How Political Institutions Create and Destroy Social Capital:An Institutional Theory of Generalized Trust

Bo Rothstein & Dietlind StolleDepartment of Political Science Department of Political ScienceGöteborg University McGill UniversityBox 711 855 Sherbrooke St. WestSE 405 30 Göteborg Montréal, QC H3A 2T7SWEDEN CANADABo.Rothstein@pol.gu.se Dietlind.Stolle@mcgill.ca

Paper prepared for the 98th Meeting of the American Political Science Association in Boston,MA, August 29-September 2, 2002.

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Introduction: The Theory of Social Capital

A new debate in social science evolves around the resource of social capital. While many

dimensions of this concept are far from new, scholars have been increasingly concerned with

presenting social capital as a key resource for societies that seems to oil the wheels of both

democratic politics as well as economic prosperity (Coleman 1990; La Porta et al. 1997;

Putnam 2002). In this expanding research agenda, social capital is believed to be an important

resource promoting several other societal and individual benefits, such as responsive and we

well-performing institutions, as well as individual health and personal happiness (Baum 1997;

Knack and Keefer 1997; Newton 1999b; Woolcock 1998; Woolcook 2001).

Social capital has been defined and measured as generalized trust, norms and reciprocity and

networks (Putnam 1993). We consider here generalized trust as the heart of social capital,

since it is an integral and probably irreplaceable part of any democratic political culture, as it

clearly indicates an inclusive and tolerant approach to the population at large.1 We consider

these civic attitudes as important prerequisites for cooperative behavior and the successful

solution of collective action problems. As is well-known from standard non-cooperative

game-theory, it makes no sense to support solutions for the common good if you do not trust

most other agents to do the same. We would like to point out that we are in agreement with

Elinor Ostrom (and many others) that this is the most fundamental problem in every

organization and society (Ostrom 1998).

Generalized trust indicates the potential readiness of citizens to cooperate with each other and

the abstract preparedness to engage in civic endeavors with each other. Attitudes of

generalized trust extend beyond the boundaries of face-to-face interaction and incorporate

people who are not personally known. These attitudes of trust are generalized when they go

beyond specific personal settings in which the partner to be cooperated with is already known.

They even go beyond the boundaries of kinship and friendship, and the boundaries of

1 Networks might have the opposite effect, e.g., by strengthening or empowering non-democratic groups andorganizations.

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acquaintance. In this sense, the scope of generalized trust should be distinguished from the

scope of trust toward people one personally knows.2

Why is generalized trust so important? Generalized trust reduces uncertainty about the future

and the need to continually make provisions for the possibility of opportunistic behavior

among actors. Trust increases the desire of people to take risks for productive social exchange

(Tyler 2001). It lubricates smooth, harmonious functioning of organizations and interactions

by eliminating friction and minimizing the need for bureaucratic structures that dictate the

behavior of people who do not trust each other (Limerick and Cunnington, 1993). More

specifically, in the political sphere, generalized trust allows citizen to join their forces in

social and political groups, and it enables them to come together in citizens’ initiatives more

easily. In the social sphere, generalized trust facilitates life in diverse societies, fosters acts of

tolerance, and acceptance of otherness. Life in diverse societies is easier, happier, and more

confident in the presence of generalized trust (Uslaner 2002).

Generalized trust has been shown to be associated with economic development and growth.

Fukuyama discusses how trust influences the scales of firms (Fukuyama 1995). Knack and

Keefer demonstrate how particularly generalized trust compared to other indicators of social

capital is an important predictor of economic growth (1997). Zak and Knack show that even

controlling for various institutional aspects that facilitate investment and growth, such as the

protection of property rights and contract enforceability, generalized trust is still an important

additional predictor of economic growth (Zak and Knack 2001). Generalized Trust has also

been shown to explain democratic stability and democracy (Inglehart 1999).

In the wealth of positive associations between trust and various desired social and political

outcomes, the sources of generalized trust often remain unexplored. If trust is such an

important societal resource, how can it be generated, maintained or even destroyed? In

particular, what are the institutional conditions under which social capital can grow or not?

The issue to which we like to draw attention here is that social capital and trust are believed to

2 This more immediate form of trust may be called private or personalized trust, which results from cooperationexperiences and repeated interaction with the immediate circle of cooperators, whether that be a family,community, or fellow members of a voluntary association. See Yamagishi and Yamagishi (1994) on distinctionsbetween general trust and knowledge-based trust, or Uslaner (2002) on a similar distinction between strategic,particularized and generalized trust. On overview of various types of trust can be found in Kramer 1999 andStolle forthcoming.

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have all of these effects, and yet it is often not absolutely clear which way the causal arrow

goes. Does generalized trust lead to all of these outcomes? Or is it sometimes the practice of

democracy, or certain characteristics of democratic institutions, or economic development that

enables and facilitates the building of generalized trust. It is the most important task of

research on trust to filter out these causality issues. In fact, the question of why it is that

citizens in some countries, regions, cities or villages are able to join together, trust each other

and solve many (maybe even most of) their collective action problems while others cannot,

turns out to be one of the most interesting puzzles in the social capital debate. In the

remainder of this article we like to address this issue in more detail, and we will develop a

theory of the formation of generalized trust that is embedded in the structure of institutions. In

fact we argue that many of the effects that social capital has been shown to have on

institutions might be as much caused by the effects of institutional differences on social

capital.

This paper proceeds in six main sections. In the following first two we review current

approaches explaining the sources of generalized trust. In the third section we present how we

build on the results of the existing approaches and how we go beyond them. In the fourth

section we develop what we consider an essential element of any causal argument, the causal

mechanism of the institutional theory of generalized trust. Short of a full-fletched test of our

causal model, in the fifth section we continue to illustrate our causal relationship with cross-

national and Swedish survey and other data. Finally, we bring our new insights together with

suggestions for future research in our last sixth section.

1) The Generation of Social Capital— The Society-Centered Model

The social capital literature is clearly divided on the question of the causes and origins of

social capital. On the one side are scholars who argue that variations in the amount and type

of social capital can be explained primarily by society-centered approaches (Banfield 1958;

Fukuyama 1999; Putnam 1993). In this account, the capacity of a society to produce social

capital among its citizens is determined by its long-term experience of social organization

anchored in historical and cultural experiences that can be traced back over centuries.

The society-centered accounts see the most important mechanism for the generation of social

capital as regular social interaction, preferably as membership in voluntary associations

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though more informal types of social interactions have been included in later work. Following

the Tocquevillian tradition, formal and informal associations are seen as creators of social

capital because of their socialization effects on democratic and cooperative values and norms:

associations function as “learning schools for democracy.”3 However, this approach has

revealed three problems. The first issue is that voluntary associations do not stand up to the

role they were believed to play in social capital creation. The second issue has to do with the

theoretical difficulty in distinguishing various types of social interactions from each other.

The third concerns the problems involved in the search for causes or roots of social capital.

We briefly summarize these issues in turn.

