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“Crowding in” or “crowding out”? An examination of the impact of the welfare state on generalized social trust

Brewer, K.B., Oh, Hans and Sharma S (2014)

Key facts

Journal/Publisher
International Journal of Social Welfare
Type of publication
Journal article
Elements of social cohesion
Trust
Other (social welfare)
Geographical focus
Europe and Central Asia
Latin America and Caribbean
North America
Main thematic areas
Economic development

Summary

Generalized social trust is correlated with increased levels of civic engagement, lower crime rates, and greater economic growth. Many scholars believe that equality provides the conditions in which social trust can flourish. Thus, welfare programs might be one way to generate social trust. However, the relationship between social spending and trust is contested: Some argue it is negative, while others argue it is positive. This study examined the effects of total social welfare expenditures on social trust in 18 OECD countries, holding constant individual characteristics, country characteristics, and country and year effects. Fixed effects analyses indicate that every additional percent of gross domestic product spent on social expenditures 5 years prior is associated with a 4.7 percent increased likelihood that respondents of that country will endorse trusting other people. Further testing for reverse causality found no significant association between trust and later social expenditures, supporting the claim that expenditures drive trust instead of the reverse.

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