Does Decentralization Bring the People Back to the Government? An Empirical Analysis of the Effect...

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Policy & Politics • © Policy Press 2014 • #PPjnl @policy_politics

Print ISSN 0305 5736 • Online ISSN 1470 8442 • http://dx.doi.org/10.1332/030557315X14296993009874

article

Does decentralisation bring the people back to the government? An empirical analysis of the effect of

decentralisation on political trust

Min Tang, [email protected]; Narisong Huhe, [email protected];

Shanghai University of Finance and Economics

This study offers an empirical test of the effect of decentralisation on political trust. A comparative

analysis of citizens in 47 countries suggests indirect and heterogeneous consequences of

decentralisation. First, while various dimensions of decentralisation are significantly associated

with political trust at the country level, no dimension has a direct effect on political trust at the

individual level. Second, not all forms of decentralisation contribute to the promotion of political

trust. And, finally, two dimensions of decentralisation (that is, fiscal and administrative) promote

political trust through reducing the negative effect of democratic values.

Key words: decentralisation • political trust • democratic values

Introduction

The past few decades have witnessed the rise of ‘critical citizens’ and the decline of political trust around the globe (Citrin, 1974; Dalton, 2004; Norris, 1999; Pharr et al, 2000; Torcal, 2014). Given the critical importance of political trust for regime stability and governance (Hetherington, 1998; 2004; Hetherington and Husser, 2012; Rudolph and Evans, 2005), various institutional and policy innovations have been introduced to build or rebuild public confidence in political institutions and political systems (Blind, 2006; Morgeson et al, 2011; Smith, 2009; Tolbert, 2003). Decentralisation, in particular, with its promises to increase the efficiency of government service (Barankay and Lockwood, 2007; Huther and Shah, 1998; Oates, 1972; 1999; Tiebout, 1956), to reduce the extent of corruption (de Mello and Barenstein, 2002; Fisman and Gatti, 2002a; 2002b; Huther and Shah, 1998), and to enhance civic and political participation (Colino, 2008; Dahl and Tufte, 1973; Diamond and Tsalik, 1999; Frandsen, 2002; Linder, 2009), is believed to be one of such reform policies that can fulfill the ever-increasing democratic demands of ordinary citizens. It is argued that decentralisation can ‘bring government back to the people’, which, in turn, increases citizens’ confidence in government (Diamond, 1999, 124–125; see also Escobar-Lemmon and Ross, 2014; Hiskey and Seligson, 2003).

Does a more decentralised country receive stronger political trust among its citizens than a less decentralised country? While there is a great deal of literature on

Min Tang and Narisong Huhe

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decentralisation, the actual effects of decentralisation on political attitudes, in general, and on political trust, in particular, have not been adequately examined. Most extant empirical studies focus on aggregate outcomes of decentralisation at the country level, such as perceived corruption and government efficiency. A few studies that do concern the influence of decentralisation at the individual level limited their scope to individual countries. With one notable exception (Tang and Huhe, 2014), the extant literature lacks adequate cross-national studies that directly test the effect of decentralisation, as a country-level institutional factor, on political attitudes, as an outcome at the individual level. To fill this gap in the literature, this study offers a comparative investigation of how decentralisation affects the perceptions of ordinary people toward government, specifically, trust in political institutions.

In addition to testing the direct effect of decentralisation on political trust, we also explore the indirect effect of decentralisation by examining its influence on the relationship between political trust and one of its correlates, democratic values. As revealed in earlier studies, political trust links contextual attributes of a political system with the evaluations of individuals (Dalton and Anderson, 2011; Norris, 1999; Weatherford, 1992). Specifically, both micro mechanisms, such as individuals’ democratic values, and macro context, such as decentralisation in which these micro mechanisms take place, are involved in trust formation. Decentralisation, therefore, does not only influence political trust in a direct manner, but also indirectly through shaping the relationship between political trust and its correlates, in particular, democratic values, at the individual level.

Employing a multilevel analysis of the World Values Survey (WVS, 2005–2008, fifth wave) data, we find that the effect of decentralisation is neither direct nor uniform. First, while various measures of decentralisation are significantly associated with country-averaged institutional trust, this significant relationship does not hold at the individual level. This not only indicates the potential ecological fallacy of inference from country-level association, but also suggests that we cannot assume a direct effect of decentralisation on political trust. Second, when examining political trust at the individual level, we find that there are significant interaction effects between decentralisation and democratic attitudes. This implies that the actual influence of decentralisation on political trust works through moderating the relationship between political trust and democratic values.

Third, different forms of decentralisation have variant impacts on political trust. In aggregate analyses, both fiscal and administrative decentralisation are positively associated with trust, but the political dimension of decentralisation has a negative association. What is more important, at the individual level, both fiscal and administrative decentralisation attenuate the negative effect of democratic value on political trust. But the moderating effect of political decentralisation on the relationship between democratic values and political trust is not evident.

Decentralisation and its political consequences

Before presenting our analyses and results, we turn to the related literature to ground our expectations in regard to the effect of decentralisation on political trust. Although theories that directly link decentralisation and political trust are sparse, a review of the extant literature shows that decentralisation is widely believed to be able to promote political trust. The literature suggests two kinds of reasons for this belief. The first

Does decentralisation bring the people back to the government?

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has to do with the improvement of the relationship between the government and its citizenry. Provided with power devolution, it is believe that local governments and politicians become more visible, which increases citizens’ perceptions of access to policy makers and institutions (Blind, 2006; Dahl and Tufte, 1973; Frandsen, 2002). This increased proximity helps people to develop an increased understanding of government agencies, making them more confident of the incentives of the government agencies. Compared to their counterparts in a centralised system, citizens in a decentralised one are more likely to believe that the misbehaviours of officials will be more easily caught under the citizens’ watch.