In a number of studies that have been carried out in different democratic countries over the

last years, the effect of participation in many voluntary associations directed at benevolent

purposes on social trust and the willingness to cooperate outside of group-life has been

questioned. It is true that people who are “joiners” also trust other people more or generally

cooperate more, but this seems to be an effect of self-selection. People who—for some other

reason—score high on the social ability to cooperate with others and to trust others, join

voluntary associations disproportionally. The activity in such organizations does not add

much in these desired traits, but members become purely more trusting in their fellow

members and they cooperate more for group purposes only (Stolle 2001). Thus the evidence

that membership creates social capital that can be used in the wider society does simply not

hold (Claiborn and Martin 2000; Hooghe and Stolle 2003; Rothstein 2002; Stolle 2000;

Uslaner 2002).4 Other types of social interactions might do the job, yet a second problem

occurs.

The second issue is that even if we accepted the importance of social interactions as a premise

for the learning of cooperation and trust, not all of them serve a desirable purpose. The

problem is that we do not yet have a micro-theory of social capital that defines those aspects

of social interactions that are important for the creation of social capital. Returning to the

example of associations, many of them are in fact established to create distrust. As one

colleague from Sarajevo told it, their problem has been “too much” social capital. By this he

3 Associations have also been praised for their external effects in that they allow citizens to access and influencegovernment.4 The evidence on the relationship between regional density and civic attitudes is also mixed at best, and doesnot hold within Scandinavia, for example where association-rich regions are not necessarily those that are mosttrusting (Lundåsen 2000; Milner and Ersson 2000; Stolle 2002).

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meant that too many people have been members of voluntary associations that contributed to

the hatred and that led to the civil war. The same could probably be said of Northern Ireland.

Alan Brinkley talks about parochial communities that do not reach out but instead manifest

and nurture an inward-looking and segregating culture (2001: TAP: Vol 7, Iss. 29). Sheri

Berman has argued that the Nazis in Weimar Germany used existing voluntary associations as

vehicles for their “Machtübername” in 1933. Far from such extreme examples, some

voluntary associations may use their power, for example as producer organizations, to extract

resources from society in a way that comes close to “black-mailing”, giving undue or

disproportional advantages to its members at the cost of the rest of society. Organized interests

have not always been known to act in a way that increases generalized trust in society. The

literature on neo-corporatism and on “rent-seeking” both emphasize this side of the effects of

interest organizations (Lewin 1992; Olson 1982).

The problem of good and bad associations is readily admitted in social capital research, and

new promising analyses distinguish between groups that have a varying degree of contacts

with people that are unlike oneself. This distinction has been labeled as bridging (contact with

many people who are dissimilar) and bonding (contact with people like oneself) social

interaction. Bridging interactions are believed to create more desirable outcomes (Putnam

2000). In a similar vein, Warren distinguishes between groups oriented toward status, group

identity and material goods, as well as those focused on inclusive social, public or identity

goods (2001). Both theoretical accounts are still up for empirical testing, however (though see

Stolle 2000; Zmerli 2002). Generally, the struggle to distinguish between the ‘good, the bad

and the ugly’ in the world of social interactions underlines the lack of theoretical parameters

that define a micro-theory of social capital. In sum, so far we know that the use of

membership in voluntary associations as a measurement of social capital should be handled

with caution; and that its use as a producer of social capital is misplaced.

The third problem has to do with lack of understanding of the actual sources of social capital.

At a closer inspection, it turns out that the theory as it stands is of a somewhat deterministic

nature. The research reveals that the level of social capital in a society is determined by very

long historical trajectories. The differences between the North and the South in Italy are

traced back to the 12th century; and current day differences within the United States are

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explained by the fraction of its population that is of Scandinavian stock (Putnam 2000:p. 294).

The implications of this view have left many policy makers and policy-oriented social

scientists dissatisfied: if the amount of social capital in a society is historically determined by

various societal structures with roots far back in historical time, there are few present-day

policy options available to stimulate the development social capital. At most, governments,

and particularly oppressive regimes, can damage and destroy what social capital exists, as the

examples of the Norman Kingdom in Southern Italy and of several authoritarian and

totalitarian regimes in Southern and Eastern Europe indicate (cf Sztompka 1998), but they

might not be able to facilitate or foster the generation of social capital.

2. The Institution-Centered Approach

As a reaction to the society-centered and historically-determined approach, the institution-

centered accounts of social capital theory respond that for social capital to flourish, it needs to

be embedded in and linked to formal political and legal institutions (Berman 1997; Hall 1999;

Levi 1998; Rothstein and Kumlin 2001; Stolle 2002; Tarrow 1996) According to this group of

scholars, social capital does not exist independently of politics or government in the realm of

civil society. Instead, government policies and political institutions create, channel and

influence the amount and type of social capital. The capacity of citizens to develop co-

operative ties and establish social trust is in this account heavily influenced by (the effects of)

government institutions and policies. This point of view would imply that institutional

engineering might indeed be used to foster social capital, (however, authors differ on the time

horizon of this effect).

In comparison to the sociological or society-centered perspective, the institutional model fits

more squarely into the field of political science. During the last fifteen years, there has been

an enormous increase in the interest in institutional effects in the field of political science.

This “new institutionalism” has mainly focused on the importance of using institutions as

independent variables in various theoretical models. This is not the place to present an

overview of this field of research or of the many variants of institutional theory that have

come to exist (cf. Peters 1999).

The problem we see is that the “new institutionalism” and the social capital research agenda

so far have been mostly disconnected. In a recent textbook titled Institutional Theory in

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Political Science, Guy Peters presents no less then six different “new institutionalisms” in

political science. What is interesting from our perspective is that he mentions social capital

only once in passing (Peters 1999). Moreover, he argues that these approaches are mutually

exclusive. Summarizing the research, he writes that “the concepts of ‘social capital’ and

‘civil society’ are really ways of saying that without the right set of social values structural

manipulation and constitution writing will produce little positive results” (p. 88). We take this

to be the general idea among scholars in the social capital approach, namely that historically

established cultural traits have precedence over institutions in explaining variation in social

capital. However, Peters also refers to the work on democratization by Alfred Stepan and Juan

Linz who emphasize the importance of building institutions for the promotion of value change

of citizens that help to stabilize fledgling democracies. Peters’ statement about this line of

reasoning is the following:

This approach argues, although perhaps not so boldly, that if effective institutions can be

constructed and managed then in time (and perhaps not very much time), the appropriate

values will also be created (Peters 1999, p. 88).

A similar argument as Stepan’s and Linz’ has been put forward by Ostrom, stressing the need

to find institutional arrangements that make it more likely for groups faced with “common-

pool resource” problems to find solutions for sustainable development so as to avoid “tragedy

of the commons” situations. In practice, this means institutions that would foster agency

where agents act as responsible citizens rather than utility-maximizing rationalists (Ostrom

2000). In fact we can point to quite a number of “bold” works that connect civic values with

the study of political/social institutions.

We can distinguish two main types of institutional arguments in relation to the concept of

social capital: an attitudinal approach and an institutional-structural. In the attitudinal

approach, scholars examine the relationship between institutional/political trust and

generalized trust. For example, Hall indicates that political trust and generalized trust are

correlated in Britain (Hall, 1999). Kaase discusses the consistently positive but weak

correlation between the two types of trust in cross-national survey samples (Kaase, 1999: 14).

