Political trust is important for the effective functioning of government. This chapter uses cross country regression analysis to see whether three different measures of economic performance matter for political trust. In this chapter, an economic approach to politics has been developed. The results lend support to the hypothesis that political trust is influenced by economic growth, the standard of living, and the appropriate use of government spending.
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Applying a vector autoregressive model on quarterly data for the U.S. from 1980 to 1997, Chanley, Rudolph, and Rahn find that favorable economic expectations have a positive effect on public trust in government, but that greater sensitivity to crime, higher concern for international affairs, and congressional scandals have a negate effect (Chanley, Rudolph, and Rahn 2000). Keele estimates a single equation error correction model on quarterly data from 1970 to 2000 (Keele 2007). He finds that, in addition to economic performance and government institutional performance as measured by congressional approval, social capital, especially in the long run, seems to exercise a strong influence on people’s trust in government. Ligthart and Oudheusden focus on fiscal decentralization. Looking at household survey data on 35,259 individuals for thirteen countries over the period 1994 through 2007, and estimating using an ordered logit model, they find that fiscal decentralization leads to greater trust in government (Ligthart and Oudheusden 2011). They also find that government size and income inequality have a negative effect on government trust, but, surprisingly, that government quality and macroeconomic performance do not seem to matter.
Two potential sources of diffuse political support are the socialization process and identity-based trust (the common trust that is based on common group identity). In countries that have just undergone a political transition, although diffuse political support from the socialization process may impact political trust negatively because the populace has been subject to the socialization of the previous government, diffuse political support arising from identity- based trust, depending on the situation, could still be positive. Askvik employs regression analysis on survey data for South Africa from 1995, 2001, and 2006, the years following its transition from an apartheid government to a democratic government (Askvik 2010). His results show that performance and diffuse support founded on identity-based trust are positive determinants of political trust for South Africa.