Moreover, decentralisation can foster political participation (Campbell, 2003; de Mello, 2004; Escobar-Lemmon and Ross, 2014; O’Neill, 2003; Smith, 2009). When decision-making authority is devolved to lower levels of government, citizens are provided with more incentives and opportunities to become engaged in the policy-making process. In particular, local constituents are more motivated to participate in decision making because they are better informed about local affairs and that local affairs are more related to their interests (Dahl and Tufte, 1973). The increased political and civic engagement in the political process increases citizens’ political efficacy (Lassen and Serritzlew, 2011), which, in turn, boosts trust in political institutions.

In addition to improving the relationship between the government and the citizens, decentralisation is expected to deliver better government performance, which also can cultivate political trust. Decentralisation, as Tiebout argues, shortens the ‘informational distance’ between the providers and recipients of public goods and services and, thus, enhances government provision of those goods and services (Tiebout, 1956). A decentralised government can better address regional disparities in cultural heritage, environment, preferences and needs, endowment of natural resources, and economic and social institutions (Ayres and Pearce, 2005; Brennan and Buchanan, 1980; Brown and Keast, 2005; de Mello, 2004; Huther and Shah, 1998; Oates, 1999; Parkins, 2006; Tiebout, 1956). A citizenry that experiences better government performance tends to believe that the government is more willing and, what is more important, more able to work for individuals’ interests, which constitutes an essential element of political trust.

With regard to government performance, decentralisation can also control corruption, which is one of the main causes of the decline of political trust (Anderson and Tverdova, 2003; Mishler and Rose, 2001; Seligson and Carrión, 2002). The closer scrutiny by the citizenry decreases the incentives for local government officials to engage in corruption (Brennan and Buchanan, 1980; Dincer, 2010; Treisman, 2007b). In addition, decentralisation is often accompanied by increased competition between local governments for investment and other resources. This competition reduces the ability of bureaucrats to extract rents and discourages government from establishing interventionist and distortionary policies (Brennan and Buchanan, 1980; Qian and Weingast, 1997).

A number of cross-national studies have been conducted to test the political effect of decentralisation (for example, Fismand and Gatti, 2002b; Treisman, 2007a; 2007b). Among these studies, the findings are divided. Some of them even found that decentralisation increases the public perceptions of government corruption (Gerring and Thacker, 2004; Kunicová and Rose-Ackerman, 2005). Some case studies also suggested that decentralisation failed to deliver its political benefits, such as curbing corruption (Koelble and Siddle, 2013; Maravic, 2007; Ouedraogo, 2003).


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Unfortunately, most empirical studies on this topic have been devoted to investigating the effect of decentralisation on corruption or other aggregate effects at the country level (for example, Fan et al, 2009; Fisman and Gatti, 2002a; 2002b; Sellers and Lidström, 2007). While aggregate effects of decentralisation are important, we believe it also is imperative to examine how individuals respond to the institutional reforms of decentralisation. Hiskey and Seligson (2003) and Escobar-Lemmon and Ross (2014) are two studies that turned their attention to the direct effect of decentralisation on individual attitudes. However, each study focuses on one country, Bolivia and Colombia, respectively, and concerns only the variation within the country. De Mello (2004) conducted the only cross-national study that tested the effect of decentralisation on attitudes of ordinary citizens toward government. But he aggregated individuals’ political confidence for each country and tested the effect of fiscal decentralisation on country-averaged government support. In short, the literature lacks a direct comparative test of the relationship between decentralisation and individual attitudes across countries. The present study is different from most extant studies in that we examine the effect of decentralisation on individual attitudes across national borders.

Decentralisation as a contextual and moderating variable

In the broader literature of social sciences, contextual analysis has become a major development. Contextual analysis is a perspective that puts the analysis of causal relationship between variables in broad contexts. This perspective holds a belief that any causal relationship happens in societal and institutional contexts and that the variant contexts at the aggregate level are likely to generate a heterogeneous causal relationship between variables at the individual level (Falleti and Lynch, 2009; Geddes, 2007; Steenbergen and Jones, 2002). Corresponding to the conceptual understanding of the context-induced causal heterogeneity, recent years have witnessed an increasing number of empirical studies that employ multilevel models to address issues with a cross-level nature.

Driven by this recent advancement of contextual analysis, we posit that the relationship between decentralisation and political trust manifests in more than a direct manner. Decentralisation provides an institutional context in which factors at the individual level affect political trust. That is, the effect of decentralisation also works through shaping and moderating the relationship between political trust and its correlates at the individual level. Different levels of decentralisation generate heterogeneous effects of individual attributes, including socioeconomic and attitudinal ones. In this study, we particularly investigate the moderating effect of decentralisation on the relationship between democratic values and political trust.

Among various individual factors, we stress democratic values for two major reasons. First, the increase of democratic inspiration and the rise of ‘critical citizens’ are believed to be major reasons for the decline of political trust worldwide (Inglehart, 1997; 1999; Norris, 1999). Internalised values, such as democratic ones, determine the benchmark against which individuals evaluate the regime and its political institutions. Therefore, in authoritarian regimes, those who strongly believe in democratic values are unlikely to trust its institutions. Empirical studies in non-democracies have consistently found a significant and negative correlation between democratic values and support for the political regime (Chen, 2004; Geddes and Zaller, 1989).


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However, even in democratic countries, higher democratic ideals make the public more critical of the actual operations and practices of democratic systems. Dalton, for instance, found that the declining political support in the societies has a lot to do with the citizens’ rising democratic aspirations: ‘[W]hat is changing is…citizen expectations of what democracy should achieve…and it is of this higher standard that contemporary politicians and political institutions fall short’ (Dalton, 2004, 109). Because many democratic governments have been slow in responding to the increasing democratic ideals held by democratically-minded citizens, the structural decline of political trust has become widespread in established democracies (Dalton, 2004; Inglehart, 1997; 1999; Norris, 1999).

