Trust is not one thing and does not have one source. It has a variety of forms and causes (Levi 1998, p. 79). A person’s trust in generalized others, likewise, has different aspects and they do not form a single syndrome (Newton 2001). As a result, some researchers argue that the standard survey question of social trust is not clear to respondents about whom to trust or under which circumstances. The ambiguity in the measurement of social trust could make it difficult for researchers to explore respondents’ perceptions of the context relating to the survey question. In order to perform a comprehensive study of the role of college education in the development of social trust, we take efforts to present a theoretical review of the micro aspects of social trust. Based on the theoretical insights, we establish two hypothetical mechanisms to explain the causal influence of college education, which we will examine in the empirical analysis.
Social Trust Theory from a Micro Perspective
Social trust reflects “a belief in the benevolence of human nature in general” (Yamagishi and Yamagishi 1994) and it implies risks to the truster of being dependent on the characteristics (competence and motives) of the trusted in social interactions (Lewis and Weigert 1985; Bluhm 1987; Coleman 1990, p. 91; Levi 1998, p. 79; Hardin 2003, p. 19). Coleman (1990, p. 91) identifies risk as an essential element in the definition of trust. Levi (1998, p. 79) proposes that the actual extent of risk and the extent to which the truster is taking a “sensible” risk are variables, and they are partially functions of the trustworthiness of not only the trustee but also those on whom the truster relies for information and sanctions against a trust-breaker.
As expectations and beliefs are characterized by risks, social trust at the individual level involves an assessment of the trustworthiness of generalized others in which a truster makes an estimate of the competence (or reliability) and an estimate of the feeling of moral obligation (or goodwill) of the “average person” to carry out the fiduciary duties and responsibilities (Barber 1983, pp. 9–10). According to a large amount of trust and social trust literature (e.g. Hardin 1996; Sztompka 1999, pp. 65–68; Rothstein and Stolle 2002; Knight 2003, p. 358; Paxton 2007), there are two primary sources of expectations and beliefs for each individual in a society: an individual’s previous experience (or individual characteristics) and cultural and social structures (or contextual characteristics).
Firstly, personal life experience is an important aspect in an individual’s assessment of the trustworthiness of generalized others (Brehm and Rahn 1997; offe 1999; Hardin 1996; Alesina and La Ferrara 2000, 2002; Uslaner 2002; Paxton 2007). Social trust at the individual level is subject to first-hand experience of the social world and the people in it—friends, family, neighbors, colleagues, and daily contacts with others, which enable a truster to make a judgment about the trustworthiness of generalized others.
People who have matured in a disadvantaged position are more inclined to have a lower sense of the reliability or goodwill of others (Paxton 2007), because they were more likely to have the experience of being exposed to the “darker side” of society. Being victim of a crime, for example, contributes to more distrusting views (Ferraro 1995). As a prudent measure against the risk of negative social encounters or being exploited, these people are less likely to trust others with whom they do not have direct contact. People who have grown up in a well-to-do environment, on the contrary, have a higher belief in the benevolence of human nature in general. They are generally happier with how the life is going and more likely to give affirmative responses in trust surveys (Brehm and Rahn 1997; Uslaner 2002, p. 33).
Socializing activities are an important source of human information practices (Granovetter 1973). Establishing and maintaining good social relationships facilitate access to relevant information in detecting and assessing risks in an uncertain environment. Lack of socialization may prevent a person from developing communication skills and lead to misunderstanding and distrusting of others. Significant experiences in social interactions, especially traumatic experience, throughout the life course may influence the assessments of the trustworthiness of others (Boyle and Bonacich 1970; Hardin 1996). Experience of divorce, for instance, could reduce an individual’s assessment of the goodwill of others, thereby generally lowering his or her view of the trustworthiness of people in general (Alesina and La Ferrara 2000, 2002; Rahn et al. 2003; Paxton 2007).
Secondly, characteristics of cultural and social structures are also an important aspect in the assessment of the trustworthiness of generalized others (Zack and Knack 2001; Rothstein and Stolle 2002; Knight 2003, pp. 358–71; Paxton 2007). These cultural and social structures include norms and conventions, as well as formal/institutional arrangements in society,
Social norms and conventions are the informal rules that configure social life. They create an incentive structure that can place pressure on an individual to honor trust (Yamagishi and Yamagishi 1994; Buskens 2002; Knight 2003). These informal rules instantiate commonly-held behavior of others and dictate differential behavior across social groups. The more a society or community shares a common set of moral values, the greater the likelihood that a high level of collective trust will arise (Fukuyama 1995, p. 153). Knight (2003, pp. 358–71) and Hardin (2003, pp. 16–17) suggest that the trustworthiness created by norm compliance can lead to generalized trust in the community. Rapid social change that undermines the normative order is likely to produce an increase in distrust and untrustworthy behavior (Sztompka 1999, pp. 151–90; Delhey and Newton 2005).
