Report from the Workshop "Cultures of Trust and Institutions of Freedom"
At the end of September, 16 scholars from different disciplines and countries came together in the Old Town of Stockholm to present and discuss new research on trust and institutions. They were all united in a quest to explore how social science can help us better understand what is needed for modern societies to function well, both economically and socially.
As part of the research project Cultures of Trust and Institutions of Freedom, IFN was happy to welcome international researchers – all of them experts on topics relating to trust and institutions – to Stockholm for a workshop 29 September–2 October, 2022, featuring a two-day academic program. The web page of the workshop, which includes the participants and program, can be accessed here.
The research project is generously financed by grant 62065 from the John Templeton Foundation. The organizers of the workshop, Niclas Berggren (IFN) and Christian Bjørnskov (Aarhus University and IFN), are also the investigators of the project, which aims at analyzing how institutions of economic freedom can contribute to a society of free, responsible and equal individuals, and how cultures of trust can emerge and grow.
This report offers a summary of the talks of the workshop, by key themes, to share the insights of the new research that was presented to anyone interested in trust and institutions. Note that all presentations were preliminary and that the underlying work is subject to revision. If there is an interest in some paper, we recommend getting in touch with the presenting author to get the latest version. Finally, note that the opinions expressed are those of the authors and do not necessarily reflect the views of the John Templeton Foundation.
Back row (from the left): Nabamita Dutta, Greg Wolcott (representative from the John Templeton Foundation), Olle Hammar, Christian Bjørnskov (organizer), Andrea Sáenz de Viteri Vázquez, Johan Graafland, Monika Bauhr, Josef Montag, John Meadowcroft. Front row (from the left): Stefan Voigt, Robbert Maseland, Tim Krieger, Ahmed Skali, Ilpo Kauppinen, Annemiek Schilpzand, Niclas Berggren (organizer)
Political and Legal Institutions
Does Economic Freedom Deliver in a China-Dominated World?
Institutions such as property rights, predictable legal rules, low trade barriers and limited regulation have been shown to generate economic development. However, the evidence in support is from a time when the United States has dominated the world economy. Today, that position of leadership is beginning to get challenged by China. Robbert Maseland uses country-level data from recent decades to investigate whether the results hold when taking interaction with China into account. His provisional findings suggest that economic freedom is positively related to economic growth, but the effect is weakened with trade dependence on China and seems to reverse when that dependence is strong.
Robbert Maseland, Radboud University Nijmegen, The Netherlands
Women’s Representation Results in Less Bribery
Can women’s political representation reduce corruption in everyday life in a society? Monika Bauhr presented a study that investigates this at the regional level in ten European countries. The results indicate that it can: the proportion of women in regional parliaments is strongly negatively associated with citizens’ self-reported experiences of corruption across all countries and years.
“We don’t know what will happen when women become more networked, but this is still a strong finding, and needs to be explored more as a potential way to reduce corruption.” –Monika Bauhr, University of Gothenburg
How Economic Freedom Impacts Economic Growth
Christian Bjørnskov presented a paper adding to the research on different mechanisms through which economic freedom affects long-run economic growth and productivity. The authors build a theoretical growth model and test it using three measures of economic freedom: government size, legal quality and regulatory freedom, combined with growth in income per inhabitant, income per full-time employed, income as a share of the capital stock and income per work hour. The paper concludes that a smaller size of government might positively affect growth, but only in democracies. Legal quality is important in all societies, while regulatory freedom appears more important for growth through capital productivity in autocracies.
Christian Bjørnskov, Aarhus University, Denmark, and IFN
Judicial Independence and Trust
Stefan Voigt’s presentation highlighted that there is often a distinct difference between actual (de facto) and legally stipulated (de jure) judicial independence. It is somewhat of a puzzle why the actual practice differs from the legal rules. Could culture help explain it – more specially, social trust? The study finds that in Europe and the Americas, trust is positively related to de facto judicial independence and negatively related to de jure judicial independence. Thus, trust offers some explanatory value in the West – but not in Asia and Africa, and puzzles still remain.