Second, democratic values are emphasised in this study because decentralisation is, in essence, a democratic institutional reform that presumably can meet rising democratic demands (Colino, 2008; Diamond, 1999; Sanderson, 1999). On the surface, a decentralised system is a more democratic one. This is so because, in a decentralised system, political power is dispersed more vertically. In this way, decentralisation introduces another dimension of checks and balances. Decentralisation also makes a polity more inclusive and renders a larger portion of government officials and institutions under the watch of the public. Such newly added democratic features can soften the negative feelings of democratic citizens toward government institutions that have long been perceived to fail democratic standards.

In addition, individuals with stronger democratic minds are more likely to respond positively to decentralisation because the effects of decentralisation, as noted above, pertain mostly to these people. First, for instance, decentralisation can ease the critical citizens’ distrust in political institutions by enabling them to participate in political processes to a greater extent (Campbell, 2003). A major reason for declining public confidence has to do with the increasing demands of democratic citizens to participate in political processes (Dalton, 2004; Huntington, 1981; Inglehart, 1999). These demands have been particularly difficult to meet in national politics due to the prohibitive cost and institutional restraints of participation in political processes at the national level. Decentralisation helps to solve this problem by expanding the scope of participation, increasing access to policy decisions and lowering the costs of political participation. As a consequence, it increases the affection of democratic citizens, especially those marginalised at the national level, for political institutions.

Second, decentralisation, by enhancing the efficiency and quality of government performance, also can ease the criticism of democratic citizens. In modern politics, citizens are overwhelmed by negative information about governments, such as scandals, partisan bickering and political incompetence, all of which make democratic citizens disenchanted with politicians and political institutions. Due to their limited access to national politics, when assessing government performance, people tend to rely more on media reporting that is mostly negative (Kerbel, 1995; Robinson and Sheehan, 1983). Decentralisation, by exposing a larger portion of the political system to the public and engaging citizens in local political and governing processes, provides alternative ways for citizens to acquire information about government and governance. If government indeed becomes more transparent, efficient and democratic as a result of decentralisation, democratically-minded citizens develop a more positive view of the political system than do those in a more centralised system.

In sum, as a democratic arrangement, the effect of decentralisation on political trust is more likely to be positive among democratically-minded people. However,


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the positive moderating effect of decentralisation is based on the presumption that decentralisation increases performance efficiency on the one hand, while on the other hand it enhances democratic governance. As noted in the previous section, decentralisation does not always produce good results. Therefore, decentralisation may not increase the support of democratic citizens for the government. In the following sections, we subject the political effect, both direct and indirect, of decentralisation on trust to an empirical test.

Variables and measurement

We draw the individual-level data from the World Values Survey (WVS 2005–2008, fifth wave). We chose this dataset because, among the available datasets, WVS covers the largest number of countries (as many as 47 in this study) with variant social, economic and political contexts and contains the wide range of variables at the individual level that we need for this study.1 It therefore enables us to conduct a comparative test of the effect of decentralisation in different national contexts. As a global research project, WVS contains a master questionnaire that is used for all the surveyed countries. The master questionnaire was developed in English, then translated into national languages, and finally translated back to English to check the accuracy. WVS randomly drew samples in each country from the adult citizens based on statistical regions or various forms of administrative districts. The survey was conducted by professional organisations in each country using face-to-face interviews or phone interviews for remote areas.2

Dependent variable: political trust

Political trust refers to one’s faith or confidence in the motivation and capacities of political institutions and politicians to work in his/her interest (Easton, 1965; Levi and Stoker, 2000). To gauge political trust, this study focuses on trust in political institutions (that is, institutional trust) and uses the respondents’ answers to a multi-item survey question: ‘I am going to name a number of organisations. For each one, could you tell me how much confidence you have in them: Is it a great deal of confidence, quite a lot of confidence, not very much confidence, or none at all?’ The institutions that we chose for this study were the government in the nation’s capital, the parliament, the civil service, the armed forces, the police and the courts. Together, these institutions constitute the core political institutions of a political system. A sum of the responses to the confidence in these institutions indicates one’s general level of trust in government institutions as a whole. A reliability test further shows that the six items have a high level of internal consistency, with Cronbach’s alpha = 0.86, which indicates that respondents hold a coherent underlying attitude toward the government that drives them to give responses to specific institutions. The composite index gauges one’s general confidence in the government, not trust in specific government institutions. The answer is recoded such that higher scores indicate higher levels of trust and the composite index is rescaled to range from 0 to 100. The summary statistics of this variable and other variables are reported in Appendix 1.


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Independent variables at country level

The primary independent variable of this study is decentralisation, a multi-dimensional concept (see a review in Dubois and Fattore, 2009). To avoid the bias caused by the choice of any single measurement, we follow several prominent studies on this topic and measure decentralisation in three dimensions: fiscal, administrative and political, in that order (Fan et al, 2009; Schneider, 2003). Fiscal decentralisation is the most popular measurement of decentralisation in the literature (Dincer, 2010; Fisman and Gatti, 2002b; Matsubayashi, 2007; Oates, 1972). Fiscal measurement is preferred because it is an objective measurement and public datasets are easily accessible. The data are obtained from Government Finance Statistics Yearbooks (GFS) published by the International Monetary Fund and for which missing observations are supplemented by the reports of country studies. GFS reports the figures of government expenditure and revenue of the whole government and different layers of the system. We sum the expenditure and revenue of all subnational governments and further average the share of local expenditure and revenue over total expenditure and revenue to create a composite measure of fiscal decentralisation. An analysis that uses separate measurements yields similar findings.