However, the interpretations of this correlation vary. Some social scientists, who recognize

the correlation between the two types of trust, see generalized trust mostly as a predictor of

political trust. For example, Lipset and Schneider claim that in the United States, what they

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call the “personal characteristic of trust in others” might explain developments in public

confidence. “A general feeling of confidence in institutions seems to derive from a personal

outlook of optimism, satisfaction and trust” (1983: 120ff.). Newton and Norris elaborate this

causal flow when they find a strong correlation at the aggregate level in the analysis of the

World Value Surveys in seventeen trilateral democracies. They interpret their findings as

evidence that social capital “can help build effective social and political institutions, which

can help governments perform effectively, and this in turn encourages confidence in civic

institutions” (1999). This, of course, is the logic of Putnam’s argument, in which he shows

that regional governmental performance depends on levels of regional social capital. The

problem with all of these analyses is that the flow of causality is not clear, which has been

noted by a number of authors who explore this relationship in more depth. Brehm and Rahn,

for example, have tried to disentangle the causality between these two types of trust with a

statistical analysis of the General Social Surveys (GSS) data set and a model that allows for

reciprocal causation. They found that confidence in institutions has a larger effect on

interpersonal trust than the other way around, even though they see both types of trust

influencing each other (Brehm and Rahn, 1997: 1014ff.).

We see three main related problems with the attitudinal arguments of the relationship between

institutions and social capital. First, the fact that attitudes cause other attitudes is not very

illuminating. The main problem of the attitudinal approach is that attitudes that relate to

institutions are not connected to the actual institutional characteristics. This omission is partly

remedied by the institutional-structural approach (see below). Second, there are a variety of

forms of institutional trust that we can identify in the study of advanced industrialized

democracies, but it is often a problem that most of them are collapsed under one label. No

wonder, scholars find weak or no correlation between generalized trust and other forms of

institutional trust or confidence, because they focus on confidence in institutions that have

little or nothing to do with generalized trust. The third problem is that the causal mechanism

in both causal claims remains unclear. Given the Putnam logic from trust to institutional

performance to confidence in politicians, we do not know how trusting people create better

service performance and better local politicians who are responsive. Do more trusting citizens

contact governmental officials more frequently to pressure them into good performance? Or is

it that local politicians just reflect the culture of trust or distrust that prevails in their local

societies? How exactly can the trust or distrust of citizens and their ability to reciprocate

influence governmental performance and as a result stimulate their confidence in politicians?

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The reverse logic is just as plausible. What we miss is a precise causal mechanism that

accounts for the causal logic.

The second institutional structural approach overcomes some of these omissions. This

approach generally centers on the role of the state as a source of social capital generation.

Sidney Tarrow, for example, argues that the “state plays a fundamental role in shaping civic

capacity” (Tarrow, 1996: 395). Scholars who follow an institutional-structural approach have

taken up this critique. The argument is made that governments can realize their capacity to

generate trust only if citizens consider the state itself to be trustworthy (Levi, 1998: 86).

States, for example, enable the establishment of contracts in that they provide information and

monitor legislation, and enforce rights and rules that sanction lawbreakers, protect minorities

and actively support the integration and participation of citizens (Levi, 1998: 85ff.). This

discussion is very insightful, as it specifies institutional characteristics such as the efficiency

and trustworthiness of state institutions as influential for social capital creation. Also certain

types of institutions such as those that deal with lawbreakers are emphasized. Yet what is still

missing here is a specification of how the causal mechanism between institutional

arrangements and trustworthy behavior works.5

In sum, our brief review of the existing approaches to the sources of social capital has

revealed a few points. For once, society-centered approaches are theoretically under-specified

and lack successful empirical testing. Institutional arguments often do not specify the “which

institutions” and the “how” questions in the creation of generalized trust. We would like to

specify a model here that a) indicates which political institutions that are the most important

for generating social capital and b) how to understand the causal mechanism between these

institutions and social trust. The first is that we need to have an idea about which political

institutions may be important for generating social capital. The reason is simple, the number

of political institutions in any political system, democratic or not, is huge. The way they can

be combined into different institutional systems is infinite (Rothstein 1996). We have to

specify if it is the electoral, or the judicial, or the military, or the administrative or any other

political institutions that may be specifically important for generating social capital. Here we

build on the insights of the institutional structural approach. Secondly, we adhere to the

5 Another problem is of course to explain why some countries have been able to construct trustworthygovernment institutions while others have not. There are several ideographic descriptions of such processes, butwe still lack an adequate theory (Rothstein 2000).

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important principle of specifying the causal mechanisms in this process. By this we mean that

it is necessary to spell out how the operation of a certain political institution actually may

change the norms or the belief system for the individual about social trust. As Ronald

Inglehart has argued, “it seems likely that democratic institutions are conducive to

interpersonal social trust, as well as trust being conducive to democracy” (Inglehart 1999).

The difficulty in this discussion is, according to Inglehart, how to specify the causal

connection(s) between these variables at the individual level. We address both of these issues

in the following two sections.

3) The Role of Political Institutions—Which Ones?

As stated above, the problem often is that many forms of institutional trust and confidence are

collapsed under one label. For example, we are certainly aware of concepts such as trust in

politicians, trust in the functioning of democratic institutions, trust in people who run

democratic institutions, trust in various agencies that implement public policies, trust in the

overall democratic system, and trust in the procedures that make institutions work. Our point

here is that the literature has not distinguished between confidence in the institutions on the

representational side of the political system (parties, parliaments, cabinets) and confidence in

the institutions on the implementation side of the system. The latter type of institution has

especially been forgotten or neglected in the debate about social capital (see exceptions here

in Levi 1998). One should keep in mind that for their personal welfare, citizens are usually

much more dependent on the institutions that implement public policies than on the

institutions that are supposed to represent their interests or ideology. To be protected by the

police and the courts, to get health care and education for one’s children is for many seen as

of vital importance.

The theoretical reason for the difference in confidence that people place in these types of

political institutions is the following. On the representational side, one of the main roles for

political institutions is to be partisan. A political party that holds government power, or the

majority in a Parliament, is supposed to try to implement their ideology in a partisan way.

Thus, people that support the ideology of the ruling party or parties are likely to have

confidence in them, while people that oppose their ideology are likely to report a lack of

confidence. For example, a city government run by the party one supports can be seen as

one’s political agent. In such a case, one is likely to have confidence in the government – as

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long as one supports its policies and keeps its promises. But, of course, people who oppose

the ruling party are more likely to distrust or to show a lack of confidence in that very same

government, especially if the ruling party does what it has promised to do. However, it is less

plausible why this type of political trust and distrust that is of a very temporary nature and

connected to political leanings should influence one’s generalized trust in other people; there

is no plausible causal mechanism linking these two phenomena. This is why we usually find

a strong correlation between political leanings and political trust but a weak correlation

between confidence in these types of political institutions and social trust (for the original

argument see Citrin 1974 and also Newton 1999a; Newton and Norris 2000; Norén 2000).

We believe that the weak findings of causal relationships between generalized trust and

political trust are mostly due to this failure to distinguish between various kinds of institutions

and related institutional confidence.

Now we are interested here in a very different institutional influence. It is mostly connected to

the legal branches of the state, the police and to many government organizations responsible

for implementing public policies such as social and welfare policies. We argue that these

branches of government and state institutions need to be distinguished from the influence of

political offices and branches such as the legislative and executive for three main reasons. In a

nutshell, these institutions serve as very encompassing socialization influences on citizens;

they reveal messages about procedural fairness and they deal with important aspects of

citizens’ concerns, namely safety. We will examine these points in more detail.