Social heterogeneities are considered to have an adverse influence on the emergence and maintenance of social trust (Lukes 1991; Putnam 2000, p. 400; Alesina and La Ferrara 2000, 2002; Marshall and Stolle 2004; Welch et al. 2005). Heterogeneities in the identity of social norms and conventions may undermine the general beliefs about the willingness of others to cooperate (Knight 2003). The greater the asymmetry of interests reflected in social norms and conventions, the higher the distrust between members of different social, racial or ethnic groups.
Individuals also resort to formal structural arrangements, such as legal system and public institutions to complement and increase the effectiveness of informal constraints in a socially diverse environment (North 1990, pp. 46–47). Formal structural arrangements provide the truster assurance against potential risks involved in trusting others with whom there is no personal knowledge, by the (partial) presence of agencies in monitoring the conduct of the trustee, providing conduct information, and sanctioning law-breaker (Levi 1998, p. 84).
The characteristics of institutional arrangements, such as efficiency, credibility, impartiality and fairness, are influential in generating and maintaining social trust (Rothstein and Stolle 2002). In a society where legal system and public institutions enforce trustworthiness in a fair and effective manner, people perceive fewer risks of being exploited or taken advantage of in social interactions and they will therefore believe that “most people can be trusted”. As Lewis and Weigert (1985) declare, trust exists in a social system when individuals are secure in their expectations.
Some research has found the distribution of resources, in particular, economic resources, to be an important determinant of social trust (Alesina and La Ferrara 2000, 2002; Zack and Knack 2001; Delhey and Newton 2005). Obtainable resources serve as a kind of insurance for the risks involved in trusting others. In a society where substantial inequality exists in the distribution of resources, it is less likely for the disadvantaged group to draw positive inference about the attitudes of resource-favored groups and to cooperate with members of the dominant group (Knight 2003, pp. 358–60). People from disadvantaged group may have higher suspicion of the competence and willingness of institutional arrangements to act in the interest of the disadvantaged or treat them impartially and fairly. Consequently, the functions of institutional arrangements are weakened as reliable assurance against potential risks involved in social interactions.
Zack and Knack (2001) show that cultural and social structures are the most important determinants of social trust at the national level. In their study, the social environment (similarity or differences in social norms and conventions), the economic environment (income and the income distribution), and the legal environment (institutions that enforce contracts) account for 76% of the variation in trust levels across countries.
It is persons who can trust or be trusting (Levi 1998, p. 79). An individual’s assessment of the trustworthiness of generalized others is subject to this person’s understanding of the content of social norms and conventions, and perceptions of the competence and willingness of institutional arrangements in the enforcement of trustworthiness.
Understanding the contents of social norms and conventions is the key to understanding their effects in rewarding compliance behavior and punishing noncompliance, which is fundamental in predicting the behavior of others. Individuals with limited knowledge of social norms and conventions are less likely to trust others within heterogeneous groups, especially in a socially diverse or a rapidly changing environment. People who are generally pessimistic about (reaching a societal or between-group consensus in) the existing normative values may have a higher preference for powerful institutional arrangements, such as strict government censorship and stiff penalties, as substitute of the informal constraints in the enforcement of trustworthiness.
Social trust is sustained by people’s confidence in the competence and commitment of formal structural arrangements in protecting the interest of generalized people (Brehm and Rahn 1997; Levi 1998, p. 81; Rothstein and Stolle 2002). In assessing whether “most people can be trusted”, one may also make an estimate of the trustworthiness of political and legal institutions. An individual who believes these institutions are effective, credible and unbiased agencies (in monitoring and enforcing trustworthy conduct) has probably a lower perceived likelihood of being exploited or taken advantage of in social interactions, and this individual is therefore more likely to express that “most people can be trusted” in the survey. An individual’s attitude toward institutional arrangements entails the perceived performance and motives of institutional arrangements in the distribution of resources. One may be more suspicious of the competence and impartiality of institutional arrangements in the enforcement of trustworthiness, when this person feels that institutional arrangements perform insufficiently in the distribution of wealth.
College Education and the Formation of Individual Social Trust
It has been commonly agreed in economic and social literature that education is a crucial determinant of social trust at the individual level. Highly-educated people are more likely to do well economically. The advantages in economic and social resources may bring highly-educated people more confidence in handling the risks involved in trusting generalized others. Knack and Keefer (1997) and Knack and Zak (2002) argue that trust is created in the education system by making individuals better informed and better at interpreting perceived information, as well as making them more conscious of the consequences of actions taken by themselves and others. Moreover, schooling might have an important socialization effect that may give young people a more positive attitude towards people in general (Bjørnskov, 2007). Yamagish (2003), p. 130) suggests that higher education makes students of elite college high trusters. According to Helliwell and Putnam (1999), higher average education levels may help to create a climate of trust that is self-reinforcing in which highly-educated people are in turn more likely to trust others.
In empirical studies, education is considered as an essential factor in the social trust equation. The estimated education effects vary across studies due to heterogeneities in survey sources and methodological or contextual variations. Huang et al. (2009) conducted a meta-analysis on the estimates of the education effects from empirical studies which have included education achievement as an independent variable and reported statistical data (t-statistics, p-value or standard error). In the meta-analysis, we synthesized 154 estimates of the education effects on social trust from 28 empirical studies and we found out that, overall, one additional year of schooling increases individual social trust by 4.6% of its standard deviation.
