Social Trust and Regulation: A Time-Series Analysis of the United States

from the book Regulation and Economic Opportunity: Blueprints for Reform

Executive Summary

Regulation often sets up rules governing interactions between individuals and businesses, due to this, it may become a substitute for social trust. In more trusting areas, regulations may not be as necessary for places with low trust. In this paper, economists Peter Calcagno and Jeremy Jackson examine the relationships between trust and regulation in various industries. Their chapter suggests:

  • Reducing regulations in an area can increase trust by encouraging social interactions that reward good behavior and punish bad behavior.
  • Within the finance industry, increases in social trust seem to also reduce the level of regulation.
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