First, these institutions are usually more permanent in character than the short-lived and

politically dependent political institutions, and therefore are able to exert important

socialization influences. The experiences and observations of these institutions seem more

present in the socialization influences than for example the more short-lived moments in

voluntary associations. Unlike politicians nowadays, these “street-level bureaucrats” of the

police, the legal system or other social institutions are the ones who get in direct contact with

citizens. Thus direct contact and every-day experiences influence citizens’ beliefs about how

society works.

Second, these permanent political institutions reveal messages about the principles and norms

of the prevailing political culture that mold and shape people’s beliefs and values. The issue

here is not so much whether these institutions speak for one’s interests, however, but more

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important for the citizen trust in them and resulting trust in other people is whether these

institutions represent the ideals of universalism, equality before the law, impartiality and a

reasonable degree of efficiency. The idea is that despite different political leanings in

government, people are able (or not) to trust that institutions responsible for the

implementation of public policies are run and guided by these principles. If we have reason to

believe that the government institutions responsible for implementing laws and policies

behave according to the principles of efficiency, fairness and impartiality, we may trust them

with our demands for protection from crime, and other essentially private goods which spills

over to generalized trust (on how this happens see section 4 below). Being fair and impartial

is very different from – in fact the opposite of – acting as an agent of someone or acting on

behalf of someone. In these cases, a government institution that simply acts in my interest as

my agent, no matter what, is one that I have bribed (or one that is run by my cousin). And if I

can bribe judges or civil servants in general, so can someone else, including my adversaries.

The principle of impartiality and fairness of administrative agencies is, above all, a very

strong principle against corruption, but it is also a principle working against the idea that

government institutions should act as agents for someone’s special interests. In sum, we argue

that the impartiality and fairness of street-level order institutions are important dimensions of

institutional trust and confidence that can be conceptually separated from conventional

political trust in politicians, parties, and “the government,” and is most influential for

generalized trust.

Third, compared to other political institutions, the police and legal institutions have a special

task, namely to detect and punish people who, in a game-theoretic parlance, use opportunistic

strategy (we would prefer the term treacherous behavior). The judicial system and the police

are in other words, in the business of protection and this is something that influences greatly

societal patterns of trust. We therefore want to emphasize here the role of the judicial

institutions and the police. In the following section we elaborate exactly how these institutions

influence generalized trust.

4. Institutions, corruption and social capital – the causal mechanism

When we try to connect institutional theory to social capital, we want to underline that we do

not want to “smuggle into the analysis” any form of the old structural-functionalism.

Democratic institutions do not create social trust because it is “necessary” for their

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reproduction. Instead, we argue for a methodological individualism which emphasizes that it

is necessary to account for the motives, intentions and beliefs that makes individuals act in a

certain way. Institutional explanations must be combined with an explanation of the social

mechanisms that induce individuals to act in accordance with the demands of the institutions

and therewith reproduce them (Hedström and Swedberg 1998; Rundqvist 1998). We want to

emphasize that by social mechanisms we do not mean the addition of just another

“intervening variables” in the explanation. Instead, it should be viewed as a theory about how

we understand why “one variable changes another” (Hage and Meeker 1988, p. 1). The idea of

concentrating the analysis on causal mechanisms is thus theoretical – to test an idea about the

reason behind how, at the individual level, a change in one variable results in a different type

of behavior by that individual. This is the “what makes it happen” question that goes beyond

establishing a statistical correlation between variables (Sayer 1992, p. 104). If such

mechanisms at the individual level can be shown to exist in a similar, recurrent and frequent

way, they will have persistent effects on the institutional structure in which individuals

operate and therefore influences individuals’ behavior and attitudes.

One last debate needs to be addressed before we can develop our causal mechanism for the

link between social capital theory and institutional analysis. How would corrupt and unfair

practices in the administrative machinery of the state influence people’s relation to and trust

in each other? The link between corruption and social capital is by no means obvious; there

are two possible answers to this issue. The first would be the assumption that in societies

where people cannot trust e.g., the police or the judicial system, they would substitute this

lack of trust by increasing their social networking and their trust in each other. The other

argument is reverse. A dysfunctioning, corrupt, biased and unfair administrative system does

not allow any kind of trust to rise, and particularly prevents the development of trust between

people. We examine both arguments in turn.

In line with the first reasoning, the logic is that facing a non-functioning state apparatus

society gets together to overcome the problems of the state. In other words, people would

compensate their lack of trust in political institutions by increasing their connectedness to

other people whom they can trust. In a way, society is “forced” to cooperate in order to fill the

gaps of and circumvent the inefficient, biased or disorganized state. In this vein, Michael

Woolcook writes that “rampant corruption, frustrating bureaucratic delays, surpressed civil

liberties, failure to safeguard property rights and uphold the rule of law, forces communities

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back on themselves, demanding that they supply privately and informally what should be

delivered publicly and formally” (Woolcook 2001, p. 16). Similar views have been

expressed about the state of civil society in the analysis of authoritarian and totalitarian states.

It has been shown that people under communism have created cooperative networks in order

to alleviate the lack of opportunities and material support provided by their government

(Sztompka 1996).

One of the leading scholars of corruption makes a related argument about the positive

correlation between corruption and social capital. Della Porta’s claim is that in order to make

corrupt exchanges, one has to trust the others who are involved in corruption. Albeit “bad”

social capital, the idea is that corruption creates strong norms of reciprocity and trust between

those who are involved in corruption.

In all illegal system of exchange, a high degree of trust and reciprocity is necessaryamong participants, so the internalization of some rules of the game is thereforenecessary. A good reputation for respecting the terms of the illegal exchange, whichparticipants often call ‘honesty’, is valued by the actors involved. (della Porta 2000, p.223).

What has been acknowledged in these debates is that these types of ad-hoc co-operations and

niches of social interactions are not of a generalized character. Surely trust can thrive in such

particularized communities, but this type of trust cannot reach out to include various groups

of the population. The high degree of norm conformity that Della Porta depicts among those

who involve in corruption is plausible. But again, this is a specific type of trust that the

“secret” of corruption not be revealed to the outsider—it does not reflect generalized trust,

which is the aspect of social capital that interests us most. Moreover, people involved in

corruption need not really trust one another, because they are in a situation of “mutual

deterrence”. By this we mean that both stand to lose if the corrupt exchange is revealed as

giving bribes and taking bribes are both criminal offences in most political systems.

Deterrence is not exactly the same as the trust that the other does not defect.

When it comes to attitudes of a generalized nature, such as generalized trust that is all-

encompassing in its nature (see Stolle, forthcoming), our argument is that things work the

other way around. A deteriorating biased corrupt administrative system in general goes hand

in hand with low levels of social capital, particularly when measured as generalized trust. The

institutional theory of trust that we propose builds on Levi’s insight that an individual’s

16

perceptions of fair, just and effective political institutions and the fact that most fellow-

citizens have similar beliefs, influences the individual’s generalized trust (cf.Rothstein 2002).

Government institutions generate social trust only if citizens consider the political institutions

to be trustworthy. In this respect it is important, according to Levi, that states enable the

establishment of contracts in that they provide information and monitor laws; enforce rights

and rules that sanction lawbreakers, and protect minorities (Levi 1998, p. 85ff).

