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Trust and the protection of property rights: evidence from global regions

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Abstract

In this study, we address the issue of whether trust enhances institutional quality. Despite accumulated research on the topic, comparative studies examining whether such a relationship holds across different regions are rare. Consequently, in this study, we focus on the heterogeneous effect of trust on the protection of property rights worldwide. According to our research, in Western democracies, owing to relatively effective legal systems, trust facilitates cooperation among citizens in utilizing public means to collectively secure properties. In contrast, in other parts of the world, owing to less effective legal systems, citizens with high levels of trust, who presumably have access to many social resources, utilize private means such as informal networks, for protecting property rights. Our empirical analysis of time-series cross-sectional data, and individual-level survey data yields evidence supporting the aforementioned assertion. Moreover, we find suggestive evidence of a causal mechanism linking trust and institutional quality.

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Fig. 1

Data Source: Gwartney et al. (2018).

Fig. 2

Gwartney et al. (2018)

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Availability of Data and Code for Replication

Replication data and code are available at https://dataverse.harvard.edu/dataverse/hkwon.

Notes

  1. Definition obtained from https://www.heritage.org/index/property-rights.

  2. Information on this dataset can be found at https://www.fraserinstitute.org/economic-freedom/dataset.

  3. The Global Competitiveness Report uses a scale of 0 to 7. However, the Fraser Institute rescaled it to 0 to 10.

  4. Information on this dataset can be found at http://www.indsocdev.org/.

  5. Some of these sources include World Values Survey, Afrobarometer, and Asian Barometer Survey.

  6. Information on this dataset can be found at https://info.worldbank.org/governance/wgi/.

  7. Information on this dataset can be found at https://www.systemicpeace.org/inscrdata.html.

  8. Information on this dataset can be found at https://www.doingbusiness.org/en/custom-query.

  9. The conventional threshold of Cook’s D test is known to be greater than 4/N. In our case, the 19 observations were slightly, but insignificantly, larger than 4/316 = 0.0127.

  10. We also examined whether there is a multicollinearity problem. None of the covariates included in our estimation model showed worrisome variance inflation factors.

  11. Although they are not displayed this in this section, we find similar results for the rest of the regions.

  12. Our analysis samples for social trust are WVS waves 2, 3, 5, 6, and for the particularized trusts, WVS waves 5, 6, due to the control variable not available for all waves.

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Acknowledgments

The authors wish to thank the editor and an anonymous reviewer for helpful comments and suggestion. This work was supported by the National Research Foundation of Korea funded by the Korean government (NRF-2017S1A3A2066657) and a Korea University Grant (K2009471).

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  1. KDI School, Sejong-si, South Korea

    Kee Hoon Chung

  2. Department of Political Science, Korea University, 145 Anam-ro, Seongbuk-gu, Seoul, South Korea

    Hyeok Yong Kwon

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Chung, K.H., Kwon, H.Y. Trust and the protection of property rights: evidence from global regions. Public Choice 189, 493–513 (2021). https://doi.org/10.1007/s11127-021-00901-1

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