How Good is Trust?

This paper investigates the notion and role of trust in modern societies as a first step towards the construction of indicators that could better inform our understanding of societal progress. Trust is commonly viewed as a proxy indicator of social capital, and a high level of trust is considered a factor that can enhance economic growth and social well-being. Indicators of trust inform about the quality of people's interactions with others, hence on their assessment of the extent to which other people in the community are perceived as potential partners rather than as rivals. The paper, starting from the various notions and theories of trust provided in literature, discusses different definitions of trust, its various dimensions (i.e. interpersonal and institutional trust), their relation to the broader notion of social capital, and the different factors that affect it. It then overviews the measures currently used to assess trust, discussing their advantages and disadvantages. Questions assessing the degree of trust of respondents towards other people and institutions have been asked in dozens of large-scale surveys worldwide, and these data highlight systematic relations between trust and various dimensions of economic and social well-being. The paper concludes by noting the limits of available evidence and the scope for improvements through better survey design and more comparable survey questions.