The argument runs as follows. Institutions of law and order have one particularly important

task: to detect and punish people who are “traitors”, that is, those who break contracts, steal,

murder and do other such non-cooperative things and therefore should not be trusted. Thus, if

citizens think that these institutions do what they are supposed to do in a fair and effective

manner then they also have reason to believe that the chance of people getting away with such

treacherous behavior is small. If so, citizens believe that people have very good reason to

refrain from acting in a treacherous manner, and they will therefore believe that “most people

can be trusted”. However, we want to emphasize here that it is not just the efficiency alone

with which treacherous behavior is punished, but the efficiency paired with the fairness of

these institutions that matters for generalized trust.6 In sum, if citizens can trust the

institutional effectiveness and fairness of the judicial system and the police, then one’s

generalized trust in others can be facilitated.

Let us illustrate the logic with a few examples. If someone has done harm to you and you

want justice to be done, you have three options. One is personal vengeance, which may lead

to endless vendettas whose outcomes are uncertain. Secondly, if existent, you can go to your

local mafia Don and ask him for a favor (knowing that someday he will come back and ask

you for a favor in return). And third, you can go to the police and courts. The last option,

however, only makes sense if you can trust they will be fair, impartial and efficient. If there is

“common knowledge” that they are unfair, take bribes and are inefficient, there is no point in

approaching these government institutions. In this case, the lack of trust in such institutions,

the messages about bribery and corruption, as well as the resulting feelings of a lack of safety

will influence one’s generalized trust in other people as well.

6 Efficiency of law- and order institutions alone can lead to feelings of relative safety or protection from arbitrarycrime committed by other fellow-citizens, as the low crime rates in former communist countries of EasternEurope indicate, however, they cannot create generalized trust because of their lack of fairness and impartiality.

17

More casually, here is a “true story” that helps to illustrate our argument. Lonely Planet is one

of the worlds largest companies in the guide-book industry. This is how the Police is

described in its latest guide to the Yucatan peninsula in Mexico. “Be advised that the federal

police have been implicated in rapes and murders… so don’t turn to them for help if you have

been assaulted. Obviously, if you survive an attack and go to the police, only to recognize an

officer as one of your assailants, he won’t be likely give you the chance to identify him in a

court of law”. The point we want to make is that in a society where such a perception of

public officials is common, people will also trust other people in general to a much lower

extent. If public officials, who are supposed to provide citizens with protection, cannot be

trusted then what are the grounds for you to trust people in general? Even visitors from

countries where the population is known to have unusually high levels of trust in other people,

will quickly change their mind about how wise it is to trust other people, let alone the police.

In addition, they will of course also feel vulnerable and unprotected, which makes them fear

strangers even more. No wonder that the wonderful beaches at the Yucatan peninsula to an

astonishing degree are being occupied by “all inclusive resorts”, which is the name for “gated

communities” in the tourist industry. Of course, this delivers just a very crude measurement

of police corruption and fairness in Latin America, however, other statistics confirm the

“story” as we’ll show below.

There is also a positive twist to our argument, of course. There is ample evidence that the

citizens’ evaluation of the performance of the different types of government institutions with

which they interact influences their confidence in them (Kumlin 2002). Moreover, it can be

demonstrated that the contact with more universal types of welfare institutions—as opposed

to selective and means-tested (and therefore biased) institutions—is positively related to

generalized trust (Rothstein and Stolle 2002). We like to expand the argument here to include

the impartial and unbiased character of various types of institutions with which the citizens

get in contact, including the courts and police, and their positive facilitative influence on

generalized trust

The causal mechanisms that we are searching for are admittedly very difficult to observe

empirically because they concern how belief systems are generated – or in more ordinary

language: “what goes on in people’s minds.” What actually determines their view of that sort

of game they are playing? We would like to specify the deductive logic as composed of the

following four causal mechanisms.

18

[Figure 1about here]

As indicated in Figure 1, we argue that the absence or presence of corruption, the level of

arbitrariness and bias of public officials in the police and court systems has two important

consequences that become influential on citizens in several ways: they influence the trust in

the institutional effectiveness and trust in institutional fairness. Surely, corruption does not go

hand in hand with trust in governmental institutions. It is obvious that the reason for offering

bribes is that one does not trust public officials to do what they otherwise are supposed to do.

We develop four different parts of this causal mechanism between institutional characteristics

and generalized trust. Institutional efficiency and fairness:

1. influence the individual agent’s perception of his/her safety and security. The absence or

presence of fear of others is obviously influential for the belief that “most other people”

ought/ or ought not to be trusted.

2. determine the individual agent’s inference from those who are given the responsibility to

guard the public interest to most people. For example, if those in position of responsibility

cannot be trusted, then “most other people” can surely not be trusted.

3. shape the observance of the behavior of fellow-citizens, as institutional fairness sets the

tone. The message of corrupt systems is, for example, that in order to get what one needs in

life, one has to be engaged in various forms corruption. Hence the individual agent will

witness the use of corruption amongst fellow-citizens, and will him or herself have to engage

in corrupt practices in order to get what she deems necessary in life. However, there cannot be

any generalized trust in those who just take advantage of others and the system.

4. cause experiences with these institutions when in direct contact with them. Corrupt and

unfair institutions, for example, might lead to experiences of discrimination and injustice,

which negatively influences generalized trust.

Our argument is certainly not that all forms of “generalized trust” are caused by experiences

with and trust in the impartiality and honesty of certain government institutions. There are

other important sources that are creating such social capital, for example the early childhood

experiences of trust relationships in one’s immediate family (Uslaner 2002). However, also

here we like to suggest that early childhood influences on trust might be parental experiences

with street-level order institutions as we presented it above. Our model helps to identify some

of the important dimensions of state institutions that are closely related to a significant aspect

19

of social capital, generalized trust, and we thus present an institutional theory of generalized

trust. Again, we consider these institutions as important influences on citizens’ views of other

people, because they 1) are permanent institutions that offer direct contact with street-level

bureaucrats in every-day settings, 2) exhibit important norms of society such as impartiality

and fairness, and 3) they deal with a valuable public good, personal safety.

5. Empirical IllustrationsSince there is no ideal data set to our knowledge in which we can test various aspects of our

argument and suggested causal mechanism, the section with empirical illustrations of the

causal mechanism and our broader argument proceeds in three parts. First, we explore

whether our general argument about varieties of institutional confidence and trust holds, and

whether certain types of institutions such as the legal system, the police and social welfare

institutions play a more important role for generalized trust than the clearly political

institutions. We will test our propositions at the macro level in a cross-national sample

provided by the World Values Survey, and at the micro-level in a Swedish national sample. In

the second part, we go a step further and move beyond this attitudinal approach to include

measurements of the institutions themselves. This test requires the merging of aggregate

statistical institutional measurements with aggregate public opinion data. Is it true that aspects

of institutional fairness, wide-spread corruption and institutional efficiency of the courts and

police are influential for generalized trust? Does the relationship hold in a multivariate

model? Third, since our argument and causal mechanism captures how institutions might

influence individuals, we need to test the relationship also at the micro-level. Are individuals

who have experienced corruption, unfair institutions, discrimination or the lack of protection

also less trusting?