Administrative decentralisation refers to how administrative resources, including personnel, are distributed across tiers of government. We measure administrative decentralisation by using a much simplified indicator, ‘personnel decentralisation’, drawn from a dataset compiled by Fan, Lin and Treisman (2009). This indicator measures the share of administrative staff employed at all subnational tiers of the government system. The share of local government employees is a good proxy of administrative decentralisation, as, supposedly, a more administratively decentralised system should employ a larger share of staff at subnational levels.

Federalism has been a traditional measurement of political decentralisation (Goldsmith, 1999; Treisman, 2000). We measure political decentralisation first by following this convention. In addition, we supplement our measure with a measurement of the degree of decision-making autonomy of local governments, as compiled by Fan, Lin and Treisman (2009). This measurement gauges the extent to which subnational actors have the right to make political decisions. It includes two indices: ‘autonomy’ and ‘residual authority’. Autonomy refers to the situation that the constitution reserves the exclusive right of subnational legislatures to legislate on at least one specific policy area; residual authority refers to a political system in which the constitution gives subnational legislatures the exclusive right to legislate on policy areas not specifically assigned in constitution.

At the aggregate level, we control a set of relevant factors in our full models. The size of a country is believed to influence political support (Matsubayashi, 2007). We, therefore, include both the population and territory size of countries. It is also believed that economic and political performance of the government is related to political trust and support (Anderson and Guillory, 1997; Becher and Donnelly, 2013; Newton, 2006). We therefore include the growth rate of gross domestic product (GDP, 2005, constant price) per capita to control for the effect of economic performance and world governance index (WGI) to control for the effect of political performance. Moreover, we control for the effect of another important factor, democracy, since it is widely believed that democratic countries have experience a decline of political trust in recent decades. The measurement is provided in the dataset of ‘Democracy and


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Dictatorship’ (DD) obtained from the website of the data authors.3 DD categorises a polity as a democracy if the executive is elected via the legislature or the legislature is directly elected, there is more than one party, and the executive power alternates.

Independent variables at individual level

The most important independent variable at the individual level is democratic orientation. We chose to measure a respondent’s democratic values based on his or her answers to three items of a four-item question available in WVS: ‘I’m going to describe various types of political systems and ask what you think about each as a way of governing this country. For each one, would you say it is a very good, fairly good, fairly bad, or very bad way of governing this country?’ The three statements are: ‘Having a strong leader who does not have to bother with parliament and elections’; ‘Having experts make decisions according to what they think is best for the country’; and ‘Having the army rule.’ We sum the responses as an index to measure one’s democratic orientation. Although the responses to the three questions of choice by no means exhaust one’s democratic attitudes which are inherently a multi-dimensional concept, we believe that, given the limit of survey questions, they together give a good indication of the strength of democratic orientation. In our main analyses, we purposefully drop the statement: ‘Having a democratic system.’ We do so because, given the global acceptance of the idea of democracy, a direct question about democratic commitment is likely to induce socially desirable answers. In a set of analyses that check the robustness of the main analyses, we include this question into the index of democratic values and get findings with similar patterns.

Building upon previous studies of political trust (for example, Chang and Chu, 2006; Mishler and Rose, 2001; Yap, 2013), we include the following socio-economic variables at the individual level: gender (0 for female, 1 for male), age (in years), marriage experience (1 for yes), education (in years) and socio-economic status (from lowest to highest). For the sake of brevity, a more detailed discussion of the effect of these variables at the individual level on political trust is omitted. We also include interpersonal trust (lowest trust to highest trust) in the analysis since some studies have suggested interpersonal trust is expected to be positively associated with political trust (Brehm and Rahn, 1997; also see a review in Mishler and Rose, 2001).

Analyses and results

We proceed first to examine the effect of decentralisation at the country level, in part as a replication of previous studies related to this topic. We then turn to our main analysis at the individual level to determine whether our results are in agreement with those of the aggregate analysis. We further investigate the indirect effect of decentralisation through introducing an interaction term between decentralisation and democratic values. Finally, to show the robustness of our findings, we conduct additional sets of analyses by varying the operationalisation of primary variables. For each set of analyses, we measure decentralisation in three dimensions: fiscal, administrative and political (federalism and subnational autonomy).

Table 1: The effect of decentralisation on political trust (aggregate-level analysis)

Model 1 Model 2 Model 3 Model 4

Fiscal Administrative Political

Federal Autonomy

Decentralization 3.30***(0.29)

3.13***(0.21)

-2.35***(0.083)

-4.27***(0.076)

Area -1.80***(0.027)

-1.73***(0.031)

-1.22***(0.029)

-1.35***(0.026)

Population 3.66***(0.031)

2.68***(0.038)

2.76***(0.030)

2.82***(0.030)

Democracy -13.6***(0.084)

-12.9***(0.094)

-13.7***(0.081)

-13.5***(0.083)

WGI 5.48***(0.052)

4.34***(0.052)

3.55***(0.039)

3.66***(0.042)

Growth 0.83***(0.017)

1.20***(0.017)

0.17***(0.013)

0.23***(0.013)

Constant 26.7***(0.31)

36.3***(0.32)

38.8***(0.24)

39.7***(0.25)

R2 0.32 0.27 0.24 0.25

No. countries (respond.)

38(66005) 32(55221) 45(79517) 42(74983)

Notes: Model: OLS; standard errors in parentheses; * p<0.10, ** p<0.05, *** p<0.01


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Country-level analysis

We first run regression analyses (OLS) to detect whether there is a relationship between decentralisation and political trust at the country level. To that end, we obtain the aggregate-level political trust for each country by taking the country average of institutional trust. In Models 1–3 of Table 1, we present the results of the analysis of the effect of fiscal decentralisation, administrative decentralisation and federalism, respectively. In Model 4, we use an alternative measurement of political decentralisation, local autonomy.

