Trust, regulation, and redistribution why some governments overregulate and under-redistribute

Abstract

For many social scientists, government intervention is linked to low levels of social trust and corruption, while others associate it with high trust and low corruption. We aim to reconcile these contrasting views by distinguishing the opposing effects of trust on two alternative types of government intervention: regulation and redistribution. We argue that distrusting individuals demand more governmental regulation (H1) but less government redistribution (H2), and this could be one of the mechanisms explaining why countries with low levels of trust tend to both overregulate and under-redistribute. And the effects of trust on policy preferences are conditional on the quality of institutions. The higher the level of quality of government in a particular region, the more high-trusting individuals will like government redistribution and dislike government regulation that restricts the operations of free markets (H3). We test these hypotheses with data from the latest round of the European Quality of Government Index (EQI) survey, which covers 77,000 individuals from 185 regions of 21 EU member states.