Varieties of Institutional Trust—A General Exploration

We turn to the indicators of political confidence. Our previous discussion demonstrated that

there are at least two dimensions along which citizens judge political institutions: they expect

representatives of political, legal and social institutions to function as their agents; and at the

same time citizens expect neutrality, fairness and impartiality. Moreover, citizens expect more

agency and potential political bias from political institutions with elected offices, whereas, we

argue, citizens expect impartiality and an unbiased approach from order institutions. Our

claim is, of course, that the lack of impartiality of order institutions disturbs trust

developments within the population. Let us first have a look at the distinctions citizens draw

20

between various institutions. Is it really true that citizens distinguish their confidence in

various types of institutions?

[Table 1 about here]

We subject the aggregated third wave of the World Values Survey to a factor analysis.7 As the

results in Table 1 indicate, citizens from 50 countries make distinctions between types of

confidence in institutions in a list of nine.8 The factor analysis (principal component, with

varimax rotation) reveals that three different dimensions of institutions emerge.9 Indeed most

political institutions with elected offices fall under the first dimension, such as confidence for

parliaments, governments, and political parties. A second dimension taps confidence in

institutions that are mostly control institutions that check power of institutions with elected

offices, and include the media and— a bit to our surprise—also the civil service. However,

confidence in civil service also loads on the other two dimensions, which clearly taps those

institutions that are expected to do their work in an unbiased and impartial way; they include

legal institutions, the police, and the army (see Table 1). In other words, citizens make

distinctions between institutions; they do not view all institutions in a similar way. It is clear

that the third dimension reflects the group of order institutions that are expected to function

with less political bias and in an impartial manner, even though the actual experiences in

authoritarian systems, for example, are sometimes very different.

[Table 2 about here]

A similar result emerges when using the SOM-SURVEYS from 1996 to 2000 which have

been conducted by the SOM (Society – Opinion – Media) institute at Göteborg University,

Sweden.10 This factor analysis is conducted with confidence values at the individual level,

and includes confidence in social welfare institutions. As the results in Table 2 indicate,

7 The third wave WVS contains the most complete battery of questions about confidence in a variety ofinstitutions.8 The inclusion of labor unions, businesses and companies as well as churches does not change the extractedfactors. However, for the argument we like to make, the inclusion of the presented institutions is sufficient.9 The results are confirmed in the WVS data set with individual cases.10 The institute is managed jointly by the Departments of Political Science, Public Administration andJournalism/Masscommunication at Göteborg University. For this project, questions about trust have been addedto the five surveys 1996 to 2000 with funding from the Swedish Council for Research in the Humanities andSocial Sciences. For information about sampling, response rates, etc. please visit www.som.gu.se or contactsom@jmg.gu.se.

21

citizens in Sweden make similar distinctions between different types of confidence in

institutions in a list of ten. The factor analysis (principal component, with varimax rotation)

reveals that three different dimensions of institutions emerge. Again, most political

institutions with elected offices fall under the first dimension, such as confidence in

parliaments, regional governments, and local governments. The second dimension here

reflects the group of impartial institutions that are expected to function with less political bias

and in an impartial manner, they include the public health system, the public school system,

the police, legal institutions, and defense. The third dimension here taps confidence in

institutions that are mostly control institutions that check power of institutions with elected

offices, and includes the media. This result is a nice confirmation of the WVS results at the

individual level, and this test revealed the same factors even with the inclusion of confidence

in other public institutions, such as institutions of the welfare state (see more about how our

argument relates to the structure of the welfare state in Rothstein and Stolle 2002). The

question now is whether these different types of institutional confidence also reveal

differences in their relationship to generalized trust. Furthermore, we will go beyond the

attitudinal approach to test whether the institutional characteristics of fairness, impartiality

and corruption stand in relationship with generalized trust in the section that follows this

analysis.

Perceptions of Institutions and Generalized Trust—the Attitudinal Approach

Even more interesting in the light of our argument is the relationship between the three

dimensions of institutional confidence and generalized trust. In the large cross-national

sample, the correlation between confidence in political/ biased institutions, as well as between

confidence in power check institutions and generalized trust is negative and low. However, in

line with our expectations, we find a rather strong relationship between aggregate levels of

confidence in order institutions and generalized trust. The results support the claim that

societies in which the impartiality of the order institutions cannot be guaranteed, which is

expressed by lower citizens’ confidence in these types of institutions, also produce lower

generalized trust (and vice versa). See Table 3 and Figure 2. The multivariate analysis follows

below.

[Table 3 and Figure 2 about here]

In the Swedish data at the individual level, we find that the correlation between confidence in

political/ biased institutions, as well as between confidence in power check institutions and

22

generalized trust is lower at the individual level than the relationship between generalized

trust and trust in impartial institutions. However, all types of institutional confidence are

significantly related to generalized trust. Even though the distinctions are not as sharp at the

individual level, the evidence points to the fact that trust in order institutions is more

influential for generalized trust (see Table 4).

[Table 4 about here]

However, causal relationships cannot be just tested in a cross-sectional way. Surely the

development of our causal mechanism ensures a causal logic that underlies our empirical

analysis, yet if institutions are in any way responsible for social capital in the form of

generalized trust, then we ought to see a connection longitudinally as well. In other words, if

institutions become more bias or less impartial over time, we would expect a negative effect

on generalized trust. Similarly, if institutions become fair and impartial we would expect a

positive effect. There is not too much longitudinal data that contain these indicators, however,

we can have a very preliminary look at the World Values survey and at Swedish national data.

[Table 5 about here]

For this step of the analysis, we estimated positive and negative trends in trust in two

important order institutions, the police and legal institutions between the three waves of the

WVS.11 Not all of these distinctions between positive and negative trends in order

institutional trust mattered for trends in generalized trust. However, our finding is that

extreme loss of institutional trust in order institutions was also accompanied by loss in

generalized trust. Generally, in countries with a loss of 10 percent in order institutional trust

in this period had on average a 6 percent loss in generalized trust. A positive or stable trend

did not lead to significant positive changes in generalized trust (see Table 5). This results

hints at the idea that negative institutional trends will be noticed in generalized trust, whereas

it is an open question that positive trends have an equally positive effect.

[Figure 3 about here]

23

A second look at longitudinal data is possible through the Swedish surveys that inquired about

different types of trust from the mid-1980’s. We need to add here that Sweden is of course

one of the countries that has consistently exhibited high levels of generalized trust and other

forms of social capital. Merging the Swedish national data with the first wave of the WVS

gives us a fairly long time series of various types of trust, including generalized trust. Figure 3

presents those types of trust for which we have the longest time series and makes various

points. First of all, the Figure indicates that like generalized trust specifically order

institutional forms of trust and trust in the welfare system are also fairly high and consistent,

which includes particularly trust in the public health care system, the police, in public schools

and to a certain degree trust in the defense system/army as well as trust in universities and

courts (not all results shown). Trust in political biased institutions is generally low such as

trust in the government and the parliament, in the Cabinet, political parties, the EU

parliament, and local government is in comparison much lower (not all results shown).