The analyses in Table 1 show that, on average, fiscal decentralisation and administrative decentralisation are positively and significantly associated with political trust. Two different measures of political decentralisation, however, are negatively and significantly associated with political trust. This mixed pattern of the effect of decentralisation conforms to the findings of previous related studies. Fiscal decentralisation, as reported in previous studies, is accompanied by lower perceived corruption (Huther and Shah, 1998; de Mello and Barenstein, 2002). Other studies found that federalism is associated with a higher level of perceived corruption (Goldsmith, 1999; Treisman, 2000). More recently, Escobar-Lemmon and Ross found that administrative and fiscal decentralisation improves perceptions of government accountability, while political decentralisation does not (Escobar-Lemmon and Ross, 2014).


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Individual-level analysis

Turning our attention to the respondents’ expressed institutional trust at the individual level, we employ a multilevel model to estimate the effect of decentralisation. For one thing, the causal relationship in this study is cross-level in nature. For another, the analysis of the null model that does not include any explanatory variables shows that the variance at the country level accounts for 22% of the total variance. We estimate a random-intercept model because a significant portion of the difference in political trust can be explained by the fact that a respondent lives in one country instead of another.

Among many advantages of the multilevel model, one is directly related to the potential limitation associated with cross-national studies of values. As argued by some scholars, a particular problem of cross-culture measurement of values is its validity (Haller, 2002; MacIntosh, 1998; Peng et al, 1997). Value preferences as surveyed indifferently across countries are highly abstract and ‘could be misleading because of tacit definitions that differ across cultures’ (Peng et al, 1997, 330). Although the social scientists involved in WVS projects have taken great efforts to deal with the validity issue, particularly in developing survey questions, it is potentially a problem for our cross-national study, as for any studies that employ global attitude measurements.

The choice of a multilevel model can help alleviate this problem. Multilevel models are particularly designed for the research of hierarchical data in which individuals are nested with higher-level units (countries). Different from traditional methods of pooled data, they take into consideration the fact that individuals within the same country tend to be more similar to each other than to those in another country because of their shared culture, experiences and institutions. Moreover, some of the cross-culture differences in values can be captured by multilevel models. For example, if there is systematic variation in the levels of political trust between countries due to unobserved factors, it can be captured by country-specific intercepts.

The largest number of aggregate units in the following analyses is 47 countries. In spite of this reasonably large sample size at aggregate level, to show the robustness of our analyses, we first conduct a set of analyses that include only measures of decentralisation as the independent variable (Models 5–8), and then include a full set of variables at the country level (Models 9–12). As shown in Table 2, both analyses yield similar results.

The results in Table 2 are consistently different from those of the country-level analyses presented in Table 1. Regardless of its specific measures, decentralisation is not significantly associated with political trust at the individual level. This indicates that decentralisation does not exert a direct impact on how people perceive various political institutions and authorities. In other words, citizens do not evaluate their government more (or less) favourably simply because its power and authority are more devolved to subnational levels.

These consistent findings cast doubt on the understanding of the influence of decentralisation developed in extant literature. First, the significant association between decentralisation and its alleged political consequences at the aggregate level, reported in previous studies, is not supported at the individual level. Second, the significant direct effect of decentralisation at the individual level, found in several single-country studies, is also not supported when more countries are included in the analysis. The

Tabl

e 2

: Est

imat

ion

of t

he e

ffec

t of

dec

entr

alis

atio

n o

n in

stit

utio

nal t

rust

(in

divi

dual

-lev

el a

naly

sis)

Mo

del 5

Fisc

alM

ode

l 6A

dmin

Mo

del 7

Fede

ral

Mo

del 8

Aut

ono

my

Mo

del 9

Fisc

alM

ode

l 10

Adm

in.

Mo

del 1

1Fe

dera

lM

ode

l 12

Aut

on

om

y

Fixe

d ef

fect

s:In

d le

vel

Sex

-0.8

6***

(0

.19)

-0.9

7***

(0.2

1)-0

.88*

**(0

.18)

-0.9

5***

(0.1

8)-0

.86*

**(0

.19)

-0.9

7***

(0.2

1)-0

.88*

**(0

.18)

-0.9

5***

(0.1

8)

Age

0.05

2***

(0

.006

1)0.

044*

**(0

.006

7)0.

052*

**(0

.005

9)0.

047*

**(0

.006

1)0.

052*

**(0

.006

1)0.

044*

**(0

.006

7)0.

049*

**(0

.006

0)0.

047*

**(0

.006

1)

Educ

atio

n-0

.12*

**

(0.0

15)

-0.0

66**

*(0

.017

)-0

.12*

**(0

.015

)-0

.11*

**(0

.015

)-0

.11*

**(0

.015

)-0

.065

***

(0.0

17)

-0.1

1***

(0.0

15)

-0.1

1***

(0.0

15)

Soci

al s

tatu

s0.

70**

* (0

.10)

0.46

***

(0.1

2)0.

58**

*(0

.097

)0.

60**

*(0

.10)

0.71

***

(0.1

0)0.

46**

*(0

.12)

0.55

***

(0.0

99)

0.60

***

(0.1

0)

Inte

rper

sona

l tr

ust

2.66

***

(0.1

1)2.

43**

*(0

.12)

2.62

***

(0.0

99)

2.52

***

(0.1

0)2.

64**

*(0

.11)

2.43

***

(0.1

2)2.

60**

*(0

.10)

2.52

***

(0.1

0)

Dem

ocr

atic

val

ue-0

.72*

**(0

.048

)-0

.63*

**(0

.053

)-0

.71*

**(0

.045

)-0

.70*

**(0

.047

)-0

.75*

**(0

.048

)-0

.63*

**(0

.053

)-0

.73*

**(0

.046

)-0

.70*

**(0

.047

)

Co

nsta

nt43

.6**

*(3

.70)

44.2

***

(5.6

6)49

.0**

*(1

.99)

50.6

***

(2.2

6)28

.4**

(12.

