The Growth of Government, Trust in Government, and Evidence on Their Coevolution

Steven Gordon
University of Kentucky

John Garen
University of Kentucky

J. R. Clark
The University of Tennessee at Chattanooga

Click here for the summary

Click here for the published version in the Journal of Economics and Finance

Click here for the altmetrics page

Abstract: The coevolution of trust in government alongside the growth of government is an aspect of the latter topic that has not been explored. Moreover, trust is viewed as part of social capital, facilitating social and economic transactions and the governance of society, and its decline has caused concern. We consider this coevolution in the context of a political economy model and a public interest view of government growth, incorporating the role of trust in government. Though a negative association of the growth in government with trust in government is broadly consistent with the historical data since the late 1950s, we present an econometrically sophisticated, time series analysis of the data. We find strong evidence that two aspects of government size—transfer payments and regulatory activity—align with the political economy model where government growth erodes trust. Specifically, we find cointegration indicating the following: negative associations of trust and lobbying activity and of trust and each of these two measures of government, and a positive association of trust and productivity. Though other measures of government size do not produce such robust findings, we do not find evidence of positive associations of trust and government size nor of trust and lobbying, as might be expected from a public interest view of government.

Published: June, 2017