The correlation statistics or simple regression statistics in the existing studies do not, however, necessarily reflect a causal effect of education. Empirical studies may be exposed to the problem of omitted-variable bias (or education endogeneity) if they ignore the possibility that the choices of educational attainment and social trust formation are simultaneously affected by unobserved factors, such as cognitive ability, personality traits, as well as family backgrounds and interactions in early life.Footnote 2 Coleman (1988) also argues for a reverse causal direction, as trust attributes in early-life might also lead to better educational outcomes by allowing students to gain access to the help of family and fellow students. In this case, the estimate of the education effect does not reflect a real causal effect, but a spurious relation. A rigorous empirical study should be able to disentangle the real effect of education from the potential influences of confounding variables or present evidence to demonstrate that unobserved heterogeneity across individuals does not cause a substantial bias in the estimation.
In a large amount of literature, individual past life experience and perceptions of cultural and social structures are considered as two primary aspects of social trust at the individual level. Until now, however, little (if any) empirical evidence can be presented to clarify how education contributes to the building of social trust via these two sources. The theoretical rationales of the education effect remain untested and hypothetical.
This paper attempts to provide an inclusive examination of the role of college education in the formation of social trust. We employ econometric techniques to isolate the potential influences of confounding variables and quantify the exact degree of college effect. We also examine the potential mechanisms for the education effect by testing two hypotheses that are established in line with the two primary sources of social trust at the individual level:
College education promotes social trust via the heterogeneities (induced by education disparities) in individual life experience/development.
Highly-educated people have more chance to do well economically, and generally live in a community where there are less heterogeneities (in the identity of social norms and conventions) and lower crime rates. They are less likely to be exposed to the “darker side” of society that has an adverse impact on the formation of social trust. With the cognitive and perceptual experiences from and outside academic programs, a college education increases the individual’s capacity to communicate effectively and to socialize with others. People who have received a college education are more optimistic about controlling their own life-chances and engaging in close interaction with others, which leads to a higher belief in the benevolence of human nature in general, or at least a higher belief in the capacity of discerning and handling risks involved in trusting others.
College education promotes social trust via the heterogeneities (induced by education disparities) in an individual’s perceptions of cultural/social structures.
In a democratic society, college institutions have a civil mission—educating their students to be effective and responsible citizens. A college education increases individual knowledge of the cultural environment, economic environment, and legal environment. High educated people are more likely to share a social consensus on normative values that create an incentive to honor trust, and they are more affirmative of the competence and willingness of social arrangements in the enforcement of trustworthiness and fairness. College institutions also offer various opportunities where students can interact and cooperate with people from different social groups (in the procedure of acquiring knowledge). The between-group interaction and cooperation may provide favorable information about the other group that would not otherwise be available (Kramer 2004, p. 152). They may enhance the perceived similarity and break down the conceptual boundaries between groups (Brewer and Kramer 1985), fostering a common knowledge that members of society share the same normative values. In general, a college experience expands the horizon of individuals on economic and social change, makes individuals more open-minded to accept otherness from heterogeneous groups, and makes individuals more affirmative of the trustworthiness of political and legal institutions.
A Brief Illustration of the Evaluation Techniques
We examine the causal effect of college education through the identification of the average treatment effect (ATE), which is an econometric measure, generally adopted in medical trials or policy evaluation, for the average causal difference in outcomes between the treatment and the control group. The expression “treatment effect” refers to the causal effect of a given treatment or policy on an outcome variable of scientific or policy interest (i.e. the health of the patients or the income of the workers). The average treatment effect is the average of the individual treatment effects across the whole population of interest. In this paper, college education is the treatment and the ATE denotes the average expected causal effect of college education relative to lower education on individual social trust.
We apply the bivariate probit (BVP) and the control functions probit (CFP) methods to handle the potentially endogenous relation between choice of college education and social trust.Footnote 3 The BVP method has been widely used in medical evaluation to reduce the bias due to self-selectivity in the binary treatment choice. The BVP is a simultaneous equation model that controls for endogeneity in the likelihood of the joint sets of the treatment and outcome distribution. Bhattacharya et al. (2006) have an inclusive comparison on the performances of the probit, two-stage probit (or two-stage least squares), and BVP. They show that the BVP is the only method to produce a consistent estimator when there is an endogenous treatment.
The control functions probit (CFP) model is a special case of the control functions (CF) model, which is generally applied to evaluate the treatment effect on continuous outcome by controlling directly for the correlation between the treatment choice and the unobservable heterogeneity in the outcome variable (Heckman and Navarro-Lozano 2004; Blundell et al. 2005). Because the probit specification can be derived from a model involving a latent variable with a linear expression, the CFP model produces a good approximation of the true ATE in a binary response model.
The CFP, like the BVP, allows one to identify the real causal effect, and one can examine the presence of treatment endogeneity. In general, an exclusion restriction is required in the CFP and the BVP approaches, especially when there is inadequate variation in the observable characteristics.Footnote 4