6)33

.9**

*(1

2.9)

35.3

***

(9.9

7)36

.5**

*(1

0.2)

Fixe

d ef

fect

s:C

oun

try

leve

l

Dec

entr

alis

atio

n16

.2(1

1.2)

13.1

(10.

2)0.

47(3

.77)

-1.2

5(3

.76)

0.02

7(1

2.3)

-7.6

9(1

0.5)

-3.8

2(3

.59)

-3.5

6(3

.20)

Are

a-1

.74

(1.1

2)-1

.75

(1.4

3)-0

.75

(1.2

0)-1

.22

(1.1

3)

Popu

lati

on

3.72

***

(1.3

6)3.

69**

(1.7

1)2.

76**

(1.2

3)2.

97**

(1.2

6)

Dem

ocr

acy

-16.

9***

(3.7

7)-1

9.1*

**(4

.24)

-14.

8***

(3.5

5)-1

5.4*

**(3

.76)


11

Tabl

e 2

: Est

imat

ion

of t

he e

ffec

t of

dec

entr

alis

atio

n o

n in

stit

utio

nal t

rust

(in

divi

dual

-lev

el a

naly

sis)

(co

ntin

ued)

Mo

del 5

Fisc

alM

ode

l 6A

dmin

Mo

del 7

Fede

ral

Mo

del 8

Aut

ono

my

Mo

del 9

Fisc

alM

ode

l 10

Adm

in.

Mo

del 1

1Fe

dera

lM

ode

l 12

Aut

on

om

y

Fixe

d ef

fect

s:

(co

ntin

ued)

WG

I7.

01**

*(2

.32)

7.16

***

(2.5

3)5.

56**

*(1

.75)

5.75

***

(1.8

7)

Gro

wth

0.71

(0.7

1)1.

21*

(0.7

2)0.

28(0

.56)

0.41

(0.5

8)

Ran

dom

ef

fect

sIn

d. v

aria

nce

384.

79**

*(2

.55)

385.

81**

*(2

.86)

392.

99**

*(2

.45)

390.

63**

*(2

.53)

383.

96**

*(2

.57)

385.

81**

*(2

.86)

393.

24**

*(2

.50)

390.

63**

*(2

.53)

Co

untr

y.

vari

ance

119.

58**

*(2

7.16

)12

1.41

***

(30.

45)

126.

37**

*(2

6.15

)13

1.87

***

(28.

86)

69.4

6***

(16.

01)

71.3

9***

(17.

94)

84.1

7***

(17.

85)

85.7

1***

(18.

82)

N. (

coun

try)

4557

8(39

)36

434(

32)

5148

9(47

)47

537(

42)

4471

0(38

)36

434(

32)

4967

0(45

)47

537(

42)

Log

likel

iho

od

-200

442

-160

279

-226

987

-209

419

-196

566

-160

270

-218

973

-209

410

Not

es: M

odel

: Mul

tile

vel m

odel

wit

h ra

ndom

inte

rcep

t; s

tand

ard

erro

rs in

par

enth

eses

; * p

<0.

10, *

* p<

0.05

, ***

p<

0.01

.


12


13

reported aggregate association, in fact, cannot fully reveal the micro mechanism that links decentralisation to ordinary people’s confidence in political institutions.

The relationship of other variables to political trust demonstrates meaningful patterns in a consistent manner. The results of the multilevel analyses show that people with a higher level of democratic orientation are more critical of political establishments than are those for whom democracy has less appeal. It is contemporary politicians and political institutions falling short of the higher standard of democracy that causes disenchantment in democratically-minded citizens. The results also suggest that political trust is strongly shaped by respondents’ socio-demographic characteristics. Male, younger, more educated, less affluent and less socially-trusting citizens are less trustful of the government.

Cross-level interaction

Although exerting no direct impact, decentralisation, as we argued, can shape the public’s perception of political institutions through affecting the relationship between political trust and its correlates, in particular, democratic value. We, therefore, include a cross-level interaction term between democratic value and decentralisation, as measured in different ways. The analytical results are reported in Table 3 (Models 13–16). The results of simpler models, including those with control variables at the country level are similar. As expected, while democratic value is negatively associated with political trust, its interactions with both fiscal decentralisation and administrative decentralisation are positive and significant (Models 13 and 14). That is, with a higher level of fiscal or administrative decentralisation in a country, the negative effect of democratic value on political trust decreases significantly. This indicates that vertical dispersion of fiscal and administrative power mitigates the negative association between democratic value and political trust.

To present a more meaningful interpretation of the moderating effects of decentralisation, in Figure 1, we plot the marginal effect of fiscal decentralisation (Figure 1a) and that of administrative decentralisation (Figure 1b), based on Models 13 and 14, respectively. Both plots show that the effect of democratic value is negative and significant at lower values of decentralisation. The negative effect of democratic value decreases in magnitude (absolute value) with a higher level of decentralisation and it becomes insignificant when decentralisation reaches its higher end. In short, decentralisation helps attenuate the detrimental effect of democratic value on political trust.

In contrast, the two measurements of political decentralisation, federalism (Model 15) and local autonomy (Model 16), do not have a positive interactive effect with democratic value. The interaction between federalism and democratic value is not significant (Model 15). The interaction between local autonomy and democratic value is significant but is in a negative direction (Model 16). The finding of Model 16 indicates that, with a higher degree of political autonomy of subnational units, people with greater democratic orientation are more critical of political institutions. It thus shows that, compared to other dimensions of decentralisation, political decentralisation might entail a dynamic that aggravates the negative feelings of democratically-minded citizens about the political system, an important issue that is addressed in the next section. But since federalism has no such effect and the following robustness-checking

Table 3: Estimation of the effect of decentralisation on institutional trust (cross-level

interaction)

Model 13Fiscal

Model 14Admin

Model 15Federal

Model 16Autonomy

Fixed effects:

Ind level

Sex -0.86***(0.19)

