Scandinavian Working Papers in Economics
HomeAboutSeriesSubject/JEL codesAdvanced Search
Ratioinstitutet - The Ratio Institute Ratio Working Papers

No 64:
Free to Trust? Economic Freedom and Social Capital

Niclas Berggren () and Henrik Jordahl

Abstract: We 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 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.

Keywords: social capital; trust; economic freedom; rule of law; property rights; legal system; (follow links to similar papers)

JEL-Codes: K42; O40; Z13; (follow links to similar papers)

31 pages, January 14, 2005

Before downloading any of the electronic versions below you should read our statement on copyright.
Download GhostScript for viewing Postscript files and the Acrobat Reader for viewing and printing pdf files.

Full text versions of the paper:

nb_hj_trust.pdf    PDF-file
Download Statistics
This paper is published as:
Berggren, Niclas and Henrik Jordahl, (2006), 'Free to Trust: Economic Freedom and Social Capital', Kyklos, Vol. 59, No. 2, pages 141-169

Questions (including download problems) about the papers in this series should be directed to Martin Korpi ()
Report other problems with accessing this service to Sune Karlsson () or Helena Lundin ().

Programing by
Design by Joachim Ekebom

Handle: RePEc:hhs:ratioi:0064 This page was generated on 2014-12-14 19:26:19