Taking the 2001 average for what we call the five implementation branches of political

institutions(health care, police, schools, courts, and army) we receive a score of +37. If we

take the average for the confidence in the political representation bodies (parties, Parliament,

Cabinet, Local Government and EU-Parliament), our average comes to -12. This is a

difference of almost 50 points on the opinion balance scale. Generalized trust falls like trust in

implementation institutions into this higher level. The second point is that there is much more

fluctuation in the political forms of trust, however, such as trust in government and trust in the

parliament, probably much depending on who is in power. Moreover, trust in biased and

political institutions is clearly diminishing, which is no secret in Swedish society. Given the

first and last measure on our time scale, trusts in parliament and the cabinet have fallen at

least 22 percentage points, and have like trust in the EU parliament and trust in local

government, etc. been much in the minus field of the scale. The same decline cannot be

observed for trust in order institutions and those that implement public policy. Given this very

rough longitudinal analysis, we can conclude that again, trust in order institutions and public

policy institutions is much more related to generalized trust than confidence in political types

of institutions.

11 For the exact trend estimation, we subtracted trust in order institutions of previous waves from more recentwaves. Since not all countries were included in all three waves, three sets of subtractions occurred: OIT –wave3minus OIT-wave1; OIT-wave2 minus OIT-wave1; OIT-wave3 minus OIT-wave2. OIT=Order Institutional trust.

24

We have now established that we can distinguish between various types of institutional trust,

and that cross-sectional and longitudinal methods of analysis revealed at least to a degree

generalized trust is more closely related to trust in order institutions and institutions that

implement public policy than the other types. It is now the task of the test of our causal

mechanism to explore which institutional experiences exactly relate to generalized trust. Our

causal mechanism entails that important components of confidence in order institutions are

aspects of institutional efficiency in terms or protection and safety as well as institutional

impartiality and fairness. Particularly, citizens’ feelings of safety and protection, citizens’

inference from elites’ and other citizens’ behavior, as well as their experiences with

discrimination contribute to the shaping of generalized trust. If this is correct, we should see

that citizens are less able to trust when experiencing wide-spread institutional corruption,

unreliable police and crime, arbitrariness and bias of courts, as well as discrimination by

police and courts. We will test some of these propositions at the macro and micro-levels

below.

Institutional Experiences and Generalized Trust—Macro Results

For this part of the analysis, we use perceptions of institutions and institutional characteristics

and their relationship with generalized trust. We utilize aggregate data from the three waves

of the World Value Survey, the International Crime Victim Survey (ICVS), 1989-1997,12 as

well as aggregate statistical indicators, such as the corruption index from Transparency

International. For various steps of the analysis, the number and selection of countries might

differ.

[Table 6 about here]

The International Crime Victim Survey includes a variety of interesting indicators regarding

people’s perception of security and safety, the experience of actual crime, the experience of

actual corruption, however, no indicators of social capital such as generalized trust. Therefore

we merge the data at the aggregate level and explore bivariate relationships. The syndrome

presented in Table 6 is fairly clear, our measures of crime experience in forms of heavy crime,

corruption or fraud as well as feelings of safety and protection are undoubtedly related to

institutional trust of order institutions. The inclusion of these institutional experiences allows

us to get closer to our causal mechanism as—contrary to several other analyses on

12 Note that the CVS samples mostly in larger cities of each country, a fact that needs to be taken into account infuture analyses.

25

institutional trust— we are therefore able to disentangle much more how exactly institutional

distrust/trust is shaped. Moreover, all of these institutional experiences relate significantly to

generalized trust measured in the same time period but different sample. Our argument is that

the differences in institutional structures are responsible for the different experiences in crime

or corruption and the variance in institutional trust, which in turn influence levels of

generalized trust.

Moreover, one important behavioral expression of institutional trust is the reporting of crime

(see Malone forthcoming). If citizens experience crime, but do not bother to report it to the

police or courts, for example, this means that citizens do not trust the police with the task of

protection and safety. The high correlations between reporting crime or corruption and

institutional trust (see table 6) indicate that the reporting to the police is not fashionable in

countries where institutional trust is low. This sets into motion our causal mechanism, either

citizens feel unprotected, and therefore distrusting in other fellow-citizens. Or citizens

experience institutional corruption, and infer that elites and other citizens are biased and out

for their own good, which also makes them distrusting in others. In countries where only up to

50% of those experiencing any kind of crime report to the police, about 23% have generalized

trust in others. In countries where the percentage is above 50% police report (and therefore

police trust), citizens trust others an average of 39% (difference significant at the p=.003

level). The relationship does not hold between the percentage of reporting to the police on

fraud and corruption and generalized trust. Perhaps because not many citizens report on

corruption and fraud; the lack of this relationship needs to be explored further.

In sum we showed that institutional experiences of safety/protection or the lack thereof, as

well as experiences with corruption are strongly linked with institutional trust/distrust, and in

turn with generalized trust. However, in order to fully gauge the causal relationship we need

to test this connection in a multivariate macro model, which will be the next step for future

analysis.

Micro Results

No causal test is complete before it is also performed at the micro level. Ideally we like to

undertake a longitudinal analysis in counties or communities, for example that experienced

some sort of corruption scandal. The purpose would be to follow how indicators of social

capita, and particularly of generalized trust changed under the influence of corruption or

26

institutional change. A similar quasi-experiment can be conducted during the time of

institutional reform as attempted in selected Latin American countries (Malone 2000,

forthcoming). As we do not have the data available at this point, we test the individual level

variable of trust in order institutions in a multivariate setting.

[Table 7 about here]

Table 7 shows two different models in which we test the micro-relationship between

institutional/corruption experiences and generalized trust. The models include various other

predictors that have been shown to be important for generalized trust, such as socio-economic

resources, attitudes, associational membership, and variables that depict our causal

mechanism. Many socio-economic resources, predominantly education, but also individual

associational membership, attitudes such as life satisfaction emerge as important factors for

trust. Associational local density does not facilitate generalized trust. Model 1 includes trust

in order institutions which—controlled for all these other variables—emerges as a very strong

predictor. We take this as a confirmation of our theoretical insights. We also included a

variable that measures whether the respondent is a Swedish citizen or not, and at the

aggregate level the percentage of immigrants per county. The thought here is that despite

many integration attempts from the side of the Swedish government, immigrants might

experience discrimination in the Swedish system. Alternatively, immigrants might come from

countries with biased institutions that lack impartiality. As a first confirmation, we find that

immigrants score significantly lower on generalized trust than Swedish citizens, but the effect

cannot be found at the aggregate level.

The second model shrinks the pooled 5-year pooled sample to a one-year sample alone,

because it includes indicators that have only been asked in one year. One indicator measures

whether the respondent thinks that corruption is widespread in Sweden. Second, a further

variable measures recent corruption scandals in Swedish communities (distinguishing those

communities as dummy variables). Finally, we included a variable that measures whether

civil rights are respected in Sweden—an indicator very much at the heart of our argument.

Someone who does not consider the Swedish order institutions to be impartial would not

answer this question in the positive. All of these predictors came out as significant for

generalized trust, but their power has to be re-analyzed in a larger sample. This means that the

perception that civil rights are respected in Sweden is positively related to trust, whereas the

27

view that corruption is wide-spread negatively influences generalized trust. Interestingly,

citizens who live in counties where people experienced a corruption scandal within the last

decade, also score lower on trust in this smaller sample, which hints at the fact that the

experience of corruption influences how people think of each other.

Finally, our yet strongest support for our argument is delivered by an analysis of corruption

and its effects in Latin America. Mitch Seligson found not only that the experience of

corruption significantly erodes the legitimacy of the political system, but in addition,

significantly reduces interpersonal trust (measured as generalized trust), see Seligson 2002:

428 ff.). The advantage of his data set, the Latin Barometers, is that citizens have been asked

both about the experience of corruption as well as various institutional and social trust

questions. The findings point exactly to what we would expect from the developed causal

mechanism in this paper.