-0.96***(0.21)

-0.88***(0.18)

-0.95***(0.18)

Age 0.051***(0.0061)

0.044***(0.0067)

0.049***(0.0060)

0.047***(0.0061)

Education -0.11***(0.015)

-0.067***(0.017)

-0.11***(0.015)

-0.11***(0.015)

Social status 0.71***(0.10)

0.45***(0.12)

0.55***(0.099)

0.60***(0.10)

Interpersonal trust

2.64***(0.11)

2.42***(0.12)

2.60***(0.10)

2.52***(0.10)

Democratic value -0.95***(0.10)

-1.35***(0.15)

-0.76***(0.056)

-0.62***(0.061)

Constant 29.9**(12.7)

40.2***(13.0)

35.6***(9.98)

35.7***(10.2)

Fixed effects:

Country level

Decentralisation -5.89(12.6)

-19.9*(10.8)

-4.60(3.68)

-1.81(3.29)

Area -1.74(1.12)

-1.75(1.42)

-0.75(1.20)

-1.22(1.12)

Population 3.73***(1.36)

3.69**(1.71)

2.76**(1.23)

2.97**(1.26)

Democracy -16.9***(3.77)

-19.3***(4.23)

-14.8***(3.55)

-15.4***(3.76)

WGI 7.00***(2.32)

7.17***(2.53)

5.57***(1.76)

5.73***(1.86)

Growth 0.72(0.71)

1.21*(0.71)

0.28(0.56)

0.40(0.58)

Fixed effects


Decent.*demo. value

0.70** (0.30)

1.41*** (0.28)

0.091 (0.098)

-0.21** (0.095)

Random effects

Ind variance 383.92***(2.57)

385.54***(2.86)

393.23***(2.50)

390.59***(2.53)

Country variance 69.56***(16.04)

71.19***(17.89)

84.30***(17.88)

85.46***(18.76)

N. (country)

44710(38) 36434(32) 49670(45) 47537(42)

Log likelihood

-196563 -160528 -218973 -209408

Notes: Multilevel model with random intercept; standard errors in parentheses; * p<0.10, ** p<0.05, *** p<0.01.


14

Figure 1. Marginal Effect of Democratic Value at All Levels of Decentralisation

a Fiscal decentralisation b Administrative decentralisation

-1.2

-.9

-.6

-.3

0.3

.6

0 .2 .4 .6 .8 1

Fiscal decentralisation

-1.5

-1.2

-.9

-.6

-.3

0.3

.60 .2 .4 .6 .8 1

Administrative decentralisation


15

analyses cannot consistently confirm this finding, we are cautious not to make a definite argument about the negative effect of political decentralisation.

In the analyses presented above, we varied model specifications by either including or excluding control variables at the country level and obtained the same pattern with regard to the effects of various dimensions of decentralisation on political trust. To further ensure the robustness of our findings, we conduct additional analyses in this subsection by varying the operationalisation of two key variables, that is, political trust and democratic values. Given the large number of models and limited space, we present some analyses as online appendices and omit others for the sake of brevity. And we only present results of models that include the primary variables at the country level. Appendix 2 presents the result of the analyses of the trust in a single political institution, national government. Appendix 3 presents the result of the analyses that uses a different measurement of democratic values. In this measurement, it includes the response to the question that directly asks one’s attitude towards democracy. Both analyses in Appendix 2 and Appendix 3 yield findings that are the same as those presented in Table 3 with regard to fiscal decentralisation and administrative decentralisation. They indicate the indirect effect of decentralisation in these two dimensions. However, unlike the results in Table 3, we find no negative moderating effect of political decentralisation in either of the two analyses.

Discussion and conclusion

As the result of decentralisation, citizens are more exposed to the operation of the government and more involved in the political or policymaking process. Does such a makeover of government change how ordinary people perceive various political institutions? In particular, does this institutional reform help to restore public confidence in political institutions that have been declining in recent decades? To


16

answer these questions, this study provides a much-needed comparative analysis of the effect of decentralisation on political trust.

Our analysis first yields no evidence that suggests the direct effect of decentralisation on individual attitudes, despite their significant association at the country level. We then show that the trust-fostering function of decentralisation in two dimensions (fiscal and administrative) works through mitigating the negative effect of democratic value on political trust. It indicates that fiscal and administrative decentralisation works for the benefits because, for the reasons explicated in the theoretical section, they can improve the government–citizenry relationship, on the one hand, and the performance of governments, on the other hand. However, our findings indicate that political decentralisation does not have such a definite moderating effect. And one measure of it, subnational political autonomy, even aggravates the negative effect of democratic value, as suggested in some of the analyses. Together, these findings suggest indirect and heterogeneous political consequences of decentralisation that have not been adequately captured in previous studies.

Although we cannot make a firm conclusion that political decentralisation is negatively associated with political trust, the different or even opposite effects of different dimensions of decentralisation warrant further research and discussion. This finding at least suggests that power devolution in its political sense is not necessarily beneficial for the government in terms of gaining public confidence. This is probably due to the unique nature of political decentralisation as compared to the two other dimensions of decentralisation. In democracies, if political decentralisation operates inappropriately, the decentralised decision-making processes make political stalemates, partisan politics, and other problems of democratic politics more salient at the local level. As a result, critical citizens become more disappointed with the democratic system. In autocracies, the decentralisation of politics can make democratically-minded individuals more aware of the undemocratic nature of the political system that has been concealed by propaganda.

Although our findings indicate that political decentralisation has no positive effect on political trust, decentralisation policies overall help to rebuild political trust among the public. This is so because, when implementing decentralisation, it is on administrative and fiscal policies that most governments focus. The vertical arrangement of authority in the political hierarchy has usually been set by a country’s constitution and is difficult to change. In contrast, how administrative authority is assigned or how revenue or expenditure is distributed among different tiers of government is much less difficult to change and is, thus, often the focus of government reforms. Although such policy reforms cannot directly increase the affection of all people for the government, they do help meet the rising democratic demand of the public and hence help to rebuild political trust.