“Attempts to speed up the rule of law have been unsuccessful. We need to be humble in proposing any kind of judicial reform anywhere since it seems like the colonial experience still has a huge impact on the capacity to implement judicial independence today.” –Stefan Voigt, University of Hamburg, Germany
Economics of Crime and Conflict
Twitter Conversations Decrease Offline Gender-Based Violence
Ilpo Kauppinen presented a study of how Twitter influences behavior. More specifically, the authors use U.S. Twitter data to see how conversations relating to gender roles and behavior might affect gender-based violence in society. The paper finds that, two weeks after a Twitter conversation, there is a decline in the crime rate and an increase in arrest rates, especially with regard to sexual gender-based violence, suggesting that social media platforms may play an important role in shaping behavior in important areas.
“One out of three women has been a victim of gender-based violence. It’s common and costly. Social media platforms could serve for interventions.” –Ilpo Kauppinen, VATT Institute for Economic Research, Finland
Economic Freedom and Crime Rates in Mexico
Andrea Sáenz de Viteri Vázquez uses Mexican state-level data to evaluate how economic institutions affect (non-drug-related) crime. The results indicate that economic institutions are associated with criminal activity, but differently so. Liberalizing state spending policy is associated with reductions in homicides and extortion rates. However, kidnapping and extortion tend to increase following reforms encouraging fiscal freedom and easing labor-market regulations. As such, the association between economic freedom remains puzzling.
“The increase in crime and the democratic transition in Mexico offer a setting for testing whether freer economies lead to more or less crime.” –Andrea Sáenz de Viteri Vázquez, Prague University of Economics and Business, Czechia
Economic Freedom, Terrorism and War
How are economic freedom and violent conflict related? Tim Krieger provided a comprehensive literature review of studies aiming to answer this question. The links between economic freedom and violent conflict are complex, and yet a final evaluation is lacking. Consequently, there are several exciting avenues for future research ahead.
“Important avenues for future research are understanding the micro-foundations of conflict caused by a macro-level concept and using disaggregated economic freedom and conflict to deal with endogeneity.” –Tim Krieger, University of Freiburg, Germany
Economic Freedom and Social Values
Economic Freedom Boosts Prosocial Behavior
Ahmed Skali exploits the collapse of the Eastern Bloc and, in particular, the fast and unexpected shock to the affected economies, shifting from central planning to a market-orientated system, to see whether economic freedom affects prosocial attitudes and behavior. Any potential effects on, for example, cooperation or trust should be identifiable after such a major change. The study covers 27 former communist countries and finds that more economic freedom indeed tends to increase prosocial behavior in several dimensions (trust, norm-compliance, cooperation and association membership).
Ahmed Skali, University of Groningen, The Netherlands
Globalization Is Not Negative for Social Trust
Niclas Berggren gave a presentation on how globalization is related to social trust. It considers both economic, social and political globalization and uses a method that avoids the problem of reverse causality – that social trust can affect the scope of globalization. Despite claims of the opposite going back to the German sociologist Tönnies, the study finds no indications that globalization is undermining social trust. If anything, the relationship with trust is positive for economic and social globalization (but the estimated effects are small throughout).
“The concerns that globalization could undermine social trust are unfounded. If anything, the relationship with trust is positive.” –Niclas Berggren, IFN and Prague University of Economics and Business, Czechia
Does Economic Freedom Make Us Happier?
Johan Graafland presented a research overview of how economic freedom affects happiness. He stressed that this relationship can feature both moderation and mediation. A moderator is a third variable that can explain under what conditions economic freedom influences happiness. Moderators could be religion or individualism. A mediator is a variable through which economic freedom can affect happiness, in addition to a direct effect. Mediators could be inequality or trust. Thus far, there are indications that both moderators and mediator help explain the relationship, bit there is ample scope for more research.
Johan Graafland, Tilburg University, The Netherlands
Discrimination and Racism
Ethnic Discrimination in Czech Schools
Josef Montag presented a paper investigating, through a field experiment, discrimination against Roma, Slovaks, Vietnamese and Ukrainians in Czech primary schools. Made-up mothers e-mailed principals, looking for a school spot for their first-grade child. She asked whether there would be an (online) open house event. The schools’ response rates indicate the degree of discrimination. The researchers find evidence of discrimination of all groups except Ukrainians. Replicating the experiment after the Russian invasion of Ukraine, they also find discrimination against Russians. Non-refugee Ukrainians are treated similarly to Czechs also after the invasion, while Ukrainian refugees seem to be treated less favorably.
