Trust in Public Institutions over the Business Cycle
Betsey Stevenson, Justin Wolfers
American Economic Review · 2011 · Volume 101 · Issue 3
Abstract
We document that trust in public institutions—and particularly trust in banks, business and government—has declined over recent years. US time series evidence suggests that this partly reflects the pro-cyclical nature of trust in institutions. Cross-country comparisons reveal a clear legacy of the Great Recession, and those countries whose unemployment grew the most suffered the biggest loss in confidence in institutions, particularly in trust in government and the financial sector. Finally, analysis of several repeated cross-sections of confidence within US states yields similar qualitative patterns, but much smaller magnitudes in response to state-specific shocks.
Keywords
Business Fluctuations, Cycles, Financial Institutions and Services: General, Structure, Scope, and Performance of Government, Economic Sociology, Economic Anthropology, Social and Economic Stratification
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