The aim of the present study is to uncover the general pattern of the relationship between decentralisation and political trust that cannot be obtained through either single-country or qualitative studies. It adds a cross-national large-N study of individual attitudes into the literature of decentralisation. Like any other cross-national quantitative studies, our study presented the general pattern at the expense of details, which can be obtained only through qualitative studies of specific countries. Moreover, as duly noted above, cross-cultural analysis also has the shortcoming of using generalised questions to measure values that are dynamic and complex in nature.


17

Future research, therefore, can develop through more intensive qualitative studies of countries with regard to the effect of decentralisation on political attitudes.

AcknowledgementThis research is supported by Natural Science Foundation of China (No.71203130) and Program for Innovative Research Team of SUFE (No.2014110344).

Notes1 Countries included in this study are Italy, Spain, the United States, Canada, Japan, South Africa, Australia, Norway, Sweden, Argentina, Finland, South Korea, Poland, Switzerland, Brazil, Chile, India, Slovenia, Bulgaria, Romania, China, Taiwan, Turkey, Ukraine, Peru, Uruguay, Ghana, Moldova, Georgia, Thailand, Indonesia, Vietnam, Serbia, Egypt, Morocco, Iran, Jordan, Cyprus, Iraq, Trinidad and Tobago, Andorra, Malaysia, Burkina Faso, Ethiopia, Mali, Zambia, and Germany.2 The details can be obtained at: www.worldvaluessurvey.org/WVSContents.jsp3 Available at https://sites.google.com/site/joseantoniocheibub/datasets/democracy-and-dictatorship-revisited.

Appendix 1: Summary statistics

Variable Mean Std. Dev. Min Max

Political trust 51.03 23.87 0 100

Sex - - 0 1

Age 41.41 16.48 15 98

Education (at what age finished education)

19.30 6.42 1 97

Social status 2.63 1.00 1 5

Interpersonal trust 2.35 0.97 1 4

Democratic value 8.32 2.17 3 12

Fiscal decentralization

0.29 0.16 0.041 0.67

Administrative decentralization

0.53 0.20 0.19 0.93

Federalism - - 0 1

Local autonomy - - 0 1

Area size (log) 6.33 1.74 1.63 9.75

Population (log) 10.35 1.52 6.92 14.08

Democracy - - 0 1

WGI 0.15 0.92 -1.75 1.91

Growth rate 3.86 2.73 -3.2 10.6

Note: The numbers of observations vary for each analysis given the varying number of countries studied in different models. Analyses with multiple imputation yield findings are consistent with those of the analyses using the raw data.


18

Appendix 2: Robustness check (trust in single institution: government)

Model 17Fiscal

Model 18Admin

Model 19Federal

Model 20Autonomy

Ind. level

Sex -0.041***(0.0077)

-0.047***(0.0087)

-0.044***(0.0073)

-0.048***(0.0076)

Age 0.0016***(0.00025)

0.0010***(0.00028)

0.0017***(0.00024)

0.0016***(0.00025)

Education -0.0040***(0.00062)

-0.0021***(0.00070)

-0.0041***(0.00060)

-0.0041***(0.00060)


0.0045(0.0048)

0.011***(0.0040)

0.012***(0.0042)

Interpersonal trust 0.11***(0.0044)

0.10***(0.0049)

0.11***(0.0041)

0.10***(0.0043)


-0.041***(0.0062)

-0.022***(0.0023)

-0.022***(0.0025)

Constant 2.28***(0.14)

2.48***(0.22)

2.37***(0.073)

2.42***(0.083)

Country level

Decentralization 0.033(0.41)

-0.15(0.40)

-0.068(0.14)

-0.096(0.14)


Decent.*demo. value 0.039***(0.012)

0.048***(0.011)

0.0073*(0.0040)

0.0031(0.0039)

Ind. variance 0.62*** 0.62*** 0.64*** 0.63***

Country variance 0.14*** 0.17*** 0.15*** 0.16***

No. of obs. (country) 42735(38) 30689(32) 48547(46) 44774(42)

Log likelihood -50555 -39968 -58032 -53305

Appendix 3: Robustness check (varying measurement of democratic value)

Model 21Fiscal

Model 22Admin.

Model 23Federal

Model 23Autonomy

Ind. level

Sex -0.76***(0.20)

-0.85***(0.22)

-0.79***(0.19)

-0.83***(0.19)

Age 0.045***(0.0065)

0.037***(0.0072)

0.047***(0.0062)

0.042***(0.0065)

Education -0.12***(0.016)

-0.056***(0.018)

-0.11***(0.015)

-0.10***(0.016)


0.52***(0.12)

0.66***(0.10)

0.67***(0.11)

Interpersonal trust 2.57***(0.11)

2.40***(0.12)

2.60***(0.10)

2.51***(0.11)


-1.91***(0.17)

-1.07***(0.059)

-1.09***(0.063)


19

Constant 53.3***(3.77)

57.5***(5.85)

53.4***(2.04)

55.3***(2.32)

Country level

Decentralization -0.27(11.3)

-2.96(10.6)

-0.28(3.91)

-2.43(3.86)


Decent.*demo. value 2.16***(0.27)

1.69***(0.32)

0.070(0.10)

0.17*(0.099)

Ind. variance 382.25*** 382.33*** 391.56*** 389.33***

Country variance 117.80*** 118.99*** 125.88*** 131.98***

No. of obs. (country) 40633(39) 32232(32) 46151(47) 42765(42)

Log likelihood -178570 -141656 -203381 -188335

Notes: Model: multilevel model with random intercept; Standard errors in parentheses; * p<0.10, ** p<0.05, *** p<0.01.

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