to look at what social
scientists actually do with the results.
We'll look at some of
the assumptions that they make.
We'll examine some of the plausible
hypotheses about the role of
trust in society.
Now there's a large body of literature
on what determines trust and
it's divided itself into three mutually
incompatible rival schools of thought.
There are those who argue that
trust is deeply culturally rooted,
that it belongs almost to the values
learned in early childhood.
Among the evidence they site to support
this claim is that trust levels of
those in an immigrant group reflect
those in the home country rather than in
the host country,
even after several generations.
Other social scientists believe that trust
is a learned phenomenon that is part of
one's process of socialization.
Robert Putnam is one of these.
He and others cite the evidence
of a link between trust and
institutional membership, and
participation in civic society.
As they're yet another group that also
believes that trust is learned, but
they contend that the mechanism is not
socialization but one of confidence.
They point to the evident relationship
between well ordered societies and
recorded levels of interpersonal trust.
The World Values Survey
collects the results of
the trust question in the form of
a single index on a separate webpage.
Some of the observations date
from the turn of the millennium.
They're 15 years old.
Does this matter?
Well it doesn't if you believe that trust
attitudes are relatively constant and
fluctuate at the most
within a small range.
And that's seems to be
the assumption underlying their use.
Culturalists span their
expectations over generations.

Institutionalists discuss changes

taking place over decades.
And the only breach that
the governance school has discovered,
is the deep changes in trust
accompanying major regime changes,
such as the collapse of communism
at the end of the 1990s.
But does this belief withstand closer
examination of the recent data?
In many instances,
the latest world value survey results do
indeed coincide well with
the results of earlier surveys, but
there are exceptions, and
here are some examples.
The Netherlands for example, which is
drifting in an economic malaise since
the financial crisis of 2008, has actually
improved it's index by a whole 25 points.
Thailand, which once formed part of
the explanation that high trust level is
reflected in it's traditional
Buddhist values, fell by 18 points.
No doubt because of the political
problems in the country.
But there again Egypt,
which has been through at
least one social political revolution to
the Arab Spring, remains almost unchanged.
By contrast Jordan, possibly under
the impact of the Syrian refugee crisis,
has seen it's trust score by 34 points.
And the largest change of all is the
collapse of trust in Ecuador, from 72.7 to
14.5, taking them from 22nd in the world
rankings right down to 7th from bottom.
A second assumption made by social
scientists is that there is
a direct link between
interpersonal trust and
generalized trust placed
in government institutions.
The evidence of the latter is
not as widely available as for
the former, nor over a similar time span.
But there is support in local and
regional studies for this assumption.
I however have a sneaking suspicion
that those answering this question will
have difficulty in separating
the institution of
government from the actual
government in power.
Now, throughout this lecture we've
argued the pivotal role played by
trust in society.
Well now, let's try to operationalize that
assumption with a series of hypotheses.
These hypotheses will follow

a track leading from homogeneity in

society to levels of trust, from levels
of trust to the quality of governance,
and from the quality of governance
to economic growth and prosperity.
First, we could argue that the more
homogeneous a society is in
terms of ethnic composition,
religious diversity, and income and
wealth equality, the higher is
likely to be its level of trust.
Large differences within society
make it more difficult to
engage in activities that allow
the creation of bridging capital.
In the presence of a clearly
defined outsider pushes people
into associations that encourage
inward looking bonding capital.
Second, we could argue
the higher the levels of trust,
the better the quality of governance.
In a high trust society, you will
allow non-group members to act on your
behalf in the belief that they will act in
the interest of society as a whole, and
not for the narrow sectional
interests of their own.
Thirdly, we could argue that
good governance will lead to
better economic performance.
That the fact that governments will
operate efficiently and predictably will
create conditions of confidence and alter
the planning scenarios for investment.
Citizens will be willing to defer
immediate consumption in the form of
savings or taxation for the certain
expectation of returns in the future.
Investment scenarios by business will
improve and the extra capital will act as
a transmission belt for
economic growth and prosperity.
Of course,
we can always reverse the causation.
Prosperity allows a society to divert
more resources to good governance.
Economic growth allows
greater expenditure of
government without competing
with current consumption.
Extra levels of public provision,
especially in education,
also contribute to higher levels of trust.
Moreover, knowing that institutions
work removes the need for
bribery and corruption.
And this too would filter back into
enhancing levels of interpersonal trust.
A confidence in good governance in terms

of openness and transparency, as well

as the efficient provision of public
goods, would also reduce the incentive for
social groups, however defined,
to grab shares for themselves.
And this, again,
will reduce the relevance of homogeneity
as an operational factor in society.
Let's sum up then.
In this video,
we've looked at the assumptions made
about the causes of interpersonal trust.
We've looked at whether trust levels
are stable, and whether interpersonal and
generalized trust are linked.
We've also examined the causal
chain linking homogeneity to trust,
to governance, and to economic progress,
and we've looked at the reverse causation.
Now, in this video, we've continually
talked about links between factors.
Such links may be logical.
But the foundation of much social science,
and
particularly political economy, is that
they are also statistically verifiable.
And in the next video we'll
examine how this is done.