“There is nontrivial discrimination against Roma, Slovak and Vietnamese minorities in Czech schools.” –Josef Montag, Charles University, Czechia
Racism as Rent-Seeking or Ideology?
John Meadowcroft presented a book-project setting out a theoretical framework adding insights from public-choice theory and constitutional political economy in the racial justice debate. The standard approach is to understand racism as an ideology. However, using the transatlantic slave trade and slavery in America and the West Indies as case studies, Meadowcroft argues that racism can often be understood as an instance of rent-seeking. This framework suggests that racist policies may be a means of securing political rents, which leads to the promulgation of racist ideas.
“If the framework of ‘racism as rent seeking’ is correct, anti-racists should focus on the rules of the game regarding rent-seeking, and not ideas about race.” –John Meadowcroft, King’s College London, United Kingdom
Culture: Effects and Measurement
Linguistic Structures and Types of Entrepreneurship
Nabamita Dutta presented a paper that investigates how linguistic structures that reflect the underlying culture affect necessity and opportunity entrepreneurship. The paper looks at whether a language allows for the dropping of pronouns and how strong “future markers” are in the language. Pronoun drops are thought to indicate that people are less individualistic, and strong future markers are considered as an indicator of long-term orientation. The study uses cross-country data and finds that non-pronoun-drop language countries and weak future-mark language countries have more opportunity entrepreneurs in relation to necessity entrepreneurs. Culture thus seems to matter for the distribution of entrepreneurs in a country.
“Necessity entrepreneurs are pushed into entrepreneurship due to a lack of other opportunities. Opportunity entrepreneurs, on the other hand, exercise an active choice to pursue entrepreneurship.” –Nabamita Dutta, University of Wisconsin, USA
People from Individualistic Cultures Favor Redistribution Less
Olle Hammar presented a paper adding to the literature on determinants of preferences for redistribution. The study focuses on the effects of individualism. He finds that immigrants from more individualistic countries prefer less redistribution. The results are only significant in a first-generation immigrant sample, not in one comprising second-generation immigrants, indicating that cultural assimilation is relatively fast in this dimension.
“People from more individualistic countries tend to have lower preferences for redistribution. However, the cultural assimilation is fast in this dimension.” –Olle Hammar, IFN and Institute for Future Studies, Sweden
Estimating the Effects of Culture: Is the Epidemiological Approach Valid?
The epidemiological approach explains the behaviors or attitudes of immigrants using characteristics of the country of origin. By using this approach, researchers hope to better understand what determines some kinds of behavior or attitude without a risk for reverse causality, as migrants are removed from the country of origin. However, a problem might be that an emigrant sample could be unrepresentative. Annemiek Schilpzand addressed this issue in her presentation. To answer how problematic using an immigrant sample for analysis might be, she compares emigrants to non-emigrants in the ancestral country and concludes that as long as the misrepresentation between emigrants and stayers is not systematic, there will not be an endogeneity problem. If anything, this could lead to the underestimation of effects.
“An emigrant sample isn’t representative of the ancestral country. Since they, in fact, moved, they must be different from the stayers. So how problematic is it to use an immigrant sample?” -–Annemiek Schilpzand, Radboud University Nijmegen, The Netherlands
Final Words
A workshop of this kind is very dynamic, and a summary like this cannot really capture either the inspiring presentations or the engaging discussions that followed during the sessions and in between, during coffee breaks, breakfasts and dinners. Nor can it capture the personal bonds that were formed. Still, we hope this summary gives a hint of what happened during these autumn days in Stockholm. Do feel free to contact any of the participants to learn more about their research.
We thank the John Templeton Foundation for its financial support and its representative Greg Wolcott for participating; all participants for giving of their time and talent; Emma Gunnarsson for writing most of this summary; and Elisabeth Gustafsson for administrative assistance of the most competent kind.
Niclas Berggren and Christian Bjørnskov, organizers
Stockholm and Aarhus, 14 October, 2022