Regulation and Distrust
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CitationAghion, Philippe, Yann Algan, Pierre Cahuc, and Andrei Shleifer. 2010. “ Regulation and Distrust.” Quarterly Journal of Economics 125 (3) (August): 1015–1049.
AbstractWe document that, in a cross section of countries, government regulation is strongly negatively correlated with measures of trust. In a simple model explaining this correlation, distrust creates public demand for regulation, whereas regulation in turn discourages formation of trust, leading to multiple equilibria. A key implication of the model is that individuals in low-trust countries want more government intervention even though they know the government is corrupt. We test this and other implications of the model using country- and individual-level data on trust and beliefs about the role of government, as well as on changes in beliefs during the transition from socialism.
Citable link to this pagehttp://nrs.harvard.edu/urn-3:HUL.InstRepos:12490649
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