Trust in Public Institutions over the Business Cycle

Betsey Stevenson; Justin Wolfers

doi:10.1257/aer.101.3.281

American Economic Review Vol. 101 No. 3 2011

Trust in Public Institutions over the Business Cycle

Betsey Stevenson¹; Justin Wolfers²

¹ Wharton School, University of Pennsylvania, 3620 Locust Walk, Philadelphia, PA 19104, CESifo, and NBER. · ² Wharton School, University of Pennsylvania, Brookings, CESifo, CEPR, IZA, and NBER.

Abstract

We document that trust in public institutions—and particularly trust in banks, business and government—has declined over recent years. US time series evidence suggests that this partly reflects the pro-cyclical nature of trust in institutions. Cross-country comparisons reveal a clear legacy of the Great Recession, and those countries whose unemployment grew the most suffered the biggest loss in confidence in institutions, particularly in trust in government and the financial sector. Finally, analysis of several repeated cross-sections of confidence within US states yields similar qualitative patterns, but much smaller magnitudes in response to state-specific shocks.

DOI: 10.1257/aer.101.3.281
Volume: 101
Issue: 3
Pages: 281-287
Language: en
Sources: crossref bibtex:phds-export.bib openalex

Trust in Public Institutions over the Business Cycle

Abstract

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