6. Conclusion

We have developed here an institutional theory of generalized trust. Our argument is that the

structure of contemporary institutions is an important and overlooked factor that matters for

the generation of generalized trust. In particular, we develop a causal mechanism which

explains and specifies the causal flow from impartial, un-biased and un-corrupt, just

institutions responsible for the implementation of public policies to generalized trust. The

impartiality and efficiency of these institutions influences basically citizens’ institutional trust

and more specifically (1) how they experience feelings of safety and protection; (2) how

citizens make inferences from the system and public officials to other citizens, (3) how

citizens observe the behavior of fellow-citizens, and (4) how they experience discrimination

against themselves or close others.

In our empirical part we have shown that these causal mechanisms are at work. Citizens make

distinctions between various types of institutions, and trust in order and implementation

institutions is more important for generalized trust than other types of institutional confidence.

Citizens do make strong connections between the impartiality of institutions and generalized

trust at the micro and macro levels. Citizens develop different levels of trust dependent on

their institutional experiences. And finally, citizens, who have experienced discrimination are

significantly less trusting.

28

Most discussions about the sources of social capital have so far been located at the arena of

civil society. Moreover, there is no successful theory of social capital that links aspects of

civic life and trust at the micro and macro level. The theoretical discussion and findings in our

paper intend to situate the concept of social capital more squarely in the realm of public

institutions. More importantly, our institutional theory of generalized trust encompasses

macro and micro links which are supported by empirical evidence. Whereas the direct causal

arrow of the relationship cannot be proven at this point, our causal mechanism and developed

theoretical insights suggest that parts of generalized trust can be influenced by the institutions

in which it is embedded.

29

Figure 1

Structure of Every-Day Bureaucracies

Fairness and

Determineeffectiveninstitutionthose whoand coope

Trust in institutio

Experiensafety/In! fear owith oth

Effectiveness

Generalized Trust in other people

Bias

s theess of states to punish violate rulesration

Determines that institutionsfunction in impartial way (ornot)

nal effectiveness

ces ofsecurityf or safetyers

AttitudinalExtension toeveryone else(Generalization)

Actual BehavioralInfluence on

Fellow-Citizens(and themselves)

ActualExperience of

discrimination orfair treatment

(particularly forminoritygroups).

Trust in institutional fairness

30

Table 1Confidence in Various Institutions

(WVS Third Wave, Number of countries=50)

Rotated Component Matrix(a)

Component Factor:Political/Biased

Institutions

Factor:Power

CheckingInstitutions

Factor:Neutral

and OrderInstitutions

Confidence in Parliament .919 .288Confidence in Government .902 .175 .110

Confidence in Political Parties .896 .285 .163Confidence in the Press .163 .959

Confidence in TV .184 .929Confidence in the Civil Service .480 .536 .428

Confidence in the Police .119 -.188 .870Confidence in the Army .119 .106 .761

Confidence in Legal Institutions .477 .272 .717Extraction Method: Principal Component Analysis. Rotation Method: Varimax with KaiserNormalization. a Rotation converged in 4 iterations.

Table: 2Varieties of Institutional Trust in Sweden (SOM data)

Rotated Component MatrixPolitical Trust

(Institutionswith elected

Officials)

Trust inImpartial

Institutions

Trust inControl

Institutions(Media)

Trust in Government .876 .161Trust in the Parliament .874 .204 .100

Trust in the LocalGovernment

.672 .254 .191

Trust in the Police .198 .733Trust in the Health System .743

Trust in the Defense System .159 .625Trust in Schools .130 .527 .287

Trust in the Legal System .353 .531 .156Trust in Newspapers .145 .815

Trust in TV .153 .833Extraction Method: Principal Component Analysis. Rotation Method: Varimax with KaiserNormalization. a Rotation converged in 5 iterations

31

Figure 2

32

Table 3: Correlations Between Various Types of Institutional Confidence andGeneralized Trust (WVS)

Factor Political/Biased Institutions PearsonCorrelation

-.07

N 50Factor Power-Checking Institutions Pearson

Correlation-.170

N 50Factor Neutral/Order Institutions Pearson

Correlation.534**

N 50

*p <.05; **p< 0.01 level (1-tailed).

33

Table 4: Correlations between Various Types of Institutional Confidence andGeneralized Trust (pooled SOM)

Generalized TrustPolitical Trust Pearson Correlation .170**

N 12629Trust in Impartial

Institutions Pearson Correlation .201**

N 12629Trust in Control

Institutions (Media) Pearson Correlation .078**

N 12629 *p <.05; **p< 0.01 level (1-tailed).

Table 5: Trends in Institutional and Generalized Trust

AverageGeneralized trusttrend in countries

with negativeinstitutional trend(10% and over)

-.06

N=6

AverageGeneralized trusttrend in all other

countries

.001

N=34

34

Figure 3

35

Table 6: Bivariate Results: Institutional Experiences and Trust

Percentvictimizedby heavycrime

Percentvictimizedbycorruptionor fraud

Meanfeelingsafe afterdark

Meanexpectingfuturebreak-in

Percentageof thosewhoexperiencedcrime andReport it tothe police

Percentage ofthoseexperiencingcorruptionand fraud andreporting topolice

CorrelationwithInstitutionalTrust (OrderInstitutions inall three waves)

-.506(**) -.794(**) -.738(**) -.761(**) .667(**) .478(**)

SignificanceLevel .002 .000 .000 .000 .000 .007Number ofcountries 30 26 26 30 30 26CorrelationwithGeneralizedtrustIn 1995

-.434(**) -.379(*) -.387(*) -.405(**) .519(**) -.032

SignificanceLevel .006 .021 .019 .010 .001 .435Number ofcountries 33 29 29 33 33 29 ** Correlation is significant at the 0.01 level (1-tailed). * Correlation is significant at the 0.05 level (1-tailed).

36

Table 7: Micro Regression results for the Swedish Data

Model 1 Model 2Variables Unstandardized

Coefficients(Standard Errors)

UnstandardizedCoefficients(Standard Errors)

Constant 5.65****(.249)

6.025****(.783)

Socio-Economic ResourcesEducation .136****

(.01).057*(.031)

Married .152***(.047)

0.06(.150)

Unemployed -.432****(.094)

-.647**(.305)

Average Income per county(kommun)

.0015**(.001)

.0007(.01)

Related AttitudesLife Satisfaction .587****

(.035).634****(.113)

Left Right Placement -.105****(019)

.078(.058)

Associational VariablesNumber of AssociationalInvolvement

.974****(.121)

.973***(.369)

Participation in Study Circles percounty (kommun)

0.0002(.000)

.0008(.001)

Variables that relate to our causal mechanismBeing a Swish Citizen or not .316***

(.110).511*(.305)

Proportion of foreign citizens percounty (kommun)

-0.011(.007)

-0.019(.021)

Institutional Trust in OrderInstitutions

.605****(.026)

.370****(.084)

Corruption is widely spread -.141****(.028)

Counties with recent corruptionscandals

-1.306**(.515)

In Sweden Citizens’ Rights arewell respected

.144****(.028)

Adjusted R square .124 .173N 11250 1140

37

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