Free to Trust: Economic Freedom and Social Capital
AbstractWe present new evidence on how generalized trust is formed. Unlike previous studies, we look at the explanatory power of economic institutions, we use newer data, we incorporate more countries, and we use instrumental variables in an attempt to handle the causality problem. A central result is that legal structure and security of property rights (area 2 of the Economic Freedom Index) increase trust. The idea is that a market economy, building on voluntary transactions and interactions with both friends and strangers within the predictability provided by the rule of law, entails both incentives and mechanisms for trust to emerge between people. Copyright 2006 Blackwell Publishing Ltd..
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Bibliographic InfoArticle provided by Wiley Blackwell in its journal Kyklos.
Volume (Year): 59 (2006)
Issue (Month): 2 (05)
Contact details of provider:
Web page: http://www.blackwellpublishing.com/journal.asp?ref=0023-5962
Other versions of this item:
- Berggren, Niclas & Jordahl, Henrik, 2005. "Free to Trust? Economic Freedom and Social Capital," Working Paper Series 2005:2, Uppsala University, Department of Economics.
- Berggren, Niclas & Jordahl, Henrik, 2005. "Free to Trust? Economic Freedom and Social Capital," Ratio Working Papers 64, The Ratio Institute.
- K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
- O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
- Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Social